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The Payment of Wages Act 1936



The Payment of Wages (Amendment) Act 2017. 


[1] Overview [2] Definitions [3] Responsibility of Payment of Wages [4] Deductions [5]

Fines [6]Inspectors [7] Grievance Officer [8] Appeal [9] Penalty [10] Amendment


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[1] Overview

1.1    The Payment of Wages Act, 1936 regulates the payment of wages to certain classes of
persons employed in industry. Hereinafter, this is known as ‘Act’.

1.2        This Act guarantees payment of wages on time and without any deductions except
those authorized under the Act.

1.3    This Act provides for the responsibility for payment of wages, fixation of wage period,
time and mode of payment of wages, permissible deduction as also casts upon the employer
a duty to seek the approval of the Government for the Acts and permission for which fines
may be imposed by him and also sealing of the fines, and also for a machinery to hear and
decide complains regarding the deduction from wages or in delay in payment of wages,
penalty for malicious and vexatious claims.

1.4    This Act applies to wages payable to an employed person in respect of a wage period if
such wages for that wage period does not exceed Rs. 24,000/- per month or such other
higher sum which, on the basis of figures of the Consumer Expenditure Survey published
by the National Survey Organisation, the Central Government may, after every five years,
by notification in the Official Gazette specify.

1.5    This Act extends to whole part of India and came in force from the date of publication
of notification in Official Gazette.
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 1.6        Any State Government may after giving 3 month notice about its intention of
publishing notification in Official Gazette and extend the provisions of this Act or any of
them to the payment of wages to any class of persons employed in any establishment of
class of establishment incorporated in Sec. 2(h)(ii) subject to the condition that in relation to
any such establishment owned by Central Government, no such notification shall be issued
except with the concurrence of Central Government.

[2] Definitions


2.1    Employed Person [Sec.2(1)]: “employed person” includes the legal representative of a 

deceased person; 


2.2    Employer [Sec. 2(ia)]: “employer” includes the legal representative of a deceased
employer: 

2.3    Industrial or other establishment [Sec. 2(i1)]: “industrial or other establishment”

means any –

(a) tramway service, or motor transport service engaged in carrying passenger or goods or
both by road for hire or reward;
(aa) air transport service other than such service belonging to, or exclusively employed in
the military, naval or air forces of the Union or the Civil Aviation Department of the
Government of India;]
(b) dock, wharf or jetty;

(C) inland vessel, mechanically propelled:

(d) mine, quarry on oil- eld;
(e) plantation;
(f) workshop or other establishment in which articles are produced, adapted or manufactured, with a
view to their use, transport or sale;
(g) establishment in which any work relating to the construction, development or maintenance of
buildings, roads, bridges or canals, or relating to operation connected with navigation, irrigation,
development or maintenance of buildings roads, bridges or mission and distribution of electricity or any
other form of power is being carried on](h) any other establishment or class of establishment which the
Central Government or a State Government may, having regard to the nature thereof, the need for
protection of persons employed therein and other relevant circumstances, specify, by noti cation in the
Of cial Gazette;

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 2.4    Wages [Sec. 2(iv)]: “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, 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

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; or
(6)any gratuity payable on the termination of employment in cases other than those
specified in sub-clause (d).]

[3] Responsibility of Payment of Wages

3.1    Every Employer is responsible for the payment to persons employed by him/her of all
wages required to be paid to the employee under his/her employment/industry.

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 3.2    Authorities responsible for payment of wage under this act are – (a) Factory Manager –
Factory, (b) Industry or other establishment – Person responsible of Supervision, (c)
Railways – Nominated authority by Railways, (d) Contractor – Person designated by the
Contractor. If he fails to pay wages to employees, person who employed the employees
shall be liable for payment of wages under this Act.

3.3    With the consultation of Central Government, State Government has power and can
change the person responsible for the payment of the wages in Railways, or person

responsible to daily-rated workers in the Public Department of the Central Government or
the State Government [Sec. 5(3)]. 


