Employee rights under civil, labour laws; when can one file payment recovery case

Updated: April 10, 2019 6:03:29 PM

Rights of an employee are governed by the nature of employment as provided under varied laws and the contract of employment signed with the employer.

The basic mandate of any applicable civil or labor law is employee welfare and their non-discrimination.

 By Daizy Chawla, Harsimran Singh

Rights of an employee are governed by the nature of employment as provided under varied laws and the contract of employment signed with the employer. The nature of employment could label an employee to be workmen or non-workmen, an employee of an organized or unorganized sector, and the government sector or private sector employee.

One would find a little degree of variation in implementation/assertion of legal rights of an employee from one type of employee to another based on applicable laws. In addition, the size of the employer organization is also important to ascertain the recourses available to an employee to claim or assert its right.

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Nevertheless, no matter how varied the laws are, the basic mandate of any applicable civil or labor law is employee welfare and their non-discrimination.

Here, keeping the senior level of employees in perspective, initiation of recovery actions qua outstanding payments or salaries could be a sign of unhealthy employer organization. Therefore, a cautious approach is imperative.

To begin with, a meticulous legal notice, issued by a lawyer for and on behalf of the claimant employee, demanding payment of the due salary in a fixed timeframe should be served upon the employer organization. This notice may or may not be preceded by a demand letter written by the claimant employee directly.

However, in almost all cases, legal notice is sent once the employee has exhausted its options informally within the employer organization. The notice must cover all rights of the employee and all obligations of the employer as may be agreed under the contract of employment.

This Notice, in case of non-payment by the employer, will serve as a strong basis for approaching the appropriate civil court for the filing of the suit for recovery of money and for this purpose, a summary suit under Order 37 of the Code of Civil Procedure would be most appropriate.

There have been many instances where writ jurisdiction has been invoked seeking unpaid salary along with interest on delayed payment of salary on grounds such as even in absence of statutory rules, administrative instructions or guidelines employees can claim under Articles 14, 19 and 21 of the Constitution of India, or employees cannot be allowed to suffer due to inaction on the part of the employer, etc.

From another angle, if the employee is assertive of any fraud by an officer of the employer company resulting in non-payment of salary, an employee may seek action against such person under section 447 of the Indian Companies Act 2013.

The term ‘fraud’ in relation to affairs of a company, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure inter alia interests of any person, whether or not there is any wrongful gain or wrongful loss. Here, wrongful loss simply means the loss by unlawful means of property to which the person losing is legally entitled.

Recently, the senior employees of a financially strapped airlines company made a lot of news over their grievance of non-payment of salaries for a considerable period. As reported, the employees approached many avenues for resolution of their claims including a nodal agency of their employer-company, minister of civil aviation and even the Prime Minister of the country.

The employees (including pilots, engineers, senior management employees, etc.) are making a combined effort to claim their unpaid dues. This sort of action, popularly known as a collective bargain, is a very effective tool to address issues affecting a large pool of employees. In Karol Leather Karamchari Sangathan v. Liberty Footwear Company, (1989) 4 SCC 448, the Hon’ble Supreme Court defined ‘collective bargain’ as “the technique by which dispute as to conditions of employment is resolved amicably by agreement rather than coercion”.

The aggrieved employees are generally represented by a trade union or an elected guild, which negotiates and settles claims for and on behalf of the aggrieved employees. Even though collective bargain actions are most suited in workmen or industrial disputes, a similar approach is also prevalent and effective in other class of employees.

Daizy Chawla, Senior Partner, Singh & Associates, and Harsimran Singh, Senior Principal Associate, Singh & Associates

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