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This article is written by Shraileen Kaur, a student at ICFAI University, Dehradun. In this
exhaustive article, the author discusses in detail the Payment of Wages Act, its historical
background, features, objectives, purpose, and relevant case laws related to the Act.
Table of Contents
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1. Introduction
2. Payment of Wages Act, 1936
2.1. Historical background of the Payment of Wages Act
2.2. Findings and suggestions by the Royal Commission on Labour (1929) which have been
incorporated under various acts
2.2.1. System of imposing penalties on workers
2.2.2. Arbitrary deductions by the employers
2.2.3. Increased indebtedness of the workers along with inhumane conditions
2.2.4. Protection of workers and optimum utilisation of fines
2.2.5. Deductions related to goods or other miscellaneous things
2.3. The outcome of the findings and suggestions made by the Royal Commission on Labour
(1929)
3. Need for the enactment of the Payment of Wages Act
4. Timeline
4.1. Period of Struggle – 1800 to 1900
4.2. Period of development of Trade Unionism – 1900 to 1948
4.3. The ultimate crisis for labourers – 1850 to 1936
5. Objective and purpose of the Payment of Wages Act, 1936
6. Application of the Payment of Wages Act, 1936
7. Approach taken by the Payment of Wages Act, 1936
8. Difference between the Payment of Wages Act, 1936 and Minimum Wages Act, 1948
9. ‘Wages’ as defined by the Payment of Wages Act, 1936
10. Significant provisions of the Payment of Wages Act, 1936
10.1. Wage payment and deduction from wages
10.1.1. The obligation of the employer to pay wages
10.1.2. Fixing a specific period for the payment of wages
10.1.3. Day on which wages shall be paid
10.1.4. Payment of wages in current cash, either coins or notes
10.2. Payroll deductions that are permitted under the Act
10.3. Amounts that can be deducted under this Act
10.3.1. Fines
10.3.2. Deductions due to exclusion from duties
10.3.3. Amount deducted for losses or damages
10.3.4. Amount deducted for services provided
10.3.5. Recovering advances from deductions
10.3.6. Deductions in relation to the recovery of the advances
10.3.7. Keeping registrations and records updated (Section 13A)
10.4. Authorities under the Payment of Wages Act of 1936
10.4.1. Inspector
10.4.2. Rights of the Inspector
10.4.3. The resources that the Inspector will make available
10.4.4. Requirement of a hearing for the claim
10.4.5. Only one application for claims from the unpaid group
10.4.6. Appeal
10.5. Power of the authorities designated by Section 15
10.6. Penalties for violations of the Payment of Wages Act
10.6.1. Reasons for imposing punishment
10.6.1.1. Penalties include a fine that won’t be less than INR 1,000 but could reach INR 7,500
10.6.1.2. Punishable with a fine of up to INR 3,000
10.6.1.3. Punishable with a fine that will not be less than INR 3,750 but might reach INR
20,500
10.6.2. Bar of suits
10.6.3. Waiving the privilege
10.6.4. Decentralisation of the specific powers under the Act
10.6.5. Payment of unpaid wages in the event of death of the worker employed
10.6.6. Power to make rules
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Introduction
It is a well-known fact that India’s economy depends not just on the formal sector but
also on the informal sector. The significance of the informal sector in India cannot be
ignored. Before independence in 1947, the informal sector, primarily agriculture,
contributed to 95 per cent of the Gross Domestic Product (GDP). Even today, 70 per cent
of the national income of India consists of income generated through agriculture (Food
and Agriculture Organisation of the United Nations).
Adhering to the Constitution of India, the Indian Government in the year 1948, right
after independence, introduced legislation named the Minimum Wages Act of 1948. The
legislative intent behind the Act was to make sure that workers in the informal sector
receive at least a minimum amount of money as wages to avoid exploitation. However,
before this Act, the Payment of Wages Act of 1936 was introduced. The Act made efforts
so that informal sector workers could be linked with mainstream development by
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providing minimum wages, which can be utilised to increase living standards and benefit
social development schemes.
The Act has occasionally undergone modifications to ensure that the law is effectively
implemented and that workers receive adequate pay in a timely manner to maintain
themselves and their families. This article explains numerous significant clauses of the
Act and related amendments and case laws.
The information gathered made it clearly evident that the problems, which included the
employers’ arbitrary deduction of large amounts of money from wages and the
inconsistent and delayed distribution of payments, which left workers in the most
precarious of circumstances, were quite real.
