Dear Experts,
Please advise. The labor inspector "Jaipur state-Rajasthan" has imposed a penalty of 45 lakhs on my organization due to late payment of salaries.
We have set up a new plant that has been operational for the past 11 months. As Diwali is approaching and government officials start seeking their share, one of the labor inspectors visited our unit. He requested documents, which my HR personnel provided. Upon inspection, it was noted that the last month's salary, and occasionally salaries from a few months back, were paid after the 7th of the month. Despite paying our employees through bank transfers, reflecting in the documents, the inspector included this in his records and issued a notice from the labor department claiming Rs. 45 lakh, ten times the salary amount.
We are unsure about the next steps. The inspector's actions seem to be a result of not receiving a bribe. While the salary payments were delayed, we did not withhold any employee's dues.
Dear Experts, please advise if there is a way to appeal against this penalty or how we should address this issue.
Thank you.
From India, Delhi
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5Please advise. The labor inspector "Jaipur state-Rajasthan" has imposed a penalty of 45 lakhs on my organization due to late payment of salaries.
We have set up a new plant that has been operational for the past 11 months. As Diwali is approaching and government officials start seeking their share, one of the labor inspectors visited our unit. He requested documents, which my HR personnel provided. Upon inspection, it was noted that the last month's salary, and occasionally salaries from a few months back, were paid after the 7th of the month. Despite paying our employees through bank transfers, reflecting in the documents, the inspector included this in his records and issued a notice from the labor department claiming Rs. 45 lakh, ten times the salary amount.
We are unsure about the next steps. The inspector's actions seem to be a result of not receiving a bribe. While the salary payments were delayed, we did not withhold any employee's dues.
Dear Experts, please advise if there is a way to appeal against this penalty or how we should address this issue.
Thank you.
From India, Delhi
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As per the norms of the Factory Act and Labor Act, it's compulsory to pay the salary on the 7th if the number of employees in your organization is below 1000. If it's more than 1000 employees, then it's the 10th of every month. Please check your employee number.
From India, Ahmedabad
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From India, Ahmedabad
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Kindly avoid mentioning "claiming bribe" in an open forum like this. If you restrict your discussion to legal issues, it will be easier to respond.
Late payment of wages does not entail a penalty of Rs 45 lakhs. The amount will only escalate significantly if employees file a claim under the Payment of Wages Act, resulting in an order by the authority and subsequent delays. A few days of delay will not inflate the amount significantly.
Please consult a reputable labor advocate in your area to address this matter. Avoid discussing bribes. If an order has been issued for Rs 45 lakhs, then deal with it through legal means in court.
From India, Chennai
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Late payment of wages does not entail a penalty of Rs 45 lakhs. The amount will only escalate significantly if employees file a claim under the Payment of Wages Act, resulting in an order by the authority and subsequent delays. A few days of delay will not inflate the amount significantly.
Please consult a reputable labor advocate in your area to address this matter. Avoid discussing bribes. If an order has been issued for Rs 45 lakhs, then deal with it through legal means in court.
From India, Chennai
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I agree with Mr. Sivasankaran. It is not good to talk about the practices as it ignites the issue further. I suggest somebody from your HR approach him personally and try to resolve the issue. You can also escalate it to his superiors like ACL, DCL, JCL, etc.
As rightly mentioned, the penalty is not proportionate. If everything goes well with the talks, okay; otherwise, challenge the decision and approach legally.
Regards - Kamesh
From India, Hyderabad
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As rightly mentioned, the penalty is not proportionate. If everything goes well with the talks, okay; otherwise, challenge the decision and approach legally.
Regards - Kamesh
From India, Hyderabad
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Dear Experts,
Thank you for your response. I would like to clarify the actual situation, "In reality, what happened so that you people can advise accordingly."
Dear T.Sivasankarn Sir,
As per your reply, late payment of wages does not contemplate a penalty of Rs 45 lacs. The amount will go very high like this only if there had been a claim by employees under the Payment of Wages Act and an order passed by the authority and there is further delay. A few days of delay will not make the figure high.
There is no complaint from our labor/employees; the labor inspector did it by himself. I spoke to one labor lawyer, and he advised me to settle with the labor inspector, but the labor inspector is not listening to anything. I want to understand the legal options only.
Thank you.
From India, Delhi
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Thank you for your response. I would like to clarify the actual situation, "In reality, what happened so that you people can advise accordingly."
Dear T.Sivasankarn Sir,
As per your reply, late payment of wages does not contemplate a penalty of Rs 45 lacs. The amount will go very high like this only if there had been a claim by employees under the Payment of Wages Act and an order passed by the authority and there is further delay. A few days of delay will not make the figure high.
