Understanding Salary Withholding in India: Legal Insights for Employees
By Career counseling, Developement, News

Explore the legality of salary withholding in India under employment agreements. This blog delves into a controversial practice where companies deny wages for work done if an employee leaves or is terminated within a specific period, such as 30 days. Learn about the applicable labour laws, including the Payment of Wages Act, the Indian Contract Act, and the Industrial Disputes Act, and why such clauses are considered illegal and unenforceable. Empower yourself with knowledge of employees’ rights, employer obligations, and the recourse available when faced with unjust salary withholding practices.

Introduction:

  • A real-life scenario where an employee was terminated within 30 days and denied wages for 20 days of work due to a clause in the employment agreement.
  • The importance of understanding the legality of such agreements in the Indian labour context.

Key Legal Frameworks:

1. Payment of Wages Act, 1936:

  • Employers must pay wages for services rendered, irrespective of the employment duration.
  • Violations of this Act can result in legal consequences.

2. Indian Contract Act, 1872:

  • Clauses that are contrary to public policy or exploitative are void under Section 23.
  • Agreements must not override statutory rights.

3. Industrial Disputes Act, 1947:

  • Protections against unfair labour practices, including non-payment of wages for terminated employees.

Why Such Clauses Are Illegal:

  • Public policy and ethical considerations.
  • The fundamental right to livelihood under Article 21 of the Constitution.
  • Court precedents invalidating similar agreements.

Implications for Employers:

  • Potential legal challenges and penalties.
  • Reputation damage due to exploitative practices.
  • Encouraging fair and legally compliant employment contracts.

What Can Employees Do?

  • Filing complaints with the Labour Commissioner.
  • Seeking redress in labour courts.
  • Sending legal notices to employers.
  • Consulting with labour lawyers for specific advice.

Conclusion:

  • Reiterating that withholding wages for work done is illegal in India.
  • Emphasizing the need for both employers and employees to be aware of their rights and obligations.
  • Encouraging fair and transparent employment practices for a healthier work environment.