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Main Provisions of the Payment of Wages Act

Payment of wages is the most important thing for a worker. Unless he is paid his
wages without delay and without any undue deductions, he will feel disturbed and
lose interest in the work.
It may become difficult for him to survive (live). Therefore, it was felt necessary that
there should be a legislation (law) to protect the wages earned by a worker.

Keeping this in view, the Government enacted the Payment of Wages Act, 1936 to
ensure that there was no delay in payment to the workers, non-payment of wages
should be avoided, and the employers should not make deductions from the wages
on account of fines imposed by him.

Object and Scope:

According to the preamble of the Act, the object of the Act is to regulate the
payment of wages to certain classes of bessons employed in the industry. The Act
provides that employed persons shall be paid their wages in a particular form and
at regular intervals without any unauthorised deductions.

The Act safeguards the wages of employees under certain conditions. The Act
applies to employees drawing not more than Rs. 1600/- per month. The State
Government has the power to make the Act applicable to any class of persons
employed in any establishment or class of establishment by giving 3 months notice.

Definition of workers is to be taken from the Industrial Employment (Standing

Orders) Act, 1946. The scope of the Act has been widened by the Amendment in the
Act called the Payment of Wages (Amendment) Act, 1982.


The Act applies to the whole of India. It came into operation on 28th March, 1937.
Under the Act, following categories of workers are covered:

a) Persons employed in any factory;

b) Persons employed (otherwise than in a factory) upon any railways or by a person

fulfilling a contract with a railway administration.

Payment of Wages and Deductions from Wages:

These are the two important provisions of the Act. According to the Act, every
employer shall be primarily responsible for the payment to persons employed by
him. He should pay all wages required to be paid.

The employer should fix the wage period in respect of his employees. This period
should not exceed one month.

The employer should also fix time of payment of wages to his workmen. For this
purpose certain conditions have been specified under the Act.

Wages should be paid in current coins or currency notes or in both.

The employer should make only the authorised deductions from the salary of
workers working in his factory. He can make authorised deductions in respect of
loan taken by the workers or for recovery of losses.

But total deductions should not exceed fifty percent of the wages. In cases where
such deductions are made to co-operative societies the deductions should not
exceed 75 per cent of the wages?

If a Court or other authorities competent to make order for deduction, orders for
deduction from salary, it is allowed under the Payment of Wages Act, 1936.

Deductions towards fine can be made from the salary of a factory worker only in
accordance with the provisions of this Act.

Other deductions like deductions for absence from duty, deductions for damage or
loss of goods by the worker, deductions for loss of money for which the worker is
directly responsible, deductions towards house rent on account of accommodation
provided by the factory owner, deductions towards recovery of advances, income
tax, etc. can be deducted from the wages of factory workers only in accordance with
the rules framed under this Act.

The following rules are given in the Payment of Wages Act:

(1) Employers cannot withhold the wages earned by workers nor can they make any
unauthorised deductions from the wages.

(2) Payments must be made before the fixed pay day after the wage period.

(3) Fines can be imposed for only those acts of omission which have been approved
by the appropriate government. These must not be more than an amount equal to
three paise in a rupee of the wage payable.

(4) If the payment of wages is delayed or wrongful deductions are made, the
workers or their trade unions can file a claim.

(5) The payment of overtime in scheduled employment is governed by the Minimum

Wages Act, 1948.

(6) Wages should be paid according to the rules, as contained in the Act.

The Payment of Wages (Amendment) Act, 1976 is applicable to the whole of India
and applies to persons employed in any factory as defined in the Factories Act, 1948
and in any railway, receiving wages and salaries which on an average are below Rs.
1,000 a month.

This amount has been raised to Rs. 1,600/- per month through Amendment of the
Act in 1982.


Payment of Wages Act, 1936

The Payment of Wages Act, 1936 is a central legislation which has been enacted to regulate the payment
of wages to workers employed in certain specified industries and to ensure a speedy and effective remedy to
them against illegal deductions and/or unjustified delay caused in paying wages to them. It applies to the
persons employed in a factory, industrial or other establishment or in a railway, whether directly or
indirectly, through a sub-contractor. Further, the Act is applicable to employees drawing wages
upto Rs. 1600/- a month.
The Central Government is responsible for enforcement of the Act in railways, mines, oilfields and air
transport services, while the State Governments are responsible for it in factories and other industrial
The basic provisions of the Act are as follows:

The person responsible for payment of wages shall fix the wage period upto which wage payment is
to be made. No wage-period shall exceed one month.

All wages shall be paid in current legal tender, that is, in current coin or currency notes or both.
However, the employer may, after obtaining written authorisation of workers, pay wages either by
cheque or by crediting the wages in their bank accounts.

