The Payment of Wages Act, 1936

Unit IV
Labour Laws [Open Elective]
SS B. Com. III
The Payment of Wages Act, 1936
 The Payment of Wages Act, 1936 was passed on 23rd April, 1936.

 It came into force from 28th March, 1937

 It was amended several times with a view to making it more comprehensive.

 The Act seeks to remedy the below grave evils in wage payment.
a. Ensuring regularity of payment

b. Ensuring payment in legal tender

c. Preventing arbitrary deductions

d. Restricting employers rights to impose fines and

e. Providing remedy to the workers.

Object of the Act

 The object of the Act is to provide that employed person shall be paid
wages in particular form, at regular intervals and without any
unauthorized deduction.
Scope of the Act
 The Act is applicable to only ‘certain classes’ of persons engaged in
factories and industries.

 Further, the Act applies to persons employed in any factory.

 Persons employed in any Railway by a Railway administration or by a

person fulfilling a contract with Railway Administration.

 Persons employed in an industrial or other establishments specified

Section 2 (i) to (viii)
Scope of the Act
 This Act applies to wages payable to an employed person in respect of a
wages period if such wages for that wage period do not exceed six
thousand five hundred rupees 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
Responsibility of Payment of Wages (Section 3)
• Every employer is responsible for the payment of wages to persons
employed by him.

• Manager in a factory

• Person who is responsible for supervision and control in industrial

establishment

• Person nominated by the railway administration.

Fixation of wage-periods (Section 4)
• Every person responsible for the payment of wages under section 3 shall
fix periods (in this Act referred to as wage-periods) in respect of which
such wages shall be payable.

• No wage-period shall exceed one month.

Time for Wage Payment (Section 5)
1. (a) In railway, factory or [industrial or other establishment] upon or in which less than one thousand persons
are employed, shall be paid before the expiry of the seventh day,

(b) In any all other cases, wages must be paid before the expiry of the tenth day, after the last day of the wage-
period.

Provided that in the case of persons who are employed on a dock, jetty, wharf or a mine, the balance of wages
found due on completion of the final tonnage account of the ship or wagons loaded or unloaded shall be paid
before the expiry of the seventh day of such completion.

2. 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 second working day from the day on which his employment is
terminated

3. All payments of wages shall be made on a working day.

Authorised Deduction from Wages
 Fines ( a list must be exhibited in the place of work) – no fine is imposed on a person below 15 years of age.

 Deduction for absence from duty

 Deductions for damage or loss

 Deductions for Recovery of advances and overpayment of wages/loan

 Deductions for income tax payable by the employed person

 If any deduction is directed by the court

 Provident Fund

 Deductions for payments to cooperative societies and insurance schemes

 Deductions for House Accommodation

 Acceptance of Counterfeit Base Coin or forged currency notes.

 Any other deduction permitted under the Act.

Illegal Deduction from Wages
 Deduction from the wages, when damage or loss is not directly because of an employed person’s
negligence or default.

 Deduction made from the wages of an employed person for tools or raw materials supplied to
him required for the purpose of employment.

 Deduction made for payment of any premium to Life Insurance Policy without the written
authorization of the employed person.

 Where deductions wholly or partly made for payment to co-operative societies exceed 75% of the
wages and in any other case exceed 50% of the wages, such excess deduction would constitute
illegal deduction.
Maintenance of Registers and Records
 Every employer shall maintain such registers and records giving particulars of
persons employed by him work performance by them, wages paid to them, the
deductions made from their wages, the receipts given by them and other
particulars in forms prescribed under this act.
Authorities Under the Act (Section 14)
 An inspector Factories appointed under Section 8 (1) of the Factories Act, 1948 is
an inspector for the purpose of this Act in respect of all factories within the local
limits assigned to him.

 The Inspector is empower to….

a. make such examination and enquiry as he thinks fit, in order to ascertain whether the
provisions of the Act or rules made thereunder are being observed.

b. Enter, inspect and search any premises of any railway, factory or industrial establishment
or any other establishment at any reasonable time for the purpose of carrying out the
objects of the Act.
Authorities Under the Act (Section 14)
 The Inspector is empower to….

c. Supervise the payment of wages to persons employed upon any railway or any
factory or industrial establishment

d. Require by a written order, the production of any register or record maintained in

pursuance of the Act and take statement of any person which he may consider
necessary for carrying out the purpose of the Act.

e. Seize or take copies of such registers or documents or their portions as he may

consider relevant in respect of an offence under the Act which he has reason to believe
has been committed b an employer.
Authorities Under the Act (Section 14)
 The Inspector is empower to….

f. Exercise such powers as may be prescribed.

The inspector cannot compel any person to answer any question or make any
statement tending to incriminate himself.

The employer is required to afford an inspector all reasonable facilities for making
any entry, inspection, supervision, examination or enquiry necessary under the
Act.
Penalties for Offences Under the Act (Section 20)
 Every employer who contravenes any provisions of this Act shall be punishable with a fine
extending up to Rs. 500.

 If an employer pays to any employee less than the prescribe minimum rates of wags shall be
punishable with imprisonment up to 6 months and with fine up to Rs.500 or both.

 Every employer who (i) does not fix period for payment of wages or (ii) does not pay wages on a
working day, or (iii) does not pay wages in current coin or currency notes or (iv) does not record
all fines and realization in a prescribed register, shall be punishable with fine extending up to Rs.
200
Penalties for Offences Under the Act (Section 20)
 Every employer who (i) fails to maintain a register or record or (ii) willfully
refuses or without lawful excuse neglects to furnish such information or return
(iii) willfully furnishes any information or return which he knows to be false or
(iv) refuses to answer or willfully gives a false answer to any question necessary
for obtaining any information required to be furnished under the Act, shall be
punishable with a fine extending up Rs. 500
Penalties for Offences Under the Act (Section 20)
 Whoever (i) willfully obstructs an inspector in the discharge of his duties or (ii)
refuses or willfully neglects to afford an inspector any reasonable opportunity for
making any entry, inspection, examination, supervision or enquiry in relation to
railway, factory or industrial establishment or (iii) willfully refuses to produce on
demand of any inspector any register or other document kept or (iv) prevents or
attempts or does anything which he has reason to believe is likely to be examined
by any inspector, shall be punishable with a fine extending up to Rs.500.