There is no complaint from our labor/employees; the labor inspector did it by himself. I spoke to one labor lawyer, and he advised me to settle with the labor inspector, but the labor inspector is not listening to anything. I want to understand the legal options only.
Thank you.
From India, Delhi
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Dear Friend,
I've gone through your case and found that though you paid wages, they were late for some days in a few months. So, if there is no application from the labor or any union, then there is not much to worry about as so much fine can't be imposed.
Please refer to the clause pasted below:
Section 15 in The Payment Of Wages Act, 1936
15. Claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims.-
(1) The State Government may, by notification in the Official Gazette, appoint a presiding officer of any Labour Court or Industrial Tribunal, constituted under the Industrial Disputes Act, 1947 (14 of 1947) or under any corresponding law relating to the investigation and settlement of industrial disputes in force in the State, or any Commissioner for Workmen's Compensation or other officer with experience as a Judge of a Civil Court or as a stipendiary Magistrate to be the authority to hear and decide for any specified area all claims arising out of deductions from the wages or delay in payment of the wages of persons employed or paid in that area, including all matters incidental to such claims. Provided that where the State Government considers it necessary to do so, it may appoint more than one authority for any specified area and may, by general or special order, provide for the distribution or allocation of work to be performed by them under this Act.
(2) Where contrary to the provisions of this Act any deduction has been made from the wages of an employed person, or any payment of wages has been delayed, such person himself, or any legal practitioner or any official of a registered trade union authorized in writing to act on his behalf, or any Inspector under this Act, or any other person acting with the permission of the authority appointed under subsection (1), may apply to such authority for a direction under subsection (3):
Subs. by Act 38 of 1982, s. 9 (w. e. f. 15-10-1982). Ins. by Act 53 of 1964, s. 12 (w. e. f. 1-2-1965). Ins. by s. 13, ibid. (w. e. f. 1-2-1965). Subs. by s. 13, ibid., for "of persons employed or paid in that area" (w. e. f. 1-2-1965).
Provided that every such application shall be presented within twelve months from the date on which the deduction from the wages was made or from the date on which the payment of the wages was due to be made, as the case may be. Provided further that any application may be admitted after the said period of twelve months when the applicant satisfies the authority that he had sufficient cause for not making the application within such period.
When any application under subsection (2) is entertained, the authority shall hear the applicant and the employer or other person responsible for the payment of wages under section 3, or give them an opportunity of being heard, and, after such further inquiry (if any) as may be necessary, may, without prejudice to any other penalty to which such employer or other person is liable under this Act, direct the refund to the employed person of the amount deducted, or the payment of the delayed wages, together with the payment of such compensation as the authority may think fit, not exceeding ten times the amount deducted in the former case and not exceeding twenty-five rupees in the latter, and even if the amount deducted or the delayed wages are paid before the disposal of the application, direct the payment of such compensation as the authority may think fit, not exceeding twenty-five rupees. Provided that no direction for the payment of compensation shall be made in the case of delayed wages if the authority is satisfied that the delay was due to:
(a) a bona fide error or bona fide dispute as to the amount payable to the employed person, or
(b) the occurrence of an emergency, or the existence of exceptional circumstances, such that the person responsible for the payment of the wages was unable, though exercising reasonable diligence, to make prompt payment, or
(c) the failure of the employed person to apply for or accept payment.
If the authority hearing an application under this section is satisfied:
(a) that the application was either malicious or vexatious, the authority may direct that a penalty not exceeding fifty rupees be paid to the employer or other person responsible for the payment of wages by the person presenting the application; or
(b) that in any case in which compensation is directed to be paid under subsection (3), the applicant ought not to have been compelled to seek redress under this section, the authority may direct that a penalty not exceeding fifty rupees be paid to the State Government by the employer or other person responsible for the payment of wages.
Where there is any dispute as to the person or persons being the legal representative or representatives of the employer or of the employed person, the decision of the authority on such dispute shall be final.
Any inquiry under this section shall be deemed to be a judicial proceeding within the meaning of sections 193, 219, and 228 of the Indian Penal Code (45 of 1860).
Any amount directed to be paid under this section may be recovered:
(a) if the authority is a Magistrate, by the authority as if it were a fine imposed by him as Magistrate, and
(b) if the authority is not a Magistrate, by any Magistrate to whom the authority makes application in this behalf, as if it were a fine imposed by such Magistrate.
Regards,
Shyamal
From India, Mumbai
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I've gone through your case and found that though you paid wages, they were late for some days in a few months. So, if there is no application from the labor or any union, then there is not much to worry about as so much fine can't be imposed.
