Bombay HC: Financial crisis no excuse for not paying salary

Financial crisis cannot be an excuse for non-payment of salaries to employees, a city labour court observed and ordered a computer services company in South Mumbai to pay salary for six months that was due to an employee, along with retrenchment compensation and interest.

Satej Malaw, a Navi Mumbai resident, had joined the organisation in mid-2017 as a manager. In April 2019, the 36-year-old received an email informing that he was terminated with immediate effect because of the company’s inability to pay salaries for several months. Mr Malaw had not received his salary since October of 2018. Besides, according to his contract, he was supposed to get a two-month notice before termination.

Mr Malaw approached the labour court in 2019 for redressal as the company did not appear before the government’s labour officer. However, the company and its managing director, whom the aggrieved employee had made a party in his complaint, did not appear before the labour court either. The court thus passed the order ex-parte.

The court said Mr Malaw was not terminated because of any fault of his, but because of the company’s financial difficulties. It also pointed out that it was the company’s responsibility to give two-months notice or salary in lieu of notice at the time of termination.

The company is well aware of its liability to pay the applicant. Being an employer, it is the responsibility of the company to make provision for payment of salaries to employees. “So-called financial crisis cannot be an excuse for non-payment of salary to employees,” said the presiding officer of the labour court, SM Aundhkar. The non-payment of salary to employees shows financial mismanagement on the part of the company, the court said.

The labour court noted that the company was responsible for the hardship faced by the employee for no fault of his when he had to work for six months without salary. It also pointed out that the employee faced hardship as he was unemployed from April 2019.

Read Also

Google HR loses job while interviewing candidate for a job role, claims call was abruptly...