Is My Employer Allowed to Do This? 20 Real Scenarios, Answered With the Law

Introduction

Most employees never read labour law until something happens to them. Payroll runs late. HR refuses a leave request. Someone holds back a relieving letter until you “settle” a bond.

One note on 2026: the four Labour Codes came into force on 21 November 2025, but most states are still notifying their rules. Therefore the older Acts and your state’s Shops and Establishments rules remain the working reference for most private employers.

So here are 20 situations Indian employees actually run into, and what the law permits in each.

Part 1: Salary, deductions and pay

1. Your employer withholds salary because you didn’t serve notice

Not allowed. Wages you have already earned are a statutory entitlement, so your employer cannot treat them as leverage. However, they can adjust notice pay against your dues, or sue you to recover it.

2. Your employer cuts salary for poor performance or damaged property

The law does not permit performance-linked deductions. Damage deductions, however, hold up but only where your neglect directly caused the loss, only up to its actual value, and only after your employer hears you out. In addition, total deductions cannot generally exceed 50% of wages.

3. Your salary lands on the 15th every month

Not legal. Employers must pay wages by the 7th where they employ fewer than 1,000 people, and by the 10th above that. Therefore your offer letter cannot override the date, whatever it says.

4. Your employer calls you a “trainee” and pays below minimum wage

Your designation does not decide this. If you do an employee’s work under the employer’s control, minimum wage for your state and skill category applies. Only apprentices under the Apprentices Act fall outside it, and even they draw a prescribed stipend.

5. You work late but get no overtime

If the Factories Act or your state’s Shops and Establishments Act covers you, your employer must pay overtime at twice the ordinary wage rate. However, most state acts exclude managerial, supervisory and confidential roles. So check what you actually do, not what your title says.

Part 2: Working hours, leave and holidays

6. Your company runs 12-hour days as standard

Not permitted. The ceiling stands at 9 hours a day and 48 a week, and overtime above that carries a double rate. The Codes do allow a 12-hour day, but only inside a four-day, 48-hour week, and only where your state has notified that option.

7. Your earned leave lapses at year-end

Only partly. Most state acts require carry-forward up to a cap, commonly 30–45 days, so a blanket 31 December lapse usually fails compliance. Casual and sick leave, on the other hand, rarely carry forward.

8. Your manager rejects a leave request

Allowed, and this surprises people. Statute guarantees your leave balance rather than your dates, so employers can schedule around business needs. Even so, they cannot deny the entitlement across the year, or mark you absent for leave they already approved.

9. HR asks you to resign after you announce a pregnancy

Not allowed. A woman who has worked 80 days in the preceding 12 months earns 26 weeks of paid maternity leave, and the Act expressly bars dismissal on account of maternity absence. Moreover, it covers contract and agency staff too.

10. You work the weekly off with no compensatory leave

Not permitted. Every employee gets one rest day in seven. Therefore, if you work it, your employer owes you either a compensatory off or overtime, depending on the applicable act.

Part 3: Termination, resignation and exit

11. Your employer terminates you with no notice and no reason

That depends on your category. For most employees, notice follows the contract and the state act usually 30 days or pay in lieu. However, if you count as a “workman” under the Industrial Disputes Act and have completed 240 days, retrenchment also requires one month’s notice plus 15 days’ average pay for every completed year.

12. HR holds your relieving letter until you “clear dues”

The law does not support this, and several state acts require a service certificate on request. In practice, though, employers still use it as leverage. So put your request in writing first, then escalate to the labour commissioner.

13. Your full and final settlement stays pending for months

Not lawful. The Code on Wages requires payment within two working days of resignation, removal or retrenchment. In other words, indefinite delay is a wage violation rather than an internal process.

14. Your employer says “resign or be terminated”

You can challenge a resignation you gave under coercion, because in substance it amounts to a termination. Evidence decides the outcome, so get the ultimatum in writing. Above all, do not sign a full-and-final release under pressure you will struggle to unwind it later.

15. Your employer denies gratuity after terminating you

Rarely valid. Gratuity falls due after five years of continuous service, and termination by itself is not a ground for forfeiture. In fact, the Act limits forfeiture to wilful damage, violent conduct, or an offence involving moral turpitude.

Part 4: Bonds, documents, privacy and conduct

16. HR keeps your original certificates

No legal basis exists. Employers verify credentials on copies, so they have no reason to keep the originals. Holding them as a control tactic therefore amounts to wrongful detention of property.

17. Your bond demands ₹5 lakh for leaving early

Courts enforce bonds only up to the genuine, documented training cost your employer actually spent. Therefore, courts routinely reduce or strike down amounts that work as a penalty rather than compensation.

18. Your contract bars you from competitors for a year

Section 27 of the Indian Contract Act makes most post-exit non-competes void. Restrictions during employment still hold, and courts treat confidentiality and non-solicitation clauses far more favourably. But a clause sitting in your contract does not make it enforceable after you leave.

19. Your employer monitors email, laptop and CCTV

Broadly allowed on company systems and premises, for a legitimate purpose, and with notice which the DPDP Act, 2023 requires anyway. However, covert monitoring, personal-device tracking and cameras in private areas all cross the line.

20. HR handles your POSH complaint “informally”

Not acceptable. Every workplace with 10 or more employees must constitute an Internal Committee under the POSH Act, 2013. Once you file a written complaint, therefore, the IC must run a formal inquiry and finish it within 90 days. Failure to constitute an IC attracts a penalty of up to ₹50,000.

Where employees usually go wrong

Three mistakes cost employees the most. First, they rely on verbal assurances, although every scenario above resolves faster with an email trail. Second, they assume the contract overrides the statute but it does not, because any clause offering less than the statutory minimum falls away to that extent. Finally, they escalate late. Statutory claims carry limitation periods, and evidence gets harder to gather after exit, so raise the issue in writing while you still work there.

Conclusion

Knowing which of these counts as a genuine violation, and which is simply an unpleasant decision, changes how you respond. The law sets a floor that no contract can go below. Still, it also leaves employers real discretion in areas people usually assume the law protects.

Ask HR Tailor answers workplace questions with law-cited responses in seconds, so you can check a situation that does not map onto any of the 20 above.

General information on Indian employment law, not legal advice.