Employer Not Paying Salary in India: Code on Wages, Section 17 Deadline, Section 45 Claim, Compensation & Recovery 2026

Updated: 21 August 2026

When an employer delays or withholds salary, one of the first problems employees face is outdated internet guidance. Many older articles still proceed on the Payment of Wages Act, 1936 and its historical wage ceilings. That is no longer the correct starting point for a current claim.

The Code on Wages, 2019 came substantially into force on 21 November 2025. For present wage-payment disputes, the Code on Wages is therefore the principal central statutory framework, subject to the identity of the appropriate Government, applicable State rules and any other law giving the employee a more specific payment deadline.

This guide explains when salary becomes due, what counts as “wages”, who is covered, how a Section 45 claim works, the three-year limitation period, compensation up to ten times the claim, recovery proceedings, appeals, deductions, resignation and full-and-final settlement, and the distinction between statutory wage claims and purely contractual remuneration disputes.

Unpaid salary law at a glance

Issue	Current position
Monthly wage payment	Before expiry of the 7th day of the succeeding month under Section 17(1)(iv)
Daily employee	At the end of the shift
Weekly employee	Last working day of the week, before the weekly holiday
Fortnightly employee	Before the end of the second day after the fortnight
Removal/dismissal/retrenchment/resignation	Wages payable within two working days under Section 17(2)
Claims authority	Authority appointed under Section 45 by the appropriate Government
Limitation	3 years from accrual of the claim; delay may be condoned for sufficient cause
Additional compensation	Authority may award compensation up to 10 times the determined claim
Recovery	Collector/DM may recover unpaid ordered amount as arrears of land revenue
Appeal	90 days under Section 49; delay may be condoned for sufficient cause
Burden of proving payment	Employer bears burden in a non-payment/less-payment/unauthorised-deduction claim under Section 59

The law changed on 21 November 2025

The Central Government notified most provisions of the Code on Wages, 2019 into force with effect from 21 November 2025. Section 69 repeals the principal legacy wage statutes covered by the Code, subject to its savings provisions.

Consequently, a current employee should not assume that an old article describing the Payment of Wages Act, 1936, an old salary ceiling, or pre-Code filing procedure remains the present remedy. Legacy disputes may still raise savings and transitional questions, but current wage-payment defaults should first be tested against the Code on Wages and the rules/notifications now in force.

Who is an “employee” under the Code on Wages?

The Code uses a deliberately broad definition of employee. It covers persons employed on wages to do skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work for hire or reward, subject to the statutory exclusions.

This matters because a common misconception is that only a traditional industrial “workman” can invoke wage-payment protection. The Code distinguishes “employee” from the narrower concept of “worker”. For the payment-of-wages framework, managerial and administrative employees are not automatically outside the definition merely because of designation.

However, jurisdiction still has to be checked carefully. Chapter III does not apply to Government establishments unless the appropriate Government applies it by notification under Section 25. Certain statutory exclusions, including members of the Armed Forces, also operate through the definitions.

What does “wages” mean? Salary and CTC are not identical

Section 2(y) defines “wages” as remuneration payable in respect of employment and expressly includes basic pay, dearness allowance and retaining allowance, while identifying a number of exclusions such as employer pension/PF contributions, certain bonus, special-expense payments, gratuity and termination benefits.

The definition has an important 50% rule. Broadly, where specified excluded payments cross one-half of total remuneration, the excess over that threshold is deemed remuneration and added back into wages. The Labour Ministry has confirmed that the revised wage definition has applied from 21 November 2025.

There is also a special proviso for payment-of-wages purposes. Accordingly, an unpaid salary dispute should not be decided merely from the employee’s CTC figure. The appointment letter, salary structure and the statutory wage definition should be mapped component by component.

Section 16: an employer cannot create an indefinite wage period

Under Section 16, the employer must fix a wage period as daily, weekly, fortnightly or monthly. No wage period can exceed one month. A company therefore cannot defend a recurring salary delay by informally treating two or three months as one wage cycle.

Section 17: when must salary be paid?

Section 17 lays down clear statutory timelines.

Wage period	Deadline
Daily	End of the shift
Weekly	Last working day of that week, before weekly holiday
Fortnightly	Before end of the second day after the fortnight
Monthly	Before expiry of the 7th day of the succeeding month

Thus, where an employee is on a monthly wage period, salary for a completed month should ordinarily be paid before expiry of the seventh day of the following month, subject to any other legally applicable deadline preserved by Section 17(4).