The Royal Commission on Labour was established in 1929 under the chairmanship of
John Henry Whitley. The commission was established to investigate and evaluate the
current working conditions in factories and other production sites in pre-independent
India. The Commission provided the data collected from the provincial governments in
British India. It was given the responsibility to do extensive research on the physical and
mental well-being, productivity, access to health services, and living standards of the
workforce, as well as on the relationships between employers and employees. Also, the
Commission had to offer suggestions for the betterment of the workers. The Government
of India collected information from the provincial governments.
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The report by the Royal Commission on Labour (1929) covered a wide range of problems
faced by workers in various manufacturing facilities, including textiles, leather goods,
underground mining, steam engines, and silvicultural factories, as well as employees
engaged in public service departments. It covered nearly all of the problems that
employees experience, from low pay, long working hours, and no leave considering bad
health and well-being, no accommodation, lack or absence of trade unions, the
establishment of workmen’s compensation fund, industrial disputes, etc.
The report is so thorough that almost all worker welfare legislation and economic laws
currently in existence, such as the Trade Union Act of 1926, the Industrial Disputes Act
of 1947, the Payment of Wages Act of 1936, and the Minimum Wages Act of 1948, etc.,
can be linked directly in some capacity to this document.
While the average fine reduction from a worker’s total pay was about 1%, it was more
important to focus on specific cases than the average because they were more relevant.
In general terms, deductions from pay can be divided into three categories:
Fines exerted for regulatory purposes (in case of indiscipline by the worker(s)),
Deductions for damages the company has incurred irrespective of the fact whether
the concerned worker was actually responsible for the damage caused or not, and
Deductions for the use of equipment and other advantages the employer provides.
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Furthermore, in each of the three cases, the Royal Commission on Labour found
compelling justification for enacting a law.
Generally, these deductions are made by the employer. However, there have been
instances where employers have delegated their powers to their subordinates. These
penalising practices are not just followed in India but across the globe. This is why
various nations have come up with different laws, rules, and regulations to prevent
arbitrariness in the imposition of penalties.
The Commission further noted that even a modest deduction from the wages of workers
is problematic for many employees because their pay often only covers the basic
requirements of life, while higher deductions put them further into debt and may even
temporarily deplete their resources.
The Commission also suggested that children should not be subject to fines because of
their incapacity, lack of prior experience, and low pay scale.
The Commission recommended that a maximum of one month following the date the fine
was levied be allowed for the payment of a fine in order to avoid spreading it out over an
excessively long period of time, which would lead to increased indebtedness.
The money collected as a fine must be used for an initiative that benefits the entire
group of workers and must receive approval from a recognised authority.
The Commission suggested that the notification outlining the actions, conduct, and
violations for which penalties may be levied should be posted, and any additional fine
should be considered to be unlawful in order to safeguard the workforce from unjustified
penalties.
Employers should keep records of deductions made for product damage, as doing so will,
in any event, give authorities the information they need to decide if additional
regulations are needed or not.
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It is permissible to deduct money for the purchase of equipment and raw materials as
well as for housing accommodations.
Any penalty can be directed at the employer for the imposition of fines and deductions
that are not allowed by the law.
Later on, the Payment of Wages Bill was reintroduced in the Legislative Assembly on
February 15, 1935, with standards that were similar to those of the previous Bill from
1933 but completely modified for better protection of labourers and prevention of
loopholes. The Select Committee was given the Bill for evaluation. On September 2,
1935, the Select Committee presented its report.
Lastly, the Payment of Wages Bill of 1935, which incorporated the Select Board of
Trustees’ suggestions, was once more presented to the Legislative Assembly before
being enacted in 1936 and entering into force on March 21, 1937.
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workers’ real wages decreased, and the average worker’s standard of living fell below the
poverty line.
Among the most oppressed groups in the history of modern capitalism were the Indian
Industrial Workers, who were underprivileged and confined like animals without access
to the basic necessities of life like food, shelter, and clothing.
Timeline
The Indian capitalist class required effective and prompt government assistance to make
up for its preliminary vulnerability in contending with the well-established industries of
European countries. This had to be done while striving for self-reliant economic progress
that was at odds with the colonial rule on almost every underlying economic concern.
However, capitalists and industrialists in India were not given this assistance. The top
administration was ruled by the Crown and antagonistic to Indian industrial initiatives, or
rather unsympathetic; after all, their ultimate objective was to squeeze the wealth of the
“golden bird”.
