How many months of salary can a company legally hold if someone resigns without giving a proper notice period ?

The government through various Central and State legislation gives rights and resolved matters relating to employment, payment of wages and other allied matters. No rigid rules are there to govern employment in India, different legislations available for different categories of employees and situations depending on their nature of employment and work performed.

Every year numerous cases are reported for delayed or no-payment of salaries by employers. These allegations are usually placed against big companies who do not pay their employees on a regular interval basis and even holds their income for intimation short of the notice period.

The document which guides for work relation between an employer and an employee is known as an Employment agreement. This agreement defines the terms of engagement to the employee in terms of income including the minimum notice period he/she is obliged to serve the company to receive his last payment in full and final settlement.

What an employee can do as per current laws for non-payment of wages/salaries?

Other than an imposition of a fine by legal authorities an employee can seek redressal for non-payment of his salary/due wages by  :

– Filling a suit against the employer as specified under employment laws.

– Taking help of a legal advisor and issuing a legal notice to the employer for payment of pending dues.

-Filling an FIR against the employer for the breach of trust of the employment contract.

– Reaching out to District Magistrate or the Registrar of Companies (ROC) to complain about the malpractices of the company.

– Reaching out to the labor court and claiming there for the salary from an employer legally.

Responsibility of employer for the payment of wages as per the Payment of Wages Act, 1936

In case an employee fulfills the notice requirement, the employer has to either :

– Pay the pending wages/salary to the person before 7th or 10th of the proceeding month for which he has served the notice period.

Pay on the last working day of the employee.

– Pay before the expiry of the second day of employment resignation or termination.

Various state laws provide a minimum of one month to three months period to be served as Notice period by the employee.

Note: Notice period is the time period from the receipt of termination letter or wilful resignation till the last working day of the employee in the organization. As per law, the employee is also entitled to receive payment for the notice period served by him.

If the employee fails in serving the company pre-stated notice period norms the company can either:-

– Sue him for breach of employment agreement for notice terms.

– Can demand to serve the notice period or pay to the company.

– To handover, the assets and secret holdings to the company & get some amount deducted from his final pay

– or may decide the actions depending on circumstances.

Conclusions :

It is the duty of the employer to pay the wages/salary of the employee by 7th or 10th of the preceding month from the last working day of the employee. In case of wilful resignation, he can demand the employee to serve the notice period or else lose some amount from the final payment as compensation for breach of notice terms or as the case may be.