Withholding salary, PF contributions, or statutory dues is illegal under Indian labour law. If your employer has not paid you, a formal legal notice creates an official record, compels a response, and opens the path to Labour Commissioner action — often without setting foot in court.
The Payment of Wages Act, 1936 gives every employee the right to receive their full wages on time — without unauthorised deductions.
Key rights:
— Wages must be paid by the 7th of the following month (for establishments with fewer than 1,000 workers) or the 10th (for larger ones).
— Deductions are allowed only for PF, ESI, fines for damage, etc. Arbitrary salary cuts are illegal.
— Delayed or withheld wages attract compensation of up to 25 times the withheld amount if a complaint is filed.
Your claim can include more than just base salary:
— Monthly salary not paid on time
— PF contributions deducted from salary but not deposited with EPFO
— ESI contributions not remitted
— Earned leave encashment not paid on exit
— Gratuity (if 5+ years of service) not paid within 30 days of leaving
— Bonus under the Payment of Bonus Act, 1965
— Full and final settlement dues not cleared after resignation or termination
All of these can be included in a single legal notice to the employer.
Labour Commissioner route: Free to approach, specifically designed for wage disputes. Cases often resolved within weeks to a few months. For PF defaults, a separate complaint can be filed before the EPFO Enforcement Officer.
Labour Court / Industrial Tribunal: For disputes involving termination, unfair labour practices, or amounts beyond the wage authority's jurisdiction.
Civil Court: For senior employees whose contracts are not covered by the Payment of Wages Act. Usually slower but allows higher claim amounts.
Sending a formal legal notice before filing often resolves the matter without any government proceeding at all.
Payment of Wages Act, 1936 mandates timely payment of wages — violations attract compensation of up to 25x the withheld amount. Industrial Disputes Act, 1947 governs unfair labour practices. EPF & MP Act, 1952 makes PF deposit a statutory obligation — non-deposit is a criminal offence.
Important deadline: Wage claims under the Payment of Wages Act must be filed within 12 months of the date the wages became due. The sooner a notice is sent, the stronger your position.
Common scenarios our users face, with specific guidance.
My company is shutting down and delaying full and final settlement for months
Company closure does not extinguish wage obligations. Employees are secured creditors for unpaid wages under the Insolvency and Bankruptcy Code, 2016 — meaning you get paid before most other creditors. Send the legal notice immediately to the management and board. If the company enters insolvency, file your claim with the Resolution Professional as a financial creditor.
My employer is deducting salary as a 'performance penalty' without any prior notice
Under the Payment of Wages Act, fines can only be deducted for specific acts of misconduct that were notified in advance by the employer in a registered notice schedule, and the total fine in a month cannot exceed 3% of wages. Any deduction outside these rules is illegal and recoverable. Document all payslips and send the legal notice demanding restoration of full wages.
I resigned and served my full notice period but my employer is not releasing my full and final settlement
Full and final settlement must be paid within a reasonable time (typically 30–45 days) after you complete the notice period. Withholding it amounts to wage theft. Send the legal notice specifying all dues: pending salary, leave encashment, gratuity (if applicable), and PF. If the employer withholds your relieving letter along with FnF, the notice should demand both.
My employer is 'informally' cutting my salary by not paying overtime I am legally owed
The Factories Act, 1948 and other sector-specific laws mandate overtime pay at double the rate for hours worked beyond the statutory limit (typically 9 hours a day / 48 hours a week). If your employer is requiring you to work overtime without payment, this is an illegal deduction from your wages. Document your working hours and send the legal notice claiming the outstanding overtime.
I am a contractual or gig worker — does the Payment of Wages Act protect me?
It depends on how your work relationship is structured. Many courts have found that gig workers and contractual employees with employer control over their work qualify as 'employees' under labour law, regardless of the 'contractor' label. If your employer controls your working hours, tools, and tasks, you likely have wage protections. A lawyer can assess your specific arrangement and advise whether to proceed under labour law or as a contractual dispute.
Everything you need to know before taking action.
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