Arrears | Meaning and Definition

What are arrears, or define arrears? 

In the Indian payroll system, arrears meaning stands for payments that are overdue either because of incorrect calculations by the employer or delay in payment by the employer. Payments that are not included as part of regular pay but fall due later (e.g., overtime, leave salary, bonus) are called arrears. In most cases, employees have to submit a written application to receive their arrears payments from the employer. 

Benefits of arrears in payroll

Arrears in payroll can provide several benefits to your business, including

  • Improved cash flow, as you will have more money available to cover expenses in the short term.
  • Increased efficiency, as employees will be paid on time and be less likely to experience financial stress, leading to decreased productivity.
  • Greater flexibility, as you will be able to make changes to your payroll more easily. 

What are standing arrears?

Standing arrears in payroll are sums of money owed to employees but have not yet been paid. They can be caused by several factors, such as missed payroll deadlines, miscalculations, or even fraud. 

If you are owed money from your employer’s past payroll cycles, it is crucial to take action as soon as possible. You can speak with an employment lawyer to learn more about your rights and options. 

Standing arrears can occur for various reasons, such as when an employer does not have enough money to pay all of its employees’ salaries on time or when an employer deliberately withholds wages in violation of the law. Some states have laws that require employers to pay interest on delayed wages.