LABOUR LAWS

PROJECT:

PAYMENT OF WAGES UNDER WAGES ACT

1936
Evolution of concept of wages in India
In the earlier days, the imposition of fine was a fairly general practice in
perennial factories and railways. There used to be other deductions from
the wages paid to the workers, such as for medical treatment, education,
interest on advances of the workers’ own wages, charities, and religious
purposes selected by the employer. An important feature which added to
the embarrassment of the workers at various places was paid. There was
no uniformity in the payment of wages. Long comparatively the longer
period in respect of which wages were intervals between wage payments
invariability added to the in convenience of the workers. The Royal
Commission on Labour in its report (1931) recommended, among other
things, that legislation on deduction from wages and fines was necessary
and desirable. The commission examined the delays in the payment of
wages and the practice of deductions from the wages of an employed
person. In the light of its recommendations, the Government of India
introduced a Bill seeking to regular the delays and deduction in the
payment of wages to industrial and plantation labor. The Bill was passed
in 1936 and the Act came into force from 28th March, 1937. In exercise
of the powers conferred under the Act, the Maharashtra Government
framed rules known as the Maharashtra Payment of Wages Rules, 1936.
The Act is in three parts.

 Part I deals with the regular and payment of wages

by the employer.

 Part 2 specifies the heads under which deduction

can be made from wages.

 Part 3 provides a machinery for enforcing specific

claim arising out of delayed payments, deduction
from wages, appeals, etc. It is a self – contained Act
and provides its own machinery for the disposal of
the claims. The Act contains 26 sections.
INTRODUCTION

The Payment of Wages Act, 1936 was passed to regulate the payment of
wages to certain classes of persons employed in industry. It ensures
payment of wages in a particular form and at regular intervals without
unauthorized deductions. The Act extends to the whole of India [Sec.
1(2)]. It was extended to Jammu and Kashmir by the Central Labour
Laws (Extension to Jammu and Kashmir) Act, 1970.The payment of
wages to persons employed in any factory, to persons employed
(otherwise than in a factory) upon any railway by a railway
administration and to an industrial or other establishment. In various
States the Act has been extended to shops and establishments also. The
Act does not apply to persons whose wages exceed Rs. 1,600 per month.
This limit was raised from Rs, 1,000 to Rs, 1.600 by the payment of
Wages (Amendment) Act, 1982. It is provided that, in relation to the
central government owned establishment, any notification will be issued
only after the concurrence of central government.

DEFINITION OF WAGES
‘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. Simply stated
‘wages’ means all remuneration due to any worker or employee if the
terms of contract of employment are fulfilled. The definition of ‘wages’
includes the following:
(a) Any remuneration payable under any award or settlement between
the parties or order of acourt; (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, contract or instrument which
provides for the payment of such sum, whether with or without
deductions, but does not provide for the time within which the payment
is to be made; (e) Any sum to which the person employed is entitled
under any scheme framed under any law for the time being in force.
The expression ‘wages’ does not include:

(1) Any bonus (whether under a scheme of profit-sharing or otherwise)

which does not form part of the remuneration payable under the terms of
employment or which is not payable under any award or settlement
between the parties or order of a Court; (2) The value of any house
accommodation, or of the supply of light, water, medical attendance or
other amenity or of any service excluded from the computation of wages
by a general or special order of the State Government: (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: (6) Any gratuity payable on the termination
of employment in cases other than those specified in Clause (d) above.

APPLICABILITY
The Act is applicable to persons employed in any factory, railway, and
to such other establishments to which the appropriate Government may,
by notification, extend the provisions of the Act after giving three
months’ notice to that effect. In the case of industrial establishments
owned by the Central Government the notification can be issued with the
concurrence of the Central Government.

This Act applies to wages payable to an employed person in respect of a

wage period if such wages for that wage period do not exceed Rs.
10,000 per month or such other higher sum, which on the basis of
figures of the Consumer Expenditure Survey published by the National
Sample Survey Organisation, the Central Government may, after every
five years, by notification in the Official Gazette, specify.

RULES FOR PAYMENT OF WAGES

(SECS. 3 TO 6)
 Responsibility for Payment of Wages (Sec.3)
 Fixation of Wage-Periods (Sec.4)
 Time of Payment of wages(Sec. 5)
 Mode of payment of wages (Sec. 8)

1) Responsibility for Payment of Wages (Sec.3) :-

Every employer shall be responsible for the payment to persons

employed by him of all wages required to be paid under the Payment of
Wages Act. But in the case of persons employed (otherwise than by a
contractor) in factories, industrial establishment or upon railway, the
following persons shall also be responsible for the payment of wages:
 In factories, the person named as the manager;
In industrial or other establishment, the person,
 if any, who is responsible to the employer for
the supervision and control of the industrial or
  other establishment; Upon railways (otherwise than in factories),
the person nominated by the railway administration in this behalf
for the local area concerned (Sec. 3) The person so named, the
person so responsible to the employer, or the person so nominated,
as the case may be, shall also be responsible for such payment.

2) Fixation of Wage-Periods (Sec.4) :-

Every person responsible for the payment of wages

shall fix periods, known as wage-periods, in respect of
which such wages shall be payable. A wage-period shall
not exceed one month.

3) Time of Payment of wages(Sec. 5) :-

 Wages to be paid before 7th or 10th day :-

The wages of every person employed upon or in any railway, factory or

industrial or other establishment upon or in which less than 1,000
persons are employed, shall be paid before the expiry of 7th day of the
following wage-period. In case the number of workers exceeds 1,000,
the wages shall be paid before the expiry of the 10th of the following
wage-period. In the case of persons employed on a dock, wharf or jetty
or in a mine, the balance of wages 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 second working day from
the day on which his employment is terminated:

 Wages in case of termination of employment :-

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 2nd 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 recognised holiday, the wages earned by him
shall be paid before the expiry . of the 2nd day from the day on which
his employment is so terminated.