Please refer to the clause pasted below:
Section 15 in The Payment Of Wages Act, 1936
15. Claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims.-
(1) The State Government may, by notification in the Official Gazette, appoint a presiding officer of any Labour Court or Industrial Tribunal, constituted under the Industrial Disputes Act, 1947 (14 of 1947) or under any corresponding law relating to the investigation and settlement of industrial disputes in force in the State, or any Commissioner for Workmen's Compensation or other officer with experience as a Judge of a Civil Court or as a stipendiary Magistrate to be the authority to hear and decide for any specified area all claims arising out of deductions from the wages or delay in payment of the wages of persons employed or paid in that area, including all matters incidental to such claims. Provided that where the State Government considers it necessary to do so, it may appoint more than one authority for any specified area and may, by general or special order, provide for the distribution or allocation of work to be performed by them under this Act.
(2) Where contrary to the provisions of this Act any deduction has been made from the wages of an employed person, or any payment of wages has been delayed, such person himself, or any legal practitioner or any official of a registered trade union authorized in writing to act on his behalf, or any Inspector under this Act, or any other person acting with the permission of the authority appointed under subsection (1), may apply to such authority for a direction under subsection (3):
Subs. by Act 38 of 1982, s. 9 (w. e. f. 15-10-1982). Ins. by Act 53 of 1964, s. 12 (w. e. f. 1-2-1965). Ins. by s. 13, ibid. (w. e. f. 1-2-1965). Subs. by s. 13, ibid., for "of persons employed or paid in that area" (w. e. f. 1-2-1965).
Provided that every such application shall be presented within twelve months from the date on which the deduction from the wages was made or from the date on which the payment of the wages was due to be made, as the case may be. Provided further that any application may be admitted after the said period of twelve months when the applicant satisfies the authority that he had sufficient cause for not making the application within such period.
When any application under subsection (2) is entertained, the authority shall hear the applicant and the employer or other person responsible for the payment of wages under section 3, or give them an opportunity of being heard, and, after such further inquiry (if any) as may be necessary, may, without prejudice to any other penalty to which such employer or other person is liable under this Act, direct the refund to the employed person of the amount deducted, or the payment of the delayed wages, together with the payment of such compensation as the authority may think fit, not exceeding ten times the amount deducted in the former case and not exceeding twenty-five rupees in the latter, and even if the amount deducted or the delayed wages are paid before the disposal of the application, direct the payment of such compensation as the authority may think fit, not exceeding twenty-five rupees. Provided that no direction for the payment of compensation shall be made in the case of delayed wages if the authority is satisfied that the delay was due to:
(a) a bona fide error or bona fide dispute as to the amount payable to the employed person, or
(b) the occurrence of an emergency, or the existence of exceptional circumstances, such that the person responsible for the payment of the wages was unable, though exercising reasonable diligence, to make prompt payment, or
(c) the failure of the employed person to apply for or accept payment.
If the authority hearing an application under this section is satisfied:
(a) that the application was either malicious or vexatious, the authority may direct that a penalty not exceeding fifty rupees be paid to the employer or other person responsible for the payment of wages by the person presenting the application; or
(b) that in any case in which compensation is directed to be paid under subsection (3), the applicant ought not to have been compelled to seek redress under this section, the authority may direct that a penalty not exceeding fifty rupees be paid to the State Government by the employer or other person responsible for the payment of wages.
Where there is any dispute as to the person or persons being the legal representative or representatives of the employer or of the employed person, the decision of the authority on such dispute shall be final.
Any inquiry under this section shall be deemed to be a judicial proceeding within the meaning of sections 193, 219, and 228 of the Indian Penal Code (45 of 1860).
Any amount directed to be paid under this section may be recovered:
(a) if the authority is a Magistrate, by the authority as if it were a fine imposed by him as Magistrate, and
(b) if the authority is not a Magistrate, by any Magistrate to whom the authority makes application in this behalf, as if it were a fine imposed by such Magistrate.
Regards,
Shyamal
From India, Mumbai
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The Payment of Wages Act is not applicable to wages exceeding Rs. 18,000/- per month. Hence, if you have made a late payment to employees with wages above Rs. 18,000/-, the inspector cannot take any action. Even in the case of others, only the authority under Section 15 can act after the due process provided by Mr. Shyamlal.
Varghese Mathew
From India, Thiruvananthapuram
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Varghese Mathew
From India, Thiruvananthapuram
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Dear MIL,
I have seen your narration. You have not mentioned under which Act the Labour Inspector has issued you a notice of late payment. It appears that the Minimum Wage Inspector has given you a notice. So, perhaps the Payment of Wages Act may not have anything to do with your case for the simple reason that normally Factory Inspectors have powers under the P W Act. Even so, I have considered the provisions of both these acts.