All payment of wages shall be made on a working day. In railways, factories or industrial
establishments employing less than 1000 persons, wages must be paid before the expiry of the
seventh day after the last date of the wage period. In all other cases, wages must be paid before
the expiry of the tenth day after the last day of the wage period. However, the wages of a worker

whose services have been terminated shall be paid on the next day after such termination.

Although the wages of an employed person shall be paid to him without deductions of any kind, the
Act allows deductions from the wages of an employee on the account of the following:- (i) fines; (ii)
absence from duty; (iii) damage to or loss of goods expressly entrusted to the employee; (iv)
housing accommodation and amenities provided by the employer; (v) recovery of advances or
adjustment of over-payments of wages; (vi) recovery of loans made from any fund constituted for
the welfare of labour in accordance with the rules approved by the State Government, and the
interest due in respect thereof; (vii) subscriptions to and for repayment of advances from any
provident fund;(viii) income-tax; (ix) payments to co-operative societies approved by the State
Government or to a scheme of insurance maintained by the Indian Post Office; (x) deductions made
with the written authorisation of the employee for payment of any premium on his life insurance
policy or purchase of securities.

The Act prescribes following rules for fines:

Fines shall be imposed for approved list of acts and omissions.

A notice specifying such list shall be exhibited in the prescribed manner on the premises in
which the employment is carried on or at the prescribed places in case a person is
employed in railways.

No fine shall be imposed on any employed person until he has been given an opportunity of
showing cause against the fine, or other-wise, than in accordance with such procedure as
may be prescribed for the imposition of fines.

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.

No fine shall be imposed on any employed person who is under the age of fifteen years.

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.

All fines and all realisations thereof shall be recorded in a register to be kept by the person
responsible for the payment of wages.

Hence, the main object of the Act is to eliminate all malpractices by laying down the time and mode of
payment of wages as well as securing that the workers are paid their wages at regular intervals, without any
unauthorised deductions. The Act was amended by the Payment of Wages (Amendment) Act,
2005Rs. in order to enlarge its scope and provide for more effective enforcement. The main amended
provision is the enhancement of wage ceiling from 1600/-per month to Rs. 6500/-per month for the
applicability of the Act as well as empowering the Government to enhance the ceiling by notification in


With the growth of industries in India, problems relating to payment of wages to persons employed in
industry took an ugly turn. The Industrial units were not making payment of wages to their workers at
regular intervals and wages were not uniform. The industrial workers were forced to raise their heads
against their exploitation.
The Payment of Wages Bill, 19351, based upon the same principle as the earlier Bill of 1933 but
thoroughly revised was introduced in the Legislative Assembly on 15 th February, 1935. The Bill was
referred to the Select Committee. The Select Committee presented its report 2, with the amended Payment
of Wages Bill, 1935 to the Legislative Assembly on 2nd September, 1935.
In 1926 the Government of India addressed Local Governments with a view to ascertain the position
with regard to the delays which occurred in the payment of wages to persons employed in industry, and
the practice of imposing fines on them. The investigations revealed the existence of abuses in both
directions and the material collected was placed before the Royal Commission on Labour which was
appointed in 1929. The Commission collected further evidence on the subject and the results of their
examination with their recommendations will be found on pages 216--221 and 236--241 of their Report.
The Government of India re-examined the subject in the light of the Commission's Report and in February
1933 a Bill embodying the conclusions then reached was introduced and circulated for the purpose of
eliciting opinion. A motion for the reference of the Bill to a Select Committee was tabled during the Delhi
session of 1933 34, but was not reached, and the Bill lapsed, The present Bill is based upon the same
principles as the original but has been revised throughout in the light of the criticisms received when the
original Bill was circulated.


The objectives of the act are three fold:

to pay the wages to the employees

to pay the wages at proper time (ie. without any delay)

to prevent unauthorized deductions
Any orders, agreements etc that override the Payment of Wages Act are invalid to the extent
of their conflict with the Act. However, anything above the act for the benefit of the workmen are
welcome. Orders may supplement but should not supplant them.
House rent is not included in wages but includes overtimne work or holidays or leave period.
In the previous unit, we have discussed ......................................... In this unit an attempt is being taken to discuss the
Payment of Wages Act. 1936 and its objects, application and other important aspects. The payment of wages Act. 1936 has
recently been amended in 2005 by the Payment of wages (Amendment) Act 2005. The way structure of an Industrial
enterprise is built on the premise that each job has its own price depending on the skill and training. Moreover, it depends on
commensurate responsibility, which is determined by systematic Job evaluation method or by 'going rate' in the particular
market area. By the payment of wages Act 1936, the payment system, rate, deduction, etc. important aspects of wages of
certain classes of employed persons are regulated. Through this unit, students can understand all about the important legal
matters of the Payment of wages Act. 1936.