Moreover, Indian capitalists feared being dominated and repressed by the much more
powerful foreign capitalists, who were given considerable concessions and the free flow
of goods around the country. The massive British Industrial Corporation began
establishing affiliates and subsidiaries in India after 1918 as a result of the large-scale
influx of foreign investment capital into the Indian industry. This was done in order to
make the most of the tariff protections offered throughout the 1920s and 1930s, the less
expensive Indian labour, and the proximity of the marketplace. At this time, Indian
businessmen had proclaimed their dominance over Indian markets.
Indian businessmen consequently came into open conflict with the British economic
system, government operations, and policies. They eventually came to the realisation
that they required a sovereign nation and a political class that supported local
entrepreneurs. As long as British imperialists ruled the nation, India’s economy and trade
could not grow properly.
The catastrophic famines that struck India from 1866 to 1901 completely crushed each
and every hope of planned growth. By the end of the 19th century, the working and
living circumstances of the labour force had deteriorated significantly.
Employees made intermittent efforts to voice their displeasure with their employers and
the authorities in the beginning, about 1880, through protests, general strikes, and
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public gatherings. However, after the Madras Labour Union was established in 1918, real
trade unionism in India started.
On the other hand, there weren’t many contemporary industries in India, which meant
that the factors of production were concentrated in the hands of a very small number of
Indians. Additionally, the Crown was in charge of overseeing and controlling these
enterprises through taxes, rules, and regulations. The cottage industry was
unsuccessfully revived despite their efforts.
In other words, the authority over the factors of production was concentrated in a small
number of people, allowing them to act arbitrarily and according to their preferences.
At the same time, there was an abundance of labour available in India, ready to be
employed in dangerous industries with few or no safety precautions, bad living
situations, longer working hours, and no nutritious food to add, and meagre or starvation
leading wages.
Trade unionism was present in India, but when compared to other nations, it was unable
to lead the labour movement to its final victory, where it would have gained sufficient
collective bargaining power to exercise authority in negotiations about topics like salaries
and benefits, conditions of employment, safety precautions, social welfare, etc. In other
words, the conditions for workers were terrible, and they had no leverage in
negotiations.
There were numerous wage periods, which added to the anguish of labourers.
Additionally, despite having certain wage periods, wages to be paid to the workers were
often months late. The working class, who rarely understood the notion of savings and
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In this way, the cumulative effects of various variables like a colonial rule, lack of proper
trade unionism, the politicisation of the concern of labourers, and the Industrial
Revolution in Britain led to the ultimate crisis of the labourers.
All these factors made the general public realise that in order to protect the rights of
labourers, a joint effort is required. Hence, the concern of the labourers was connected
with the need for “Swaraj.” This resulted in increased pressure on the governmental
authorities, which finally led to the introduction of the Payment of Wages Act of 1936.
The Payment of Wages Act 1936 is a useful piece of legislation that governs how specific
kinds of people employed in industries get paid.
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The first one is to specify a date on which the wages are paid, and
The second one is to see if the pay deduction that was stated by the employer is
reasonable or not.
According to Section 1(4) of the Payment of Wages Act, 1936, all individuals who have
worked in factories, for the Railway Administration or a subcontractor, or in other
manufacturing or commercial facilities must be paid their wages accordingly.
According to the Payment of Wages Act, 1936, the state government has the authority to
apply the requirements of the Act to any category of employed individuals after
publishing a three-month notice in the Official Gazette of India. All employers are now
compelled by Section 3 of the Payment of Wages Act, 1936, to undertake the obligation
to pay the entitled wages as specified by the Act to all of the employees who come under
the ambit of Section 1(4) of the Act.
Meanwhile, if any employers violate Sections 5 or 7 of the Act, which deal with the
prompt payment of wages in existing authorised “coins and currency”, then in such a
scenario, the employer could be fined, which should not be less than INR 1,000.
However, such a fine can go as high as INR 5,000.
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entirely different. As per the Payment of Wages Act of 1936, workers must be able to get
their wages on time, and it also specifies the minimum wages that must be paid to them.
Regardless of whether it is
referred to as a monetary
incentive or by another The additional payments due
Additional name, any additional under the conditions of
remuneration compensation due under employment to the employee are
the conditions of not considered wages.
employment is not
considered as “wages.”
“Wages” encompasses
Compensation for extra hours,
compensation for extra
Scope of wages holidays, and leave time is
hours, holidays, and leave
excluded.
time.
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Amount paid as overtime compensation or for time off during the holidays, and
Wages have been defined under Section 2(iv) of the Payment of Wages Act, 1936.
