Arrears

Definition and Meaning

Arrears are the unpaid salary, wages, or allowances an employer owes an employee at a prior point in time. Usually, this is a result of late salary revisions or appraisals, backdated promotions, or correcting errors on the payroll.

HR Highlights

• Common payroll changes associated with salary increases and raises.
• Past due salary adjustments are paid correctly to the employee.
• Payroll processes and monthly salary calculations will be impacted.
• Accurate income tax calculations and statutory deductions are required.
• Payroll and human resource management are performed with the help of payroll software and HRMS.

Compliance With Legal Requirements

You must make payment for arrears according to all applicable Indian laws regarding payment of wages and payroll, including the following:

• Payment of Wages Act 1936 – Timely payments of wages
• Income Tax Act 1961 – Taxable and relief on arrears, if applicable
• PG (Provident Fund) and ESI (Employee State Insurance) regulations regarding payment of arrears

If there is no valid reason for delaying or withholding payment of the arrears, it could result in a dispute.