PAYMENT OF WAGES ACT, 1936

OBJECTIVES OF THE ACT

Regulating the payment of wages, imposition of fines and deductions from wages, and Eliminating all malpractices by laying down wage periods and time and mode of payment of wages. The act therefore ensures payment of wages in a particular form at regular intervals without unauthorized deductions The act provides for a speedy and effective remedy to the employees in respect of their claims arising out of illegal deductions or unjustified delay made in paying the wages to them

APPLICATION OF THE ACT

This act extends to whole of India. It came into force on 28th march 1937. the act applies to: Persons employed in any factory Persons employed upon any railway administration Person employed upon any railway either directly or through a sub-contractor, And to persons employed in an industrial or other establishment

i. ii. iii.

iv.

The State Government may, after giving three months’ notice of its intention of so doing, by notification in the Official Gazette, extend the provisions of this Act or any of them to the payment of wages to any class of persons employed in any establishment or class of establishments specified by the Central Government or a State Government

The wage limit for the applicability of the act is Rs.1600 per month. This act does not apply to a person whose average wage is rs.1600 or more per month

DEFINITIONS

"factory" means a factory as defined in clause (m) of section 2 of the Factories Act, 1948.

i.

"industrial or other establishment" means anytramway service , or motor transport service engaged in carrying passengers or goods

ii.

air transport service
dock, wharf or jetty; inland vessel, mechanically propelled; mine, or oil-field;

iii.

iv.

v.

plantation; workshop or other establishment in which articles are produced, adapted or manufactured, with a view to their use, transport or sale; establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, or relating to operations connected with navigation, irrigation, or to the supply of water or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on.

 "wages"

means all remuneration (whether by way of salary, allowances, or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes-

(a) any remuneration payable under any award or settlement between the parties or order of a court; (b) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period;

(c) any additional remuneration payable under the
terms of employment (whether called a bonus or by any other name);

(d) any sum which by reason of the termination of employment of the person employed is payable under any law or contract
(e) any sum to which the person employed is entitled under any scheme framed under any law for the time being in force,

but does not include(1) any bonus, which does not form the part of remuneration payable under the terms of employment (2) the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity (3) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon; (4) any travelling allowance or the value of any travelling concession; (5) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; or (6) any gratuity payable on the termination of employment

RULES REGARDING PAYMENT OF WAGES (SECTION-3 TO 6)

PERSON RESPONSIBLE TO PAY WAGES (SEC-3)
Every employer shall be responsible for the payment to persons employed by him of all wages required to be paid under this Act. In addition to the employer, the following persons shall also be responsible for the payment of wages:
(a)

in factories, if a person has been named as the manager of the factory in industrial or other establishments, if there is a person responsible to the employer for the supervision and control of the industrial or other establishments and

(b)

(c)

In railways (otherwise than in factories), if the employer is the railway administration and the railway administration has nominated a person in this behalf for the local area concerned.
If the manager of the factory resigns or is removed then the responsibility to pay wages again become the responsibility of the employer

FIXATION OF WAGE PERIODS (SEC-4)
1)

2) 3)

4)

5)

Every person responsible for the payment of wages under section 3 shall fix periods (in this Act referred to as wageperiods) in respect of which such wages shall be payable. No wage-period shall exceed one month. The main purpose of fixing the wage periods is to ensure that ordinance delay is not caused in payment of wages and a long time is not elapsed before wages are paid for a period for which an employee has worked Sec-4 is merely concerned with fixation of wage periods and not with the fixation of wages Wages cannot be fixed as payable quarterly, half yearly or yearly but they may be fixed as payable daily, weekly , fortnightly and monthly

TIME OF PAYMENT OF WAGES (SEC-5)
The following rules have been laid down regarding the time of payment of wages: (1) The wages of every person employed upon or in(a) any railway, factory or industrial or other establishment upon or in which less than one thousand persons are employed, shall be paid before the expiry of the seventh day, (b) any other railway, factory or industrial or other establishment, where the number of workers exceed 1000, shall be paid before the expiry of the tenth day, In the case of persons employed on a dock, wharf or jetty or in a mine, the balance of wages found due on completion of the final tonnage account of the ship or wagons loaded or unloaded, as the case may be, shall be paid before the expiry of the seventh day from the day of such completion.