Section 15 of the P W Act is for illegal deductions or delay in payment. However, if you look at the provisions, the penalty for a delay in payment is only Rs. 25 and not Rs. 45 lakhs as mentioned in the notice.
However, if the matter is under the MW Act, Section 20 of the Act provides for the claims. Here also, the penalty for a delay in payment is Rs. 10 only and not Rs. 45 lakhs as mentioned in the notice.
Since you are making the payment through the bank and due to a delay in clearance, it is possible that there is a delay in crediting wages. This is a minor and unintentional delay for which there was no necessity for the Inspector to go for the notice.
My suggestion is to file a proper reply to the notice along with references to the provisions of the section applicable to your case. Simply mention that there is no such provision to inflict a penalty of 10 times the wages amounting to Rs. 45 lakhs for a minor delay in wages payment. Also, state that for such a minor, technical, unintentional, and genuine reason, such a heavy penalty cannot be imposed.
Please bear in mind that this is a show cause notice only. The Inspector, if not satisfied with your answer, will have to file a case before the authority and shall have to satisfy that the case is of 10 times penalty which I think is absolutely impossible. So there is no reason to worry, and if at all he wants to proceed further, let him do so.
I hope this will help you reduce your anxiety.
Adv. K. H. Kulkarni
From India, Kolhapur
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I have seen your narration. You have not mentioned under which Act the Labour Inspector has issued you a notice of late payment. It appears that the Minimum Wage Inspector has given you a notice. So, perhaps the Payment of Wages Act may not have anything to do with your case for the simple reason that normally Factory Inspectors have powers under the P W Act. Even so, I have considered the provisions of both these acts.
Section 15 of the P W Act is for illegal deductions or delay in payment. However, if you look at the provisions, the penalty for a delay in payment is only Rs. 25 and not Rs. 45 lakhs as mentioned in the notice.
However, if the matter is under the MW Act, Section 20 of the Act provides for the claims. Here also, the penalty for a delay in payment is Rs. 10 only and not Rs. 45 lakhs as mentioned in the notice.
Since you are making the payment through the bank and due to a delay in clearance, it is possible that there is a delay in crediting wages. This is a minor and unintentional delay for which there was no necessity for the Inspector to go for the notice.
My suggestion is to file a proper reply to the notice along with references to the provisions of the section applicable to your case. Simply mention that there is no such provision to inflict a penalty of 10 times the wages amounting to Rs. 45 lakhs for a minor delay in wages payment. Also, state that for such a minor, technical, unintentional, and genuine reason, such a heavy penalty cannot be imposed.
Please bear in mind that this is a show cause notice only. The Inspector, if not satisfied with your answer, will have to file a case before the authority and shall have to satisfy that the case is of 10 times penalty which I think is absolutely impossible. So there is no reason to worry, and if at all he wants to proceed further, let him do so.
I hope this will help you reduce your anxiety.
Adv. K. H. Kulkarni
From India, Kolhapur
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If they have issued a notice, reply legally. Unless I see the notice issued by the Labour Inspector, no advice can be given with confidence. Based on the facts given by you, my recommendation is to file a reply and face it legally.
From India, Chennai
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From India, Chennai
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Dear MIL,
I totally agree with the views and legal aspects brought forward by Adv. Kulkarni. Such notices are often issued for some biases which are expressed in this form when authorities are not taken care of properly. However, I too will suggest that using terms like bribe, illegal gratification, etc., on this public forum is not ethical and will not take you or anybody else anywhere. They will just add to your agony. It is just likely that the authority or the person about whom things are being written is also following this thread.
Rest assured that the penalty imposed will not stand before any Appellate Authority. Just give a suitable, polite reply to the notice giving the provisions of Sec. 15(3), 15(4)(a), (b) of PW Act or go through the relevant provisions of the Act under which the notice has been issued. You and your Company will not be required to pay the penalty of Rs. 45 lakhs.
Best wishes,
AK Jain HR Personnel NCL, CIL
From India, New+Delhi
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I totally agree with the views and legal aspects brought forward by Adv. Kulkarni. Such notices are often issued for some biases which are expressed in this form when authorities are not taken care of properly. However, I too will suggest that using terms like bribe, illegal gratification, etc., on this public forum is not ethical and will not take you or anybody else anywhere. They will just add to your agony. It is just likely that the authority or the person about whom things are being written is also following this thread.
Rest assured that the penalty imposed will not stand before any Appellate Authority. Just give a suitable, polite reply to the notice giving the provisions of Sec. 15(3), 15(4)(a), (b) of PW Act or go through the relevant provisions of the Act under which the notice has been issued. You and your Company will not be required to pay the penalty of Rs. 45 lakhs.
Best wishes,
AK Jain HR Personnel NCL, CIL
From India, New+Delhi
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