“Wages” refers to all remuneration (whether paid in the category of wage entitlements or
otherwise) represented in cash or qualified to be presented in finances that would be due
for payment to a worker in respect of his occupation or work performed in such
employment. Also, wages include payments if the express or implied terms of
employment are satisfied, and include:
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1. Any earnings resulting from a judgement, award, or agreement reached between the
parties;
4. Any amount due as a result of the worker’s termination of employment under any law,
agreement, or other documents that permits payment of the amount, regardless of
any deductions from the wages, but does not establish a deadline for payment;
5. Any remuneration to which the employee has a right under any system established by
any law in effect at the time, with the following exceptions:
Whatever amount is paid to the employee to cover specific costs that his work
requires of him; or
Any gratuity due upon dismissal from work under conditions other than those
mentioned in subclause (d).
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In other circumstances, if the employer identifies a person or, on the rare chance,
realises that there is a person qualified for the job or is authorised for the same task, at
that point, such a person is responsible for the payment of wages.
These points must be noted concerning the obligation of the employer to pay wages –
Regardless of what is said in sub-section (1), the company is competent to pay any
wages that are required under the Act.
Also, if the contractual employee or any person to whom the employer designates to
make the payment in favour of the workers forgets to do so, then the employer is the
one to be held responsible.
Each employer shall be held responsible for paying all necessary wages and benefits
to the individuals they employ.
The manager of that production facility will be responsible for paying the wages of the
employees he employs as a result of the industrial setting.
Concerning the payment of wages to the workers in the railway line department, an
individual is appointed by the department for a specific region, and such a person is
under the obligation to pay wages to the workers.
A person appointed by a contractual worker who is directly under his supervision will
be held responsible for the payment of the representatives’ wages on account of the
contractual worker.
In the event that he fails to pay wages to the representatives, the people who hired
the workers could be held liable for the payment of their wages.
Also, the Act clearly mentions that under no circumstances shall the payment of wages
to the representatives by the manager go beyond the intervals of 1 month, i.e., 30
days.
Moreover, considering the then-prevalent situation where the workers were paid wages –
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Annually,
Bi-annually, or
Quarterly
The Act mentioned that wages could not be paid following this system as it leads to
increased indebtedness of the workers.
1. Any railway, factory or industrial or other establishments upon or in which the total
number of employed persons is less than one thousand, must receive his wages
before the expiry of the seventh day from the last day of the wage period for which
the wages are payable.
2. Any other railway, factory or industrial or other establishments, must receive his
wages before the expiry of the tenth day from the last day of the wage period for
which the wages are payable.”
These points must be noted with regard to the payment of wages. The points are as
follows –
The company or the individual accountable for the payment of wages must ensure
that the wages are paid on a working day.
The competent authorities may ask the person responsible for making wage payments
to recruit or appoint persons, but only to a certain extent and according to the
restrictions set out in the order.
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no longer be permitted to deduct what he deems fit. Deductions relating to all payments
made by an employee to his employer must be stated beforehand.
The aforementioned actions taken by the organisation must have a good and appropriate
justification before initiation.
Fines
Employers should impose a fine on employees only with prior approval from the state
government or other authorised institutions. Before imposing a fine on the employee, the
employer must go by the rules listed below.
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In the workplace, a notice listing all fines imposed on employees should be posted.
This notice should also list any actions that the representative should not take.
The worker shouldn’t be forced to pay a fine before explaining his actions and
providing justification for them.
The total amount of the fines shouldn’t be more than 3% of his salary.
Any person under the age of fifteen should not be required to pay a fine.
In order to punish the worker for his acts or omissions, a fine should be imposed only
once on his wages.
Within 60 days of the date the penalty was imposed, it must be deducted or
recovered.
On the day that the worker or employee commits the act of exclusion, a fine should
be imposed.
All fines collected from workers should be added to the general reserve and used to
assist the workers.
A record of all penalties and payments made must be kept by the individual in charge
of the payment of wages to the workers under Section 3 of the Payment of Wages Act
of 1936.
All funds received in relation to penalties imposed must be used strictly for the goals
determined by the competent authorities. Such goals should be in the long-term
interests of the workforce at the production line or mines.
After 90 days have passed since the day the fines were imposed, no fines imposed on
an employee or worker may be recovered from them.
The worker’s absence from work for either a single day or for any other duration of time
may result in deductions from wages by the employer.
The amount deducted for the absence during working hours must not be greater than a
total that has a comparable connection to the pay. This pay is due in reference to the
payment period as this absence does to that wage period.
