Payment of salary
Sanjeev Hota
(Querist) 13 May 2014
This query is : Resolved
My friend's business hasn't been operating since last one year as he has some legal issues to be sorted out so the office closed.He hasn't been able to pay 3 months salary to the employees as his bank accounts have been frozen. How dose he communicate to the employees his clear intent to pay when the bank accounts have been unfrozen and does he have to inform any regulatory authority about the same?
Sankaranarayanan
(Expert) 14 May 2014
Where the legal issue arose in your query. Your duty to pay the airier salary at any cost. Why the bank account freeze. How many staffs working.
Rajendra K Goyal
(Expert) 14 May 2014
Better ask your friend to arrange and pay to staff before further complicate situation arise.
Guest
(Expert) 14 May 2014
Can you provide more information on the following points:
(1) The number of employees affected by non-payment of salaries?
(2) What is the reaction of employees so far? and
(3) What efforts your friend has made so far to convince the employees about the problem?
Sanjeev Hota
(Querist) 14 May 2014
Thank you sir
1) The number of employees are around 20
2) They have been requesting time and again
3) A clear intention to pay has been communicated to them after the issue has been resolved and bank account unfrozen
Guest
(Expert) 14 May 2014
In addition to his earlier written commitment, a personal meeting with the staff is necessary to pose trust of staff on your friend. If some members have any doubt in payment at some later date, they may be allowed to leave the company and your friend should try to get some loan from friends & relatives, if not possible from any financial institution/banks, to ensure clearance of their full & final, so that the other staff members may get convinced about the intentions of your friends.
Loyalty and trustworthy association of staff members is quite necessary in a bad patch of time in a business.
Sankaranarayanan
(Expert) 14 May 2014
yes i do agree with Dhingra ji , Are you plan to winding up the business or you plan to continue the same once come out from the clutch
Sanjeev Hota
(Querist) 14 May 2014
Great suggestion Dhingra sir
Mr Shankar yes he has plans to continue after he comes out of the clutch
Sankaranarayanan
(Expert) 14 May 2014
Hope your company resisted under ESI and EPF too, then you have to remit the arrears with interest to the statuary
Guest
(Expert) 14 May 2014
Dear Sanjeev,
Thanks for your appreciation.
Sanjeev Hota
(Querist) 14 May 2014
@Mr Shankar no not registered under ESI or PF
@ Mr Dhingra thanks again and most welcome
T. Kalaiselvan, Advocate
(Expert) 14 May 2014
I too endorse expert Mr. Dhingra's views on the subject issue. It is better to act wisely now itself before the things are going beyond control or out of the hand.
Sanjeev Hota
(Querist) 14 May 2014
Thank you Mr Kalaiselvan. The problem is that the organisation is in a financial mess due to the legal tangle and freezing of accounts has prohibited payment of 2-3 months salary.The market reputation at this juncture may prevent loan form any institution. But there is a clear intent to pay when things become normal.
Kumar Doab
(Expert) 14 May 2014
As suggested by Mr. Goyal, arrange funds and disburse the payment of wages AS AP.
Register for PF, ESIC the fee might be as low as Rs7/month.............
If the authorities raid and penalize the reputation shall further deteriorate.
Beyond a limit employees may not co operate.
The penalty of non payment of wages on pay day may be Rs7500/instance.
Labor authorities are expected to take suo motu notice of such matters.
T. Kalaiselvan, Advocate
(Expert) 14 May 2014
The intention may be to pay the backlog or arrears promptly as and when the things will become alright, but on what basis are you so much confident about the settlement within two months time, better make ground work for the same to face any event accordingly while sincerely trying to augment the funds for the intended settlement. As rightly observed by expert Mr. Kumar Doab, the Labor authorities may take suo motu notice of the issue by making the same more complicated.