2) Where the employment of any person is terminated by or on behalf of the employer, the wages, earned by him shall be paid before the expiry of the second working day from the day on which his employment is terminated:

where the employment of any person in an establishment is terminated due to the closure of the establishment for any reason other than a weekly or other recognized holiday, the wages earned by him shall be paid before the expiry of the second day from the day on which his employment is so terminated

(3) The state govt. may by any order exempt any

person responsible for the payment of wages from any provisions in this section.
(4) All payments of wages shall be made on a working day.

WAGES TO BE PAID IN CURRENT COINS OR CURRENCY NOTES (SEC-6)

 All

wages shall be paid in current coin or currency notes or in both: that the employer may, after obtaining the written authorization of the employed person, pay him the wages either by cheque or by crediting the wages in his bank account.

 PROVIDED

DEDUCTIONS FROM WAGES

Sec 7-13 of the act deals deductions which can be made from the wages of the workers The object of sec-7 is to make every employer liable to pay wages of an employee without deductions of any kind except those authorized under this act Sec-7(2) enumerates the deductions which are authorized under this act

WHAT IS DEDUCTION?
 Every

payment made by an employed person to the employer or his agent is treated as deduction from wages

PERMISSIBLE DEDUCTIONS SEC-7(2)]
1) 2) 3) 4) 5)

6)

7)

8)

9)

fines; deductions for absence from duty; Deductions for damage to or loss of goods Deduction for services rendered Deductions for recovery of advances or for adjustment of overpayment of wages Deductions for recovery of loans made for the welfare of labor Deductions for recovery of loans granted for house building, etc Deductions for payment to co-operative societies and insurance schemes Other deductions

DEDUCTION FOR FINES (SEC-8)
1)

No fine shall be imposed on any employed person save in respect of such acts and omissions on his part as the employer, with the previous approval of the State Government or of the prescribed authority,

(2) A notice specifying such acts and omissions shall be exhibited in the prescribed manner on the premises in which the employment is carried on or in the case of persons employed upon a railway (otherwise than in a factory), at the prescribed place or places. (3) No fine shall be imposed on any employed person until he has been given an opportunity of showing cause against the fine.

4)The total amount of fine which may be imposed in
any one wage-period on any employed person shall not exceed an amount equal to three per cent of the wages payable to him in respect of that wage-period. 5) No fine shall be imposed on any employed person who is under the age of fifteen years. 6) No fine imposed on any employed person shall be recovered from him by installments or after the expiry of sixty days from the day on which it was imposed.

7) Every fine shall be deemed to have been
imposed on the day of the act or omission in respect of which it was imposed.

(8) All fines and all realisations thereof shall be recorded in a register to be kept by the person responsible for the payment of wages under section 3 in such form as may be prescribed; and all such realisations shall be applied only to such purposes beneficial to the persons employed in the factory or establishment as are approved by the prescribed authority.

DEDUCTIONS FOR ABSENCE FROM DUTY (SEC-9)
1)

Deductions may be made under only on account of the absence of an employed person from the place or places where, by the terms of his employment, he is required to work, such absence being for the whole or any part of the period during which he is so required to work. This absence must be voluntary and without the permission of the employer

2)

3. It cannot cover the absence of the employee when

he is forced by circumstances created by the employer from carrying out his duties

4. An employed person shall be deemed to be absent from the place where he is required to work, if, although present, he refuses to carry out his work in pursuance of a stay in strike or for any other cause which is not reasonable in the circumstances

5. No deduction from the wages can be made

when the absence from duty is for the period between his dismissal and reinstatement as the absence from duty cannot be said to be voluntary.
6. Section 9 further authorizes the employer to deduct to the extent of eight days wages, if 10 or more persons acting in the concert absent themselves from duty without reasonable cause and without any notice.