For instance, if a worker’s monthly salary is INR 15,000 and he misses one month of
work due to another obligation, the penalty for failure to fulfil an obligation should not
exceed INR 15,000.
Employees who show up for work and refuse to participate in the business operation
without a valid excuse will be seen as being absent from their duties.
The employer may withdraw eight days’ worth of wages from the pay of the workers if at
least ten persons collectively fail to report for duty without being given a cause and
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According to Section 10(2) of the Payment of Wages Act, 1936, the employer should give
the worker an opportunity to provide justification and reason for the damage that took
place. The deductions made by the employer from the wages of the worker should not
exceed the value or measure of the damage done by the worker.
The amount of the deduction should not be greater than the estimated value of the
house-convenience services or administrative structure.
The conditions that the State Government may impose will determine the justification for
pension contributions to cooperative organisations, deductions for payments to insurance
coverage maintained by the Indian Postal Service, or for worker recognition deductions
made for compensation of any premium on their additional security strategic plan to the
Life Insurance Corporation.
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Every registration and record must be maintained and protected for a duration of three
years following the date of the last addition made to them. It means that both the
employer and the employee need to have a three-year history of transactions.
Inspector
A monitor may be chosen by the state government to oversee the implementation of this
legislation. Each inspector will be treated as a member of the general public or a public
worker for the purposes of Section 14 of the Indian Penal Code, 1860.
Inspectors have the authority to conduct investigations and evaluate whether employers
are appropriately adhering to the rules mentioned in this Act or not.
For the purposes of carrying out the purposes of this Act, the Inspector may, with the
assistance, if any, he deems necessary, may enter, investigate, and examine any
property of any railway, production system, industrial, or other establishments.
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Any state government representative who, for the past two years, has not occupied
the position of the Assistant Labour Commissioner;
A supervisory official of any Labour Court or Industrial Tribunal established under the
Industrial Disputes Act, 1947 (14 of 1947), or under any equivalent law governing the
investigation and resolution of industrial conflicts in existence in the State; or
If the appropriate Government deems it necessary to do so, it may choose more than
one specialist for any area that has been identified, and it may grant special or
general proposals to facilitate the conveyance of those experts or the part of the work
that is required of them under the Payment of Wages Act.
Appeal
Section 17 of this Act mentions the right to appeal. The parties who are dissatisfied may
file an appeal with the district court under the following circumstances:
In the unlikely event that the above organisations reject the applicant’s request.
The authorities compel the employer to pay more than or equal to INR 300.
In the unlikely event that the total exceeds INR 25, the employer will retain it for the
single unpaid employee. If several unpaid workers are present, they will each receive
INR 50.
Taking evidence, putting it into practice, requiring witnesses to appear, and mandating
the production of reports.
Provisional attachment of the employer’s or another party’s assets that are involved in
the wage-payment process
“Where whenever after an application has been made under sub-section (2) of Section
15 the authority or where whenever after an intrigue or appeal has been filed under
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The court, at times, has referred to this Section and is satisfied that the company or
another person responsible for paying wages under Section 3 is likely going to avoid
paying any sum that may be arranged to be compensated under Section 15 or Section
17 by the officials or the court, as the case may be, with the sole exception of
circumstances where the institution or court has made the decision that the components
of the contractual arrangements be destroyed by the temporary suspension.
After giving the employer or any other party an opportunity to be heard, it is feasible to
make arrangements for the connection of a significant amount of the employer’s or
another party’s liability for the payment of wages as determined by the authority or
court to be sufficient to cover the potential payment under the heading. Any application
for connection under subsection (1) will be subject to the provisions of the Code of Civil
Procedure (1908) (5 of 1908) dealing with connection before judgement under that
Code.
Unjustified deductions,
Penalties include a fine that won’t be less than INR 1,000 but could reach INR
7,500
In the unlikely event that the wage period is longer than one month;
Inappropriate use of the fine that was collected from the employees;
If the employee doesn’t display the edited compositions of the notification of this Act
and the rules made
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Anyone who prevents an Inspector from fulfilling his duty under this Act;
Anyone who strongly refuses to disclose any registers or other records at the request
of an inspector
Punishable with a fine that will not be less than INR 3,750 but might reach INR
20,500
Detention for a period that will not be less than one month but might extend to six
months, as well as a fine that will not be less than INR 3,750 but could increase to
INR 20,500.
The process employed in the trial of the offences under the Payment of Wages Act of
1936.
