Last Updated on June 15, 2024 by Satish Mishra
Do you know being an employee, you are one of the operational creditors who can recover dues through National Company Law Tribubal (NCLT) established at Chandigarh.
The newly made Insolvency Banking Code (IBC), 2016 allows creditor to start insolvency proceeding against a corporate debtor for dues as low as Rs 1 lakh.
Once the application is filed, the company/corporate has to admit the claim or reject it. Employee can also claim interest for the delayed time.Insolvency law, India allows employees collectively also to recover if dues from employer if they are unable to pay.
Also Read- Bankruptcy Law in India Decoded
Both financial corporate debtors and operational creditors are allowed to initiate the resolution process under IBC, 2016. The claim is initiated before adjudicating authority u/s 5(1) of NCLT constituted under section 408 of Companies Act, 2013.
Financial Creditors is the one who provides funds/credits to the company.
Operation Creditor is one to whom any amount or due is owed.
Financial Debt is defined u/s 5(8) of IBC defines Debt.
Operational Debt – 5(21) if IBC , 2016 owing out from repayment in lieu of services or government compliances.
Also Read- A MUST KNOW ABOUT INSOLVENCY AND BANKRUPTCY CODE, 2016
But only an Employee can take this benefit. Thus, there should clearly be a relation of Employee-Employer.
A. Gets wages or salary
B. Employer control
C. Contract to that effect
How to file :
1 Creditor u/s 5(20) of IBC (Operational Creditor)
2 Min. Salary one lakh rupees to one crore.
3 Operational Debt owed by the company.
Recover of Salary through NCLT follows this process:
1 Send demand notice – Amount from Debtor.
2 Within 10 days reply by corporate debtor to present status of your dispute.
3 After expiry of 10 days, file corporate insolvency resolution process
A. Copy of Demand Notice – Receipts.
B. Affidavit to say whether notice was served or not to debtors .
C. Within 14 days of receipt of Application by Operational Creditor, NCLT either has to admit or reject the application along with reasons. If accepted (Corporate Resolution Process) CRP starts. CRP has to complete the process within 180 days, extendable to 270 only. Interim Insolvency Professional (IRP) is also appointed meanwhile and during the moratorium period company is prevented from any further legal action under Sec 178 of IBC.
Also Read- HOMBUYERS AND INSOLVENCY
Moratorium is the period where management is temporarily suspended.
Benefits of IBC for Employees:
1 A powerful tool in the hands of employee to recover what is rightfully due.
2 Debt recovery is fastest through NCLT but remember the debtor can be company only.
3 Financial Creditor to whom financial debt is owed. Operational Creditor to whom Operational debt is owed. It covers goods, services, employment , debt towards government dues
4 Fastest way to recover money within 270 days .
5 Min amount should be Rs one lakh or above .
6 IBC is a far reaching reform with a thrust on Creditor driven insolvency resolution. Improvement in Debt Recovery rates .
7 Limitation Act doesn’t apply to NCLT.
The recent example is of employees of Zeal Global Projects Applied Electromagnetics Pvt Ltd & Phadnes Properties were initiated under Recovery Proceedings including Aruna hotels Chennai.
8 Company those who have failed to provide pay, salary , gratuity , leaves encashment of those employees.
9 Employee can claim contractual bonus under section 53 of the code as well. Dues of contractual as well as statutory nature are also covered under it. Sec 53(1) talks of workmen and employers (wages and unpaid dues) . Bonus under the Act is unpaid dues. EPF , Misc Provisions Act 1952 , Industrial Tribunal along the unpaid debt.
10 Sec 178 talks about payment of debts and priority .
11 No bar to employee to go to labour court. He can directly approach the NCLT.
Also Read- DEBT RECOVERY UNDER IBC: A SPEEDY REMEDY FOR CREDITORS
Hope this post helps in making a call regarding your pending salary and dues towards the employer. For specific legal advice/assistance or more info please call 99888-17966 or write to us at [email protected]