DEDUCTION FOR DAMAGE OR LOSS (SEC-10)
A

deduction shall not exceed the amount of the damage or loss caused to the employer by the neglect or default of the employed person.  Employer cannot make profit out of such deductions  A deduction shall not be made until the employed person has been given an opportunity of showing cause against the deduction

All such deduction and all realizations thereof shall be recorded in a register to be kept by the person responsible for the payment of wages

DEDUCTIONS FOR SERVICES RENDERED (SEC-11)

A

deduction shall not be made from the wages of an employed person, unless the houseaccommodation amenity or service has been accepted by him, as a term of employment or otherwise, and such deduction shall not exceed an amount equivalent to the value of the houseaccommodation amenity or service supplied

DEDUCTION FOR THE RECOVERY OF ADVANCES OR FOR ADJUSTMENT OF OVERPAYMENT OF WAGES (SEC-12)
Deductions shall be subject to the following conditions, namely:

Recovery of an advance of money given before employment began shall be made from the first payment of wages in respect of a complete wageperiod.

Recovery of advances of wages not already earned shall be subject to any rules made by the State Government regulating the extent to which such advances may be given and the installments by which they may be recovered.

DEDUCTIONS FOR RECOVERY OF LOANS MADE FOR THE WELFARE OF LABOUR

 Deductions

for recovery of loans granted under this act shall be subject to any rules made by the State Government regulating the extent to which such loans may be granted and the rate of interest payable thereon.

DEDUCTIONS FOR RECOVERY OF LOANS GRANTED FOR HOUSE BUILDING

Shall subject to any rules made by the state government. It shall regulate the extent to which loans may be granted and the rate of interest payable thereon

DEDUCTIONS FOR PAYMENT TO COOPERATIVE SOCIETIES AND INSURANCE SCHEME (SEC-13)
 Deductions

shall be subject to such conditions as the State Government may impose.

OTHER DEDUCTIONS
IT INCLUDES:
 Deductions

of income-tax payable by the employed person; Deductions required to be made by order of a court or other competent authority

 Deductions,

made with the written authorization of the employed person, for payment of the fees payable by him for the membership of any trade union registered under the Trade Union Act, 1926

PERMISSIBLE TOTAL DEDUCTIONS
The total amount of deductions which may be made under any wage-period from the wages of any employed person shall not exceed(i) In cases where such deductions are wholly or partly made for payments to co-operative societies seventyfive per cent of such wages, and (ii) In any other case, fifty per cent of such wages: PROVIDED that where the total deductions authorized exceed seventy five per cent or, as the case may be, fifty per cent of the wages, the excess may be recovered in such manner as may be prescribed.

MAINTENANCE OF REGISTERS AND RECORDS
 Every

employer shall maintain such registers and records giving such  particulars of persons employed by him,  the work performed by them,  the wages paid to them,  the deductions made from their wages,  the receipts given by them  such other particulars

 Every

register and record required to be maintained under this section shall, for the purposes of this Act, be preserved for a period of three years after the date of the last entry made therein.

INSPECTORS
The payment of wages act, 1936 makes provision for the appointment of inspectors by the state govt. for the purpose of enforcing compliance with the provisions of this act

in respect of persons employed in factories, an inspector of factories under the factory act, 1948 shall be an inspector

The State Government may appoint Inspectors for the purposes of this Act in respect of all persons employed upon a railway (otherwise than in a factory) to whom this Act applies. The State Government may, by notification in the Official Gazette, appoint such other persons as it thinks fit to be Inspectors for the purposes of this Act, and may define the local limits within which they shall exercise their functions

POWERS OF INSPECTORS

Make such examination and inquiry as he thinks fit in order to ascertain whether the provisions of this Act or rules made there under are being observed; enter, inspect and search any premises of any railway, factory or industrial or other establishment at any reasonable time for the purpose of carrying out the objects of this Act;

Supervise the payment of wages to persons employed upon any railway or in any factory or industrial or other establishment.