 Exemption :-

The State Government may, by general or special order, exempt the

person responsible for the payment of wages from the operation of the
above provisions in certain cases.

 Wages to be paid on a working day :-

All payment of wages shall be made on a working day.

4) Mode of payment of wages (Sec. 8)

Section 6 provides that all wages shall be paid in currency coin or

currency notes or in both: It is provided that the employer may, after
obtaining the written authorization of employed person, pay him the
wages either by cheque or by crediting the wages in his bank account.
All wages shall be paid in current coins or currency notes or both.
Payment of wages in kind is not permitted. The process of payment of
wages in cash is very cumbersome where the number of workers is very
large. It is also risky where the sum involved is large and the factory or
industrial establishment is situated at a remote place.

 In order to obviate these difficulties and save the worker from

carrying cash on the pay day and misspending it, 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.

DEDUCTIONS FROM WAGE

(SECS. 7 TO 13)
Deduction which may be made from wages (Sec.7):-

The wages of an employed person shall be paid to him without

deductions of any kind except those authorized by or under the Payment
of Wages Act, 1936. The deductions from wages of an employed person
may be of the following kinds only, namely;

1) Deductions for fines:-

(a) No fine shall be imposed on any employed person save in respect of

such acts or omission on his part as the employer, with the Previous
approval of the State Government or of the prescribed authority, may
have specified by a notice.

(b) The notice specifying the acts and omissions for which fines may be
imposed shall be exhibited in the prescribed manner on the premises
(and in case of persons employed upon a railway, at the prescribed place
or places) in which the employment is carried on.

(c) No fine shall be imposed on an employed person until he has been

given an opportunity of showing cause against the fine and has
completed the age of 15 years.

(d) The total amount of fine which may be imposed in one wage period
on any employed person shall not exceed 3 per cent of the wages
payable to him in respect of that wage-period. Such a fine shall not be
recovered from the employed person by installments or after the expiry
of 60 days from the day on which it was imposed [ Sec. 8(6) ]

2) Deductions for absence from duty:-

Deduction may be made on account of the absence of an employed

person from duty from the place or places where, by the terms of his
employment, he is required to work. But the ratio between the amount of
such deductions and the wages payable shall not exceed the ratio
between the period of absence and total period within such wage period.
It has however been held in K.S.R.T. Employees’ Assn. Vs General
Manager, K.S.R.T., (1985) that in a strike by workers in a public utility
service like transport service, if employees absent for a part of the day
without notice, deduction of full day’s wages would not be unjustified or
illegal.

3) Deductions for Damage or Loss:-

A deduction for damage to or loss of goods expressly entrusted to the

employed person for custody or for loss of money for which he is
required to accounts shall not exceed the amount of the damage or loss
caused to the employer by the neglect or default of the employed person.
Same is the case as regards losses sustained by a railway administration
on account of any rebates or refunds incorrectly granted by the
employed person.

4) Deductions for services:-

A deduction for house accommodation and such amenities and services

supplied by the employer as have been authorised by the State
Government shall not be made from the wages of an employed person,
unless such services have been accepted by him as a term of
employment or otherwise. Deductions in respect of these services shall
not exceed the value thereof. In case of deductions as regards services
and amenities, the State Government may impose
conditions.

5) Deductions for recovery of advances:-

A deduction for recovery of an advance given to an employed person is

subject to the following conditions viz., (i) recovery of an advance of
money given before employment began shall be made from the first
payment of wages in respect of complete wage-period, but no recovery
can be made of such advance given for travelling expenses: (ii) recovery
of an advance of money given after employment began shall be subject
to such conditions as the State Government may impose: (iii) recovery
of advances of wages not already earned shall be subject to any rules
may by the State Government in this regard. The State Government may
regulate the extent to which such advances may be given and the
instalments by which they may be recovered.

6) Deductions for recovery of loans:-

Deductions for loans granted for house-building or other purposes and

the interest due in respect thereof approved by the State Government
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.

7) Deductions for payments to co-operative societies and insurance

Schemes:-

These deductions shall include (a) deductions for payments to co-

operative societies approved by the State Government or to a scheme of
insurance maintained by the Indian Post Office; and (b) deductions
made with the written authrisation of the person employed for the
payment of any premium of his life insurance policy to the Life
Insurance Corporation (LIC) of India or for the purchase of securities of
th Government of India or of any State Government or for being
deposited in any Post Office Saving Bank in furtherance of any saving
scheme of any such Government.

7) Other Deductions:-

The following deductions shall also be permitted under the Act: (a)
deductions of income-tax payable by the employed person. (b)
deductions required to be made by order of a Court or other authority
competent to make such order [Sec. 7 (2) (h)] (c) deductions for
contributions to any insurance scheme framed by the Central
Government for the benefit of its employees.

MAINTENANCE OF REGISTERS
AND RECORDS (SECTION-13 A)
 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 and such other particulars and in
such forms as may be prescribed.
 Every register and record required to be maintained under this
section shall, for the purpose of this act, be preserved for a period
of three years after the last entry made therein.
BIBLIOGRAPHY

 LEGAL SYSTEM IN BUSINESS (BUSINESS LAW ,

COMPANY LAW, INDUSTRIAL LAW ) BY :- P.
SARAVANAVEL S. SUMATHI HIMALAYA
PUBLISHING HOUSE

 INDUSTRIAL JURISPRUDENCE AND LABOUR

LEGISLATION BY:- A.M. SARMA HIMALAYA

 INDUSTRIAL& LABOUR LAWS

BY:-SANJEEV KUMAR BHARAT LAW HOUSE