No court will consider a claim against a person for an offence under subsection (1) of
Section 20. However, if the claim regarding the circumstances constructing the
offence has been made under section 15 of the Act and has been fully or partially
accepted, and the authority involved pursuant to the last Section of the investigatory
court has conceded that such a claim has been made, thereby authorising the
formation of the perceived injustice, in that case, the following circumstances may be
considered –
2. No court lobby, with the exception of an objection raised by or with the approval of an
Inspector under this Act, takes notice of the rejection of Sections 4 or 6 or of any
requirement made under Section 26, accordingly.
3. The amount of any payments already made against the person charged in any
proceedings conducted in accordance with Section 15 will be taken into consideration
by the Court when imposing any penalties for an offence under subsection (1) of
Section 20.
Bar of suits
No court will hear any cases involving the recovery of salaries or other deductions from
benefits if the complete amount of the promised benefits has not been received. It
involves –
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Structures that are the focus of intrigue under Section 17 or a request under Section
15 that has been presented by the aggrieved party and is currently before the power
chosen under that Section; or
has been declared not to be payable to the offending party in any proceeding under
Section 15; or
The person responsible for paying wages to workers in a manufacturing facility shall
require a notification to be displayed in such a manufacturing facility.
The notification shall contain such summaries of this Act and of the guidelines
promulgated thereunder in English as well as in the language of the majority of the
workers in the manufacturing unit, as may be suggested.
The business will be freed from its obligation to pay any salaries that the employer
has with the designated authority.
If no such nomination has been provided or if payments cannot be sent to the person
so chosen for whatever reason, the funds should be retained with the position that
has been authorised to retain them. This position will maintain the funds in the
manner that may be advised.
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Make room for routine checks of the scales, measurements, and weighing equipment
used by employers to determine the pay of those in their employment;
Suggest a method for changing the dates on which compensation will be provided;
Make recommendations on the position that can be favoured under subsection (1) of
Section 8 and deductions with respect to which fines may be required;
Provide a technique for the establishment of the deduction under Section 10 and the
imposition of penalties under Section 8;
Suggest the terms under which the proviso to Section 9‘s sub-section (2) for
deductions may be used;
Suggest the authority with the necessary resources to back up the justifications for
using fine returns;
Impose limits on the number of advances that may be made and the percentages by
which they may be recovered with regard to Section 12‘s clause (b);
Determine the range of expenditures that could be allowed in operations under this
Act;
Determine the sum of court fees payable for any actions brought under this Act; and
Specify the amended works that must be included in the Section 25 notification.
When establishing any regulation under this Section, the State Government may
stipulate that violating the rule shall result in a fine of up to INR 200.
All recommendations made pursuant to this Section shall be based on the State of the
preceding publication, and the date to be ascertained pursuant to clause (3) of Section
23 of the General Clauses Act, 1897, shall not be less than one-fourth of a year after the
date on which the document of the suggested fundamentals was made available.
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Representatives of
Mr. T. K. Prabhakaran
Petitioner
Representative for Mr. S.B. Deshpande (Assistant Solicitor General) and Mr.
Respondent D.R. Kale (Government Pleader)
The businesses were compelled to scale back or cease their manufacturing operations as
a result of the lockdown restrictions issued by the Ministry of Home Affairs in India.
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“I am of the opinion that since the Hon’ble Apex Court is dealing with a related cause of
action, I would not be inclined to interfere with the impugned order and would expect
the petitioners to pay the gross monthly wages to the employees, save and except for
conveyance allowance and food allowance, if being paid on a month-to-month basis in
the cases of those workers who are not required to report for duties.”
“It is made clear that workers will be expected to report for duty according to shift
schedules, subject to the employer providing adequate protection against coronavirus
infections since the State of Maharashtra recently partially lifted the lockdown in some
industrial areas in the State of Maharashtra. If these employees choose to stay away
from work, the management is free to deduct their salary as a result, as long as it
follows the legal process for doing so. Even in places where there may not have been a
lockdown, this would still be applicable.”
1. The Bombay High Court noted the order of the Supreme Court issued on April 27,
2020, in a series of cases involving Ficus Pax Private Ltd. v. Union of India and others
(2020), where the Supreme Court ordered the petitions to be stated in two weeks,
and no interim relief was granted to the businesses or employers who had likewise
asked for a stay of the MHA Order requiring them to pay proper wages.
2. The Court further observed that the Kerala High Court had decided to stay a decision
by Kerala’s Finance Department that allowed for the payment of 50% of salaries right
away and deferred payment of the remaining 50%.