3.4    Fixation of Wage period [Sec.4]: No wage period shall exceed one month. Wages can

only be paid on – (a) Daily, (b) Weekly, (c) Fortnightly (in every 15 days) and monthly basis
only. 

3.5    Time of payment of Wages [Sec. 5]: In (a) Railway factory or (b) Industry or (c) Other
establishment where – less than 1000 employee, wage should be paid before expiry of the
7th day after the last day of the wage period. If there are more than 1000 employees, wages
of employee should be paid before the expiry of the 10th day after the last day of the wage
period.

3.6    For employee of – (a) Port area, (b) Mines, (c) Jetty or wharf, wages of employee should
be paid before the expiry of the 7th day after the last day of the wage period.

3.8    In case of termination [Sec. 5(2)]: In case where, an employee is terminated or removed
from his/her employment by the employer, the wage of the employee should be paid
within 2 days from the day on which he/she was terminated or removed as the case may
be.

3.9    In all other cases except termination, all wages of an employee should be paid y their
employer on the working day only.

3.10    Payment of wages in case of deceased employee [Sec. 25A]: It should be paid by the
employer to the person nominated by the employee.

3.11    Any wages deposited by the employer with the prescribed authority, the employer
shall be discharged of his liability to pay those wages.

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 3.12    Where no such nomination is made or where for any reasons such amounts cannot be
paid to the person so nominated, be deposited with the prescribed authority who shall deal
with the amounts so deposited in such manner as may be prescribed.

[4] Deductions (Sec. 7)

4.1    Definition: Every amount paid by an Employee to his Employer is called deductions

[Sec. 7(1)].


4.2    At the time of payment of wage to an employee, an employer should make deductions 
according to this act only. An Employer should not make deductions as per his desire.


4.3        Elements which are not treated as deductions under this Act: Stoppage of – (i) 

increment, (ii) promotion, (iii) incentive due to lace of performance , (iv) demotion, (v) 
suspension.

4.4        According Sec. 7(2) of this Act, deductions are – (i) Fine, (ii) Deductions for – (a)
absence from duty, (b) for damage to or loss of goods made by the employee due to his
negligence, (c) for house accommodation/housing rent, (d) for such amenities and services
supplied by the employer, (e) for recovery of advances connected with the excess payments
or advance payments of wages, (f) for recovery of loans made from labour welfare fund, (g)
for recovery of loans granted for house-building or other purposes (h) income tax liability (i)
by order of court, (j) for payment of provident fund, (k) for payment to co-operative
societies approved by Government, (l) for payment to a scheme of insurance maintained by
Indian Post Office, (m) for payment of premium of insurance to Life Insurance Corporation
with the concurrence of an employee, (n) any contribution made as fund to trade union with
the acceptance of the employee, (o) for payment of insurance premium on Fidelity
Guarantee Bonds with the acceptance of employee, (p) for recovery of losses sustained by
Railway on account of failure by the employee in collections of fares and charges, (q) if any
contribution is made to the Prime Minister’s National Relief Fund with the acceptance of
employee, (r) for contribution to any insurance scheme framed by the Central Government
for the benefit of its employees with the acceptance of employee.

Bullet: Workers voluntarily remain absent, the management would be at liberty to deduct their
wages as per judgment of Hon. High Court of Bombay.

4.5    Limit for Deductions [Sec. 7 (3)]: The total amount of deductions from wages of an
employee should not exceed 50%. In case of co-operative societies, deduction from wages
can be made
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 4.6      Deductions for absence from duty [Sec.9]: Amount deducted from absent from duty
should not exceed the total wage amount.

4.7    Employee present at work place and refuses to work without any proper reason shall
be deemed to be absent from duty.

4.8        If 10 (Ten) or more persons together absent for the duty without reasonable cause,
employer can made 8 days’ of wages as deduction from their wages.