Salary after resignation, termination or retrenchment

Section 17(2) provides a much shorter timeline where employment ends. Where an employee is removed or dismissed, retrenched, resigns, or becomes unemployed due to closure, the statutory provision requires prompt payment and specifically provides the two-working-day rule for the listed separation situations.

This does not necessarily mean that every component of a commercial “full and final settlement” becomes statutorily payable within two working days. Earned wages must be distinguished from gratuity, retrenchment compensation, variable incentive, leave encashment, reimbursements, bonus and other sums that may have their own statutory or contractual basis and payment timeline.

The practical exercise is therefore to split the F&F statement into components instead of treating the entire figure as one undifferentiated “salary”.

Can an employer withhold salary because the employee did not serve notice?

An employer cannot make arbitrary deductions from wages. Section 18 states that deductions may be made only as authorised by the Code. Whether notice pay can lawfully be adjusted depends on the employment contract, statutory deduction framework, the nature of the sum being adjusted and the facts of separation.

A disputed contractual claim is not the same thing as an unlimited right to retain earned wages. Employers should separately compute:

earned wages;
lawfully authorised deductions;
notice-pay liability, if any;
employment-bond claim, if any;
loans/advances lawfully recoverable;
statutory terminal benefits; and
other disputed contractual sums.

For the separate law governing minimum-service covenants, see Employment Bonds Legal in India? Supreme Court Ruling, Section 27.

What should an employee do when salary is not paid?

A practical escalation should usually begin with creating a reliable documentary record. A legal notice is not stated in Section 45 as a mandatory pre-condition to filing a wage claim, but a written demand can materially assist in proving the amount, due date and employer response.

Check the salary structure: identify what part of the claimed amount constitutes statutory wages and what part is a separate contractual or statutory benefit.
Confirm the due date: use Section 17 and any applicable State or sector-specific rule.
Preserve evidence: appointment letter, salary revisions, payslips, attendance, bank statements, HR emails, resignation/termination letter and F&F computation.
Send a written demand: state the wage month, gross/net computation, deductions, statutory due date and unpaid amount.
Identify the appropriate Government: Central Government jurisdiction applies only to establishments allocated to the Central sphere under the Code; other establishments fall within the appropriate State framework.
File the statutory claim: where maintainable, invoke Section 45 before the notified claims authority.
Seek recovery: if an order is passed and remains unpaid, Section 45 provides the recovery-certificate mechanism.

Section 45 Code on Wages: the principal statutory claim

Section 45 authorises the appropriate Government to appoint one or more Gazetted Officers as claims authorities. The authority hears and determines claims arising under the Code.

The provision is materially stronger than a simple demand mechanism because the authority may:

determine the amount due;
award additional compensation having regard to the circumstances;
award compensation that may extend to ten times the determined claim;
exercise civil-court powers for evidence, attendance and document production; and
trigger statutory recovery if the employer does not pay the ordered amount.

The ten-times figure is a maximum discretionary power, not an automatic multiplier. The employee should not plead that every delayed salary claim necessarily results in 10× compensation.

Who can file a Section 45 claim?

The application may be filed by:

the concerned employee;
a registered trade union of which the employee is a member; or
the Inspector-cum-Facilitator.

A single application may also be filed for multiple employees, subject to the applicable rules. This can be significant in cases of establishment-wide salary default.

What is the limitation period?

Section 45(6) provides a three-year limitation period from the date the claim arises. The authority may entertain an application after three years if sufficient cause for delay is shown.

Employees should nevertheless avoid waiting. Repeated monthly defaults may produce different accrual dates, and documentary evidence becomes harder to preserve over time.

Can compensation be more than the unpaid salary?

Yes. Section 45(2) permits compensation in addition to the amount determined, extending up to ten times the claim depending on the circumstances. Relevant circumstances can include the duration and nature of default, conduct of the employer, whether records were manipulated or withheld, and other facts proved before the authority.

The authority is expected to endeavour to decide the claim within three months.

How is an unpaid Section 45 order recovered?

If the employer fails to pay the determined claim and compensation, Section 45(3) requires the authority to issue a recovery certificate to the Collector or District Magistrate of the district where the establishment is situated. The amount is then recoverable as arrears of land revenue and remitted for payment to the employee.

This statutory recovery mechanism is one of the most important practical differences between a mere HR demand and an adjudicated wage claim.

