Labour Court Compliant - Are IT companies bound by the shops and establishment act?

One of our ex-employees has filed a case in the Haryana labour court for non-payment of F&F and salary.

I have a few queries to deal with this case:

1. Are IT companies bound by the Shops and Establishment Act?
2. In case the company is STPI, do they have any privileges?
3. Do cases like these protect the employer when the maximum wages of an employee are more than Rs. 36,000?

Dear Nexgendude,

The replies to your queries are as below:

1. Is IT companies bound by the shops and establishment act

Reply: Yes, there is no exemption. A company either has to register under the Factory Act or S and E Act. There is no exemption.

2. Incase the company is STPI, do they have any privileges

Reply: STPI deals with the export of the software products (digital goods). It acts as a bridge between the software company and the government. However, compliance with the labor laws has to be done. STPI has nothing to do with the labor laws.

3. Does cases like these protect the employer when the maximum wages of the employee are more than Rs. 36,000

Reply: Irrespective of the salary drawn, under the provisions of the S and E Act of your state as well as the Payment of Wages Act, the wages have to be paid to each employee by the stipulated date. There is no ground for seeking exemption of any kind.

Final Comments: Though you have raised the queries, you have not mentioned why things came to such a pass where a former employee had to approach the court to get his/her legitimate dues. Did the employee abandon his/her employment and now has filed a suit?

If the employee had committed any misconduct, then your company should have ordered a domestic inquiry to establish the blameworthiness and awarded a suitable punishment. However, all this should have been completed before his exit.

Nevertheless, withholding the salary is illegal. His case has sent a very wrong signal to the other employees. It will create an atmosphere of distrust in the company. When I quit the company, will I get my legitimate dues that the company will owe me? This question will always lurk in the minds of the current employees.

While employees may pretend that they trust the company's top-level officials, their trust could be superficial. Please be aware that open hostility is better than false trust!

Thanks,

Dinesh Divekar

Dear Nexgendude,

From your profile, you are representing Employee Relations, HR (Ops), Talent Management, Training & Development, and Business Development. Mr. Dinesh Divekar has already provided you with an answer to your query. I am just reminding you of your profile and would like to ask how you plan to attract what is expected from you.

I would like to add that it is the court that will decide whether the complainant is a workman under the ID Act or not. The court will not base its decision on salary or your industry. Salary and your industry are not the criteria.

You need to have a good adviser but also have empathy.

Hi,

What exactly are you expecting from the government agencies as an employer? Even if you do not know the legal implications, one has to follow the principles of natural justice in dealing with HR-related issues first. One cannot escape and seek legal remedy by not following the rules. Hope the issue is as straightforward as you had mentioned. Our learned colleague has already explained in detail why you cannot take the shield even if you are an employer. In fact, the burden is much more on the employer to show why it was not resolved across the table.

Paying a good salary does not exempt you in any way from abruptly cutting off the flow of salary just like that without any strong reasons.

Regards