Hello Friends,

Background:
Company A pays the salaries on the last day of every month. Employee X has certain monthly payments to be made like Home Loan EMI, Utility Bills (like electricity, phone, society charges), Credit Card Bills. Company has had an excelent track record in terms of disbursing salaries on time every month.

In a particular month, due to some reason, the salaries could not be paid on the last day of the month. An emailer was sent to all employees informing them about the delay and the revised payment date, which is the 5th of next month.

Emploee X approaches the ER Dept, highly dissatisfied with the emailer, with a grievance that any delay in payment of his monthly bills results in late charges and penalties. He wants the company to bear these charges. When he is informed that it is not possible, he threatens to sue the company legally and go to the press and create bad name for the company.

Questions:
Is a company legally bound to pay salaries on a particular date of the month?
If yes, what law / act covers this ?
What are the legal consequences of delay in salary disbursement ?
What should be the ideal course of action by HR personnel in such case ?

Any inputs on this question would be really appreciated.

Dear Srini,

In this Case company have to give notice of chage before 21 days to employees related to change date.

As per Payment of wages Act company can pay up to 7 of next month(up to 1000 employee) and 10th of next month(more than 1000) employees.

THis act aplicable in all companies.

Regards,

Faruk Shaikh

Salary disbursement is governed by the Payment of Wages Act. For an establishment employing upto 1000 persons wages must be disbursed before 7th of the subsequent month and for more than 1000 before 10th of subsequent month.

Relax, since you have paid by 5th, however yours is more of an HR issue and not a legal one since your company has a history of disbursing salary on last day of a given month.