Central-sphere employees: who is the authority in 2026?

For establishments for which the Central Government is the appropriate Government, the Ministry of Labour and Employment issued S.O. 2452(E) in May 2026 appointing Regional Labour Commissioners (Central) as Section 45 claims authorities within their respective territorial jurisdictions.

A companion notification, S.O. 2453(E), appoints Deputy Chief Labour Commissioners (Central) as appellate authorities under Section 49 for the specified areas.

This does not mean every private employee in India should file before the Central Labour Commissioner machinery. The first jurisdictional question is always whether the Central or State Government is the “appropriate Government” for the establishment concerned.

Appeal under Section 49

A person aggrieved by an order under Section 45(2) may appeal to the notified appellate authority within 90 days. The appellate authority can entertain a delayed appeal where sufficient cause is shown and should endeavour to dispose of it within three months.

Outstanding dues under the appellate order are also recoverable through the Section 45 recovery mechanism.

Section 59: employer bears the burden of proving payment

Section 59 is particularly useful in litigation. In a claim alleging non-payment of remuneration or bonus, less payment, or an unauthorised deduction, the burden to prove that the dues were paid is placed on the employer.

This does not eliminate the employee’s obligation to state and substantiate the claim. But once the dispute concerns whether the employer actually paid the dues, payroll records, bank transfer proof, wage registers and related material become central employer-side evidence.

What documents should an employee preserve?

appointment letter and employment agreement;
salary revision letters;
monthly payslips;
bank statements showing prior salary credits and missing payment;
attendance or login records;
timesheets where relevant;
email/WhatsApp/HR portal communications about delayed salary;
resignation, termination or retrenchment letter;
relieving letter;
full-and-final settlement statement;
proof of authorised deductions or advances;
Form 16/TDS records where relevant;
incentive or commission policy where such amounts are claimed; and
any written admission by the employer that salary remains outstanding.

What should an employer preserve to defend a false or inflated claim?

bank transfer/payment proof;
wage and payroll registers;
signed or electronically issued wage slips;
attendance records;
deduction authorisations and statutory basis;
loan/advance records;
leave-without-pay calculations;
notice-period clause and separation records;
F&F computation sheet;
proof of reimbursements and non-wage components;
salary restructuring documentation; and
communications explaining any bona fide computation dispute.

Because Section 59 shifts the burden of proving payment to the employer in specified claims, weak payroll documentation can convert an otherwise defensible case into a substantial litigation risk.

Can salary be deducted for damage, absence, loans or advances?

The Code permits specified deductions, but does not create a general power to deduct any amount the employer chooses. Sections 18 to 24 regulate categories such as absence from duty, fines, damage/loss, services, advances and loans.

Every proposed deduction should therefore be checked for:

statutory authorisation;
procedural compliance;
quantum;
supporting documents;
opportunity requirements where applicable; and
the overall cap on deductions prescribed by the Code.

Can an employee file a civil suit for unpaid salary?

The answer depends on the precise character of the claim. Section 57 of the Code bars civil suits in specified matters that are recoverable through the Code’s claim machinery. At the same time, not every component appearing in an employment package is necessarily “wages” or a Code claim.

For senior employees in particular, disputes may involve pure contractual sums such as particular incentive arrangements, equity-linked compensation or other benefits requiring separate contractual analysis. A claimant should therefore avoid filing parallel proceedings without first identifying:

which amounts fall within the statutory wage definition;
which relief is available under Section 45;
whether another labour statute or State enactment applies;
whether an arbitration clause governs the contractual component; and
whether civil jurisdiction is barred for the particular relief sought.

What if the employee is a “worker” and there is also an industrial dispute?

Non-payment of wages may sometimes accompany termination, retrenchment, lay-off, closure, settlement or award disputes under the Industrial Relations Code, 2020. Those remedies should not be mechanically substituted for Section 45.

For example, the Industrial Relations Code’s recovery provisions concern money due to a worker under specified statutory sources such as a settlement, award or relevant chapters of that Code. A generic unpaid monthly salary claim should first be classified under the correct statutory route rather than forcing every case into industrial-dispute recovery proceedings.

Is a legal notice compulsory before filing?