4.9        Deduction for damage or loss [Sec. 10]: An Employer is authorized to make 
deductions towards any dame or loss caused by employee which should not exceed the

value of dame or loss so caused subject to the condition that he/she should be given an
opportunity to explain the reason for such loss or damage [Sec. 10(1)]. 


4.10    All such deductions are required to be recorded in a specific register which is to be
maintained for this purpose under section 3 of this Act.

4.11        Deductions for recovery of advances [Sec. 12]: In case of advance paid to the
employees by the employer before employment began, such advance should be recovered
by the employer from the first payment of wages. Advance given for travelling expenses not
allowed to be recovered.

4.12        Deductions for Recovery of Loans [Sec. 12A]: Deduction for recovery of loans
granted for House Building Advance (HBA) or other purposes is subject to be recovered
with interest thereof if any.

4.13    Deductions towards Co-operative Society & Insurance Scheme [Sec. 13]: Deductions
for co-operative society & Insurance premium is allowed under this act with the consent of
the employee.

Bullet: Every employer is required to maintain a specific & records givng 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. Such registers & records are
required to be maintained for three years from the date of last entry.

[5] Fines

5.1        Fine should be imposed by the Employer on employee with the approval of State
Government or prescribed authority. Employer should follow the rules mentioned below
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 (successive Para hereinafter) for and before imposing of fine on the employee.

5.2        Notice board of fines on employee should be displayed in the work premises and it
should contain activities that should not be made by employee.

5.3    Fine should not be imposed on the employee until he gives the explanation and cause
for the act or omission he made.

5.4    The amount of total fine should not exceed 3% of wage. 


5.6    Fine should not be imposed on any employee who is under the age of 15 years.


5.7        Fine should be imposed for one time only the wage of the employee for the act or 
omission he made.


5.8    Fine should not be recovered in the way of installments.

5.9    Fine should be recovered within 60 days from the date on which fine was imposed.

5.10    Fine should be imposed on day act or omission made by the employee.

5.11    All fines collected from the employee should be credited to common fund and utilize
for the benefit of the employees.

[6] Inspectors (Sec. 14)

6.1    State Government appoints an inspector for the purpose of this Act. Every inspector
shall be deemed to be public servant within the meaning of the Indian Panel Code, 1860.

6.2        Powers of the Inspector [Sec. 14]: (i) Inspector can make inquiry and examination
whether the employer are properly obeying the rules mentioned under this Act or
otherwise.

(ii) Inspector can enter, inspect and search any premises of any railway, factory or industrial
r other establishment at any reasonable time for the purpose of carrying out the objects of
this Act.

(ii) Inspector can supervise the payment of wages to persons employed upon any railway or
in any factory or industrial or other establishment.

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 (iii) Inspector can 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.

6.3    Facilities afforded to Inspector [Sec. 14A]: Every Employer shall afford an Inspector all
reasonable facilities for making any entry, inspection, supervision, examination or inquiry
under this Act.


[7] Grievance Officer

7.1    Appropriate Government appoints an officer to hear and decide all claims arising out

of deductions from the wages, or delay in payment of the wages, of persons employed or
paid, including all matters, incidental to such claims. 


7.2        Such officers appointed under this act are – (a) Any Commissioner for Workmen’s
Compensation; or

(b) Any officer of the Central Government exercising functions as – (i) Regional Labour
Commissioner; or (ii) Assistant Labour Commissioner with at least two years’ experience;

(c) Any officer of the State Government not below the rank of Assistant Labour
Commissioner with at least two years’ experience; or

(d) A presiding officer of any Labour Court or Industrial Tribunal, constituted under the
Industrial Disputes Act, 1947 or under any corresponding law relating to the investigation
and settlement of industrial disputes in force in the state; or

(e) Any officer with experience as a Judge of a Civil Court or a Judicial magistrate, as the
authority to her and decide for any specified area all claims arising out of deductions from
the wages, or delay in payment of the wages, of persons employed or paid in that area,
including all matters incidental to such claims;

Bullet: Appropriate Government considers it necessary so to do, it may appoint more than one
authority for any specified area and may, by general or special order, provide for the distribution or
allocation of work to be performed by them under this Act.

