Employment & Service

Received Legal Notice By Ex Employee For Settlement of Payment

Sir I have a small consulting firm. One of my employee quit last month. We have paid all his outstanding salary in full. But part of the salary was paid in cash and part by bank transfer. Now he has sent a legal notice for payment due and is claiming that his full salary is still outstanding. How can we protect my firm? What ground should we take in reply to legal notice for payment claimed to be due?

Expert Advice


Dear Sir/ Ma’am, there are various genuine cases of non-payment of salaries by employers. And it is obligatory to pay salary to your employees under the Payment of Wages Act, 1936. Also, if you fail to take any action against this notice, your employee can file a suit under Section 33(c) of the Industrial Disputes Act, 1947 for recovery of money due from employer. Alternatively he/she may also sue your for non-payment of dues with fraudulent intent under Section 447 of Companies Act, 2013 which would call for a minimum imprisonment of 6 months upto 10 years.

But since you claim to have paid the salary amount, you must reply to the legal notice for non-payment of dues by your ex-employee. In your notice, you can state the facts and evidences that you have regarding the bank statement for part-payment and the acknowledgement from the employee of having received the remaining amount in cash. If not that, then some proof from your account records stating that the payment was done to this particular employee. Having such a strong and clear evidence will help defend your company in case your matter goes for litigation.

It would be helpful if you seek professional legal advice in drafting a reply for salary due who would draft a point-by-point reply mentioning the details and evidences to the claims made by your ex-employee and send it on your behalf.

However, as a company, you must have appropriate policies for employee salary payments, acknowledgements and written communication in order to avoid any such occurrences.

You can read more in our blog about sending and responding to a legal notice.

If you need any assistance in drafting this legal notice or any other legal matter, request call back from our legal expert or you can check our other services.

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First, let us understand your legal position. If you have paid half the salary by bank transfer, the bank records can to show that such amount was paid. The ex-employee's claim, to that extent, fails. As regards the rest which was paid in cash, it may be difficult to prove that the payment was actually made. However, the facts and circumstances of payment may support your position. Further information is required before a conclusion can be drawn.


Next: your response to the legal notice. You may state down the facts clearly in your response, with the dates, amounts, circumstances and details of the people involved in payment of the salary clearly stated. Having facts on record may help you at subsequent litigation, if any. While not strictly necessary, it is advisable to take professional legal help to draft a complete and coherent response to the notice.


Do remember: as a practice, you must ask for receipts for all payments made in cash. Also, your retirement and termination policy should require an employee sign-off against payment of full & final dues, so as to avoid such an occurrence in the future.

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Adv. Manish Acharya

Partner
LawLeo.com
Andheri , Mumbai


Dear sir, since you have firm even for cash salary we take receipt for payments done. You must have acknowledgement from him having received half salary in cash. In case no receipt, your accountant should say that it is paid. In case of no proof you have to pay remaining salary. You reply legal notice through some Advocate in order to avoid future legal action. Subject to quantum of amount, you should not take it lightly.

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DISCLAIMER: The guidance provided above by the lawyers is based solely on the limited information made available to them by the respective querist. These answers are general guidelines and not specific legal advice or legal opinion. All answers are made in individual capacity and do not reflect the opinions of any employer or organisation. Kindly refer to MyLegalWork's Terms & Conditions of use.

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