3. The Hon’ble Judge observed that petitioners would be required to pay full wages
because the Supreme Court is dealing with a related cause of action. Therefore, the
Bombay High Court was unwilling to interfere with the MHA order case in the Apex
Court.
5. The case was expected to be heard on May 18, 2020, or the next day the Honourable
Court performs court proceedings, whichever comes first. However, the decision is still
pending.
Although the Court did make two important exceptions to the general norm, they are as
follows:
2. Employees are expected to report for work according to their work routines in the
locations where the lockdown has been removed, provided they are adequately
protected from coronavirus infections. If these employees choose to voluntarily miss
work, the management is free to withhold their pay.
“It is made clear that workers will be obliged to appear for duty according to shift
schedules under the condition that the employer provides proper protection against
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coronavirus infections. Recently, the State of Maharashtra partially lifted the lockdown in
some industrial districts. If these employees choose to stay away from work, the
management is free to deduct their salary as a result, as long as it follows the legal
process for doing so. Even in places where there may not have been a lockdown, this
would still be applicable.”
The same arguments were put out in the other case, Twin City Industrial Employers
Association v. Union of India (2020); however, the Supreme Court refrained from
interfering with the Ministry’s ruling preventing small-size businesses from having to pay
their workers any wages.
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In both cases, the Apex Court issued inconsistent rulings; nonetheless, in the first, the
Payment of Wages Act’s provisions are being violated because the workers’ payments are
not being paid on time.
Moreover, in this case, the Apex Court also made reference to a landmark judgement of
Anant Ram v. District Magistrate of Jodhpur (1956). In this case, it was held that in
order to be eligible for a payment deduction on the ground of absence from work, such
absence should be voluntary. Therefore, no deduction must be made under Section 7(2)
when an employee is absent from work during the time between being fired and being
reinstated because such an absence cannot be characterised as voluntary.
Section 6 of the Payment of Wages Act of 1936 enables the employer to pay
compensation solely in coins or currency. However, the proviso said that if the employer
so chooses, they may pay the salaries via check or by depositing the amount in the
employees’ bank accounts—but only after getting the necessary consent from them.
Compared to the era when the 1936 legislation took effect, technology has advanced and
evolved in the present era. Nowadays, a lot of workers have their own bank accounts.
Hence, the new Act makes several substantial improvements, but the most important
one is that companies no longer need to obtain written consent before paying
employees’ salaries by check or bank account.
Regardless of their financial situation, the government has pushed every individual to get
a bank account. Most employees and labourers, about 80%, have a bank account. As a
result, the ability to transfer wages through a cheque or bank account is now convenient
for both companies and employees. In doing so, employers will encounter fewer
complaints from workers about inadequate and tardy wage payments.
The government has made it clear that only checks or electronic transfers may be used
to pay compensation to the manufacturing and other entities listed under the legislation.
Thus, the goal of the digital economy will be furthered. A lot of state governments,
including those in Punjab, Andhra Pradesh, Haryana, Kerala, etc., have already enacted
the aforementioned revisions to their laws.
Through these changes made to the Payment of Wages Act of 1936, the Central
Government has formally adopted the crucial policy of elevating electronic transactions
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in prominence. Adopting such a system will be beneficial in the modern period as it will
undoubtedly streamline the process of paying wages while also making it easier to keep
track of those payment records.
Moreover, through a notification, the central government raised the salary level in 2017
from 18,000 to 24,000 in order to make the Act more applicable. This limit was raised in
order to expand the number of employees the Act will apply to. In today’s typical and
lower-middle-class families, the earning member makes at least 20,000 rupees per
month or more.
As a result, raising this barrier will broaden the reach of the current Act. The Payment of
Wages Act’s revised “salary threshold” and its potential effects on pari materia laws (pari
materia is a doctrine in statutory construction which states that the statutes on the same
topic or subject must be interpreted collectively) in our nation will need to be examined
in the future. The need for it increases in light of Parliament’s consideration of passing
the Labour Code on Wages, which would unify all existing laws, including the Payment of
Wages Act of 1936, the Minimum Wages Act of 1948, the Equal Remuneration Act of
1976, and the Payment of Bonus Act of 1965.
Therefore, the new Labour Code, which is basically a compilation of the labour laws in
the country, would have a significant impact not just on the payment of wages but on
the overall conditions of the workers.