Require by a written order the production at such place, as may be prescribed, of any register maintained in pursuance of this Act and take on the spot or otherwise statements of any persons which he may consider necessary for carrying out the purposes of this Act

Seize or take copies of such registers or documents or portions thereof as he may consider relevant in respect of an offence under this Act which he has reason to believe has been committed by an employer;

AUTHORITY TO HEAR CLAIMS
The following may be appointed as an authority:  a presiding officer of any Labour Court or Industrial Tribunal, constituted under the Industrial Disputes Act, 1947  any Commissioner for Workmen’s Compensation or  other officer with experience –  as a Judge of a Civil Court or  as a Stipendiary Magistrate

PRESENTATION OF APPLICATION
When contrary to the provisions of section 7 to 13 any deduction has been made from his wages.  When there has been any delay in the payment of wages

The application may be presented by:


the employed person a legal practitioner an official of a registered trade union authorized in writing to act on behalf of the employed person

An inspector appointed under Sec-14

Every such application shall be presented within twelve months from the date on which the deduction from the wages was made or from the date on which the payment of the wages was due to be made

Any application may be admitted after the said period twelve months when the applicant satisfies the authority that he had sufficient cause for not making the application within such period.

PROCEDURE
 When

any application under the section is entertained, the authority shall hear the applicant and the employer or other person responsible for the payment of wages under section 3, or give them an opportunity of being heard, and, after such

 Further

inquiry (if any) as may be necessary, may, without prejudice to any other penalty to which such employer or other person is liable under this Act, direct the refund to the employed person of the amount deducted, or the payment of the delayed wages, together with the payment of such compensation as the authority may think fit, not exceeding ten times the amount deducted in the former case and not exceeding twenty-five rupees in the latter,

 No

direction for the payment of compensation shall be made in the case of delayed wages if the authority is satisfied that the delay was due to(a) a bona fide error or bona fide dispute as to the amount payable to the employed person, or (b) the occurrence of an emergency, or the existence of exceptional circumstances, or (c) the failure of the employed person to apply for or accept payment.

RECOVERY OF AMOUNT
The amount directed to be paid under sec-15 may be recovered:

If the authority is a Magistrate, by the authority himself the authority is not a Magistrate, by any Magistrate to whom the authority makes application for the recovery of the amount

 If

PENALTIES
1.

Whoever being responsible for the payment of wages to an employed person contravenes any of the provisions of any of the following sections, shall be punishable with fine which shall not be less than two hundred rupees but which may extend to one thousand rupees. For not fixing the wage periods in accordance with the provisions of the act, or paying the wages on the day other than working day, or not paying the wages in current coins or currency notes or not recording the fines, the employer shall be punishable with a fine which may extend to Rs500 for each offence

3.Whoever being required under this Act to maintain any records or registers or to furnish any information or return(a) fails to maintain such register or record; or (b) willfully refuses or without lawful excuse neglects to furnish such information or return; or (c) willfully furnishes or causes to be furnished any information or return which he knows to be false; or (d) refuses to answer or willfully gives a false answer to any question necessary for obtaining any information required to be furnished under this Act, shall, for each such offence, be punishable wit fine which shall not be less than two hundred rupees but which may extend to one thousand rupees

4. Whoever(a)

willfully obstructs an Inspector in the discharge of his duties under this Act; or

(b) refuses or willfully neglects to afford an Inspector any reasonable facility for making any entry, inspection, examination, supervision, or inquiry authorized by or under this Act in relation to any railway, factory or industrial or other establishment or (c) willfully refuses to produce on the demand of an Inspector any register or other document kept in pursuance of this Act; or (d) prevents or attempts to prevent or does anything which he has any reason to believe is likely to prevent any person from appearing before or being examined by an Inspector acting in pursuance of his duties under this Act; shall be punishable with fine 45[which shall not be less than two hundred rupees but which may extend to one thousand rupees.]

If any person who has been convicted of any offence punishable under this Act is again guilty of an offence involving contravention of the same provision, he shall be punishable on a subsequent conviction with imprisonment for a term which shall not be less than one month but which may extend to six months and with fine which shall not be less than five hundred rupees but which may extend to three thousand rupees

 If

any person fails or willfully neglects to pay the wages of any employed person by the date fixed by the authority in this behalf, he shall, without prejudice to any other action that may be taken against him, be punishable with an additional fine which may extend to 47[one hundred rupees for each day for which such failure or neglect continues.