Section 45 does not state that an advocate’s legal notice is a mandatory condition precedent to filing a claim. A written demand is nevertheless often useful because it:

crystallises the amount claimed;
identifies the due month and statutory deadline;
asks the employer to disclose its deduction/set-off calculation;
creates evidence of admission or denial;
may resolve a genuine payroll error without litigation; and
helps distinguish an undisputed wage default from a broader contractual dispute.

Can an employee lodge an FIR simply because salary is unpaid?

Ordinary non-payment of salary is primarily a wage, labour or contractual default. A criminal case should not be invoked merely to convert a civil or statutory payment dispute into a criminal proceeding.

Criminal liability may arise only where the facts independently disclose the ingredients of a criminal offence—for example, legally sufficient material establishing deception or dishonest intention from the relevant inception point. The mere fact that money is due does not automatically establish cheating or criminal breach of trust.

What if the company says it has no money?

Financial difficulty does not by itself erase accrued wage liability. Where an establishment is under severe financial stress, however, recovery strategy may also need to consider insolvency, liquidation, asset attachment, secured creditor claims and the employer’s legal status.

An employee should identify whether the company is merely delaying payroll, has ceased operations, has been struck off, is under CIRP, or is in liquidation because different recovery mechanisms and moratorium issues can arise.

Can salary be withheld because company property has not been returned?

An employer may have a separate claim relating to laptop, access card, documents, confidential material or other property. That does not automatically authorise indefinite withholding of all wages.

The correct approach is to identify whether any deduction is authorised by the Code and whether the employer can independently recover property or proven loss through the lawful contractual/statutory route.

Employer compliance checklist for salary payment

Fix a lawful daily/weekly/fortnightly/monthly wage period.
For monthly wages, build payroll so funds are paid by the Section 17 deadline.
Do not treat cash-flow shortages as an informal extension of the statutory due date.
Map every CTC component against Section 2(y).
Apply the 50% wage-definition rule correctly.
Maintain wage slips, payroll and bank-transfer evidence.
Document every deduction and its statutory basis.
Separate notice pay, bond claims and asset-recovery disputes from earned wage computation.
On separation, immediately identify what qualifies as wages under Section 17(2).
Maintain records capable of satisfying the Section 59 burden of proof.

For a broader compliance framework, see Employment Law Compliance in India.

Frequently asked questions

My salary is paid monthly. By what date must it be paid?

Section 17 ordinarily requires monthly wages to be paid before expiry of the seventh day of the succeeding month, subject to any other applicable statutory deadline.

I resigned. Can my employer wait 30 or 45 days to pay earned wages?

Section 17(2) contains a two-working-day rule for wages payable on the listed separation events, including resignation. Other F&F components may have separate rules, so the settlement should be broken down component-wise.

Can a manager file a wage claim?

The Code’s definition of “employee” expressly includes managerial and administrative work, so designation alone does not automatically exclude a manager. Jurisdiction, the nature of the establishment, Chapter III applicability and the particular amount claimed must still be examined.

How long do I have to file a Section 45 claim?

Three years from the date the claim arises, with power to entertain a delayed claim on sufficient cause.

Will I automatically get 10 times my unpaid salary?

No. Ten times is the maximum compensation the authority may award in addition to the determined claim. The amount is discretionary and depends on circumstances.

What happens if the employer ignores the order?

The Section 45 authority can issue a recovery certificate to the Collector or District Magistrate, who recovers the amount as arrears of land revenue.

Who must prove that salary was paid?

In the categories identified by Section 59—including non-payment and less-payment—the burden of proving that dues were paid lies on the employer.

Can the employer deduct an employment bond from salary?

A disputed employment-bond demand is not automatically an unrestricted right to deduct earned wages. The statutory deduction rules, employment contract and enforceability of the bond must all be considered separately.

Primary legal sources

Conclusion

The current unpaid-salary framework is considerably clearer than much of the legacy guidance still circulating online. For a monthly employee, the statutory starting point is Section 17’s payment deadline. If wages remain unpaid, Section 45 provides a claim mechanism with a three-year limitation period, discretionary compensation up to ten times the determined claim and a coercive recovery process through the Collector or District Magistrate.

The strongest case—whether for employee or employer—is built by accurately distinguishing statutory wages from other CTC components, applying lawful deduction rules, identifying the correct appropriate Government and preserving payroll evidence.

This article is published for general legal information and public legal awareness. It does not constitute solicitation, advertisement or case-specific legal advice. Employment and wage disputes can depend on State rules, the appropriate Government, salary structure, contractual terms and the facts of separation.

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