Deductions from wages for the recovery of loss occurred or damage to the employer’s
products, goods, or installations are permitted only when loss or damage has occurred
for which the employee in question is indisputably held accountable.
Such fines and penalties should be reasonable and should not be in excess of the
actual value of the damage or expense.
The employee in question should have a fair chance to explain why such a deduction
shouldn’t be made before the decision is taken to make one such deduction from the
wages of the concerned worker.
The proper actions must be taken to restrict deductions from wages for toolkits, raw
materials, or machinery supplied by the employer. Also, there is a need to look at
situations where such fines and penalties are:
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3. They are authorised in another way through a process that is accepted by national
laws or regulations.
1. If a worker’s wages are determined on an hourly, daily, or weekly basis, they must be
paid at least twice every month for periods of no more than sixteen days.
2. Payment of wages not less than once a month in the case of employees whose pay is
fixed on a yearly or monthly basis.
2. Appropriate steps should be taken to ensure the following in the event of workers
hired to complete a task that will take longer than a fortnight to complete and for
whose periods for the payment of wages are not expressly established by a collective
agreement or arbitration award –
1. Those payments are made on the account not less often than twice a month at
intervals not exceeding sixteen days, in proportion to the amount of work completed,
and
2. That final settlement will be made within a fortnight of the completion of the task.
1. The amounts of wages that are due, how they are calculated, and how frequently they
are paid;
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Any deductions that may have been made, together with the justification for them
and their total cost; and
Conclusion
The Payment of Wages Act makes an effort to unify the definition of “wages,” which is a
step toward providing more clarity. However, there is room for misinterpretation given
how the terms “employee” and “worker” are used within the Act and how their separate
definitions are arranged.
It’s no longer a problem, though. It is anticipated that the newly passed Labour Code,
which will be put into effect soon nationwide, will close any gaps left by the country’s
prior labour laws. By describing observers as facilitators rather than just inspectors, the
Code also seeks to alter the impression of the “Inspector Raj” in relation to the
government’s work guidelines.
There have been significant changes made to the offences and penalties under the new
Code. The reformative measures make a strong case for their necessity and
proportionality, with the intention of assisting rather than impeding corporate leadership.
The Code encourages creativity in decisions about topics like wage payment methods
and assessment procedures that are intended to help it achieve its administrative
digitalisation goals.
Hence, it will be exciting to see how the new labour code (which is inspired by the
previous labour laws such as the Minimum Wages Act, Payment of Wage Act, Factories
Act, etc.) will improve the prevalent situation of labourers across the country.
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This can only be applied to employees who are at least 15 years old, must be retrieved
within 90 days of the date of the action or omission, and be imposed following a proper
show cause procedure.
Employers are required to keep the following records in the appropriate formats.
A wage register;
A fines register;
A list of advancements.
A worker designated by the contractor who is immediately under his supervision in the
case of a contract; an individual selected by the employer who is in charge of enforcing
the Act’s provisions.
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penalties, and reductions for damages or losses or the repayment of loans or advances.
In such a circumstance, a fine of at least Rs. 1000 and up to Rs. 5000 may be imposed.
If convicted again, the fine must be at least 5000 rupees and might be as high as
10,000.
For failing to keep records, wilfully refusing to provide information without a valid
justification, omitting to respond to a request for information, or willfully providing a
false response to a request for information under this Act, the maximum fine for such
offences is Rs. 5000, with a minimum fine of Rs. 1000. For a second or subsequent
offence, the fine must be at least 5000 rupees and might be as high as 10,000 rupees.
A fine of at least Rs. 1000, extendable up to Rs. 5000, must be paid for knowingly
interfering with an inspector’s fulfilment of his responsibilities and for refusing to submit
any register or other papers. If convicted again, the fine must be at least 5000 rupees
and might be as high as 10,000.
Failure to pay wages to any worker may result in a minimum one-month sentence that
may be increased to six months in prison and a minimum fine of Rs. 2000 which may be
increased to Rs. 15,000 in fines. Each additional day carries a punishment of up to Rs.
100.
References
https://www.legalserviceindia.com/legal/article-3706-historical-perspective-of-
payment-of-wages-act-1936.html
http://labourbureaunew.gov.in/UserContent/PW_2011_180920141542.pdf
https://www.scconline.com/blog/post/2020/05/15/covid-19-no-coercive-action-to-be-
taken-for-one-week-in-representative-petition-challenging-mha-order-on-payment-of-
full-wages-during-lockdown/
https://articles.manupatra.com/article-details/EMPLOYMENT-REFORMS-A-STEP-
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