7.3    According to Sec. 15 (2), if any Employer does against the provisions of this Act, any
unreasonable deduction has been made from the wages of an employed person, or any
payment of wages is delayed, in such case any lawyer or any Inspector under this Act or
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 official of a registered trade union authorized to write an application to the authority
appointed by Government for direction of payment of wages according to this Act.

Every such application shall be presented within 12 months from the date on which the
payment of the wages was due to be paid.

7.4    After receiving of the application, the authority shall give an opportunity to hear the
applicant and the employer or other person responsible for the payment of wages and

conducts the enquiry if necessary. If it is found that there is mistake with employer;
authority may order the employer for payment of wages or refund to the employee of the 

deducted amount or the payment of delayed wages, together with the payment of such 
compensation as the authority may think fit. There will not be any compensation payable by

employer if there is a reasonable and genuine cause in delay in the payment of wages.

7.5    Powers of Authorities appointed [Sec. 18]: The authority appointed under this act for
the purpose of matters discussed above can exercise powers of taking evidence and of
enforcing the attendance of witness and compelling the production of documents.

Bullet: If there are many employees whose wages are not paid, such all employee can make
one application to the authority for payment of wages according to this Act [Sec. 16].

[8] Appeal

8.1    Appeal may be preferred in case the parties who are dissatisfied. Any Appeal under
this Act lies with District Court.

8.2        Appeal is made if – (a) the application dismissed by above authorities, (b) if the
amount exceeding Rs. 25/- withheld by the Employer to single unpaid employee, (c) Rs.
50/- in case of may unpaid employees.

[9] Penalty (Sec. 20)

9.1    Penalty under this Act may be made due to several reasons or contravention of rules,
terms and conditions laid down under this Act. Such penalty may be imposed due to
following reasons –

(a) Delay in payment, (b) Unreasonable deductions (c) Excess deduction for absence of duty
(d) Excess deduction for damage or loss to employer (e) Excess deduction for House-
accommodation amenity or service.
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 These offences are punishable with fine which shall not be less than Rs. 1000/- but may
extend upto Rs. 7500/-.

9.2        Penalty which is punishable with fine may extend to Rs. 3000/- are – (a) If Wage
period exceed one month, (b) Failure in payments of wages on a working day, (c) Wages not
paid in form of current coin or currency notes or both, (d) Failure to maintain record for
collected fines from employees, (e) Improper usages of fine collected from employees, (f)
Failure of employee to display notice containing such abstracts of this Act and of the rules

made.


9.3    Penalty which is punishable with fine which may not be less than Rs. 1000/- but can 
extend to Rs. 7500/- are – (a) Whoever obstructs an Inspector in the discharge of his duties

under this Act, (b) Whoever willfully refuses to produce on the demand of an Inspector any
register or other document. (c) Whoever 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.

9.4    If any one repeats the same offence committed before – imprisonment for a term which
shall not be less than one month but can extend upto 6 months and fine shall not be less
than Rs. 3750/- and can extend upto Rs. 20500/-.

[10] Amendment

10.1        Amendment made in 2017 is known as The Payment of Wages (Amendment) Act,
2017. Main amendment made by are – All wages shall be paid in current coin or currency
notes or by cheque or by crediting the wages in the bank account of the employee subject to
the condition that such order may be published by the Appropriate Government.

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2 thoughts on “PWA”

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 BEERENDRA KUMAR VERMA
18/07/2020 AT 4:25 PM

Simpli ed language with bullet points.

Great job.

Reply

ADMIN
23/07/2020 AT 6:06 PM 


Stay tuned and keep commenting.
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