Payment of wages Act 1936

PAYMENT OF WAGES ACT, 1936

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 Introduction of the Payment of Wages Act, 1936

In a country where even living wages are not paid to workers, the
need to protect the wages earned by them can hardly be over
emphasized.
Before the Payment of Wages Act, 1936 was passed, evils of
withholding wages, delays in paying wages and making unreasonable
deductions out of wages were quite prevalent

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Objective of the Act

1. The Payment of Wages Act, 1936 was passed to regulate the

payment of wages to certain classes of persons employed in industry.
2. It is essentially meant for the benefit of industrial employees not
getting very high salaries and the provisions of the Act were enacted to
safeguard their interest.
3. It also provides against irregularities in payment of wages and
unauthorized deductions there from by the employers. Further it
ensures payment of wages in a particular form and at regular intervals,
without unauthorized deductions

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Extent of the Act

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.

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Definition
Wages [Sec.2 (vi). 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.

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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 traveling allowance or the value of any traveling 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

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Rules for Payment of wages

Responsibility for
Fixation of wages Time of payment of Medium of payment
payment of wages
periods (Sec. 4) wages (Sec.5) of wages (6)
(Sec. 3).

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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 be paid under the Payment of Wages Act (Sec. 3).
But in the case of persons employed (otherwise than by a contractor) in factories,
industrial establishments or upon railways, the following persons shall also be
responsible for the payment of wages:

a) in factories, the person named as the manager;

b) in industrial or other establishments, the person, if any, who is responsible to the
employer for the supervision and control of the industrial or other establishment;

c) upon railways (otherwise than in a factories), the person nominated by the

railway administration in this behalf for the local area concerned [Provision to Sec.
3].

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2.Fixation of wages periods (Sec. 4)

Every person responsible for the payment of wages under Sec. 3 shall
fix periods, known as wage-periods, in respect of which such wages
shall be payable {Sec. 4 (1)]. A wage-period shall not exceed one
month [Sec. 4 (2)].

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3. Time of payment of wages (Sec.5)
i) 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 day of the following wage-period [Sec. 5 (1)].

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 (ii) 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 [Sec.
5)

(iii)Wages to be paid on a working day. All payment of wages

shall be made on a working day [Sec.5)

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4. Medium of payment of wages (Sec. 6).
All wages shall be paid in current coin or currency or in both.
However, the employer may, alter obtaining the written authorization
of the employed person, pay him the wages either by cheque or by
crediting the wages in his bank account.

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Deduction from Wages (Section 71)
Meaning of Deduction section 7(1)
Section 7(1) provides that notwithstanding the provisions, the wages
of an employed person shall be paid to him without deductions of any
kind except those authorized by or under this act.

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Kinds of Deductions
1.Fines (Section 8):
i) No fine shall be imposed on any employed person save in respect of
such acts or omissions 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 [Sec. 8 (1)].
ii) 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 [Sec. 8 (2)].
iii) 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 [Sec. 8 (3) and (5)].
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 iv) The total amount of fine which may be imposed in any 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 [Sec. 8 (4)]. 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)].
v) Every fine shall be deemed to have been imposed on the day of the act
or omission in respect of which it was imposed [Sec. 8 7)].
vi) All fines and all realizations thereof shall be recorded in a register to be
kept by the person responsible for the payment of wages, in such form as
may be prescribed. All realizations of fines shall be applied only such
purposes as are beneficial to the persons employed in the factory [Sec. 8
(8)].

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2. Deductions for absence from duty [Sec. 9]
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.

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3. Deductions for damage or loss (section 10)
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 account shall not exceed
the amount of 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 [Sec. 7 (2) (c) and 10 (1)].

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4. Deduction 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.

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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 money given after employment began
shall be subject to such conditions as the State Government may
impose.

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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 shall be deducted
from the wages.

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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 authorization 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 the 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.

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8) 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.

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