Query About Pending Payment To Absconding Employees As Per Wages Act?

Good evening to all Cite HR members,

My question is, in our organization, some of our contract/permanent workers have left the organization without any communication. Consequently, we have not paid wages to them as per our internal policy.

In this case, my question is whether it is legal or not. How many years can we retain their wages as per the Payment of Wages Act? Under which section/rule does this fall?

I kindly request you to clarify this matter for me.

With Regards,
Naga

Any amount due to be paid to the contractor or employees may be deposited into the account of the Maharashtra Labour Welfare Fund. The Fund shall provide a receipt. When an employee returns to collect the payment, the receipt may be handed over to him or her for collection from the organization. The employer has fulfilled his legal obligation under the Bombay Labour Welfare Fund Act of 1953.

AB

Dear NM Rao,

You have mixed up two different issues.

One: permanent employees leaving without communication. This must be treated separately.

Two: Contract Employees leaving without intimation is not your concern; it is the headache of the contractor. You only need to communicate to the contractor about the absence and make him reimburse with new manpower. Otherwise, you can deduct the differential amount from the contractor's bill (this must be as per the contract agreement).

With regard to the permanent employees, it is your obligation to carry forward this amount for 3 years or until it is claimed, whichever is earlier. Generally, management will issue a show-cause notice to the employees leaving without intimation. Subsequently, management will issue an absconding notice and thereafter a deemed termination letter. All such correspondence must be secured in the office premises under the proper control of HR.

Regards,
JSR

Payment of Wages Act and the state Labour Welfare Acts, taken together, require you to maintain a register of unpaid wages. After a period of 3 years, all unpaid wages are to be deposited with the Labour Welfare Fund. The provisions and procedures vary from state to state, so you need to check the relevant rules.

When computing unpaid wages, you can deduct any amount that the employee owes to you, including notice pay. In general, notice pay will be more than the unpaid wages. Therefore, unpaid wages would be nil or negative. You need to keep records of this working for a period of 3 years as per the Payment of Wages Act. However, considering the Companies Act and income tax requirements, it is advisable to maintain the records for 8 years.