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Part 1st INTRODUCTION OF WAGES

1.1 Wages and Salaries

Wages are paid to employees on


an hourly, daily or weekly basis.
Examples of jobs that typically
pay wages are house painters,
substitute teachers and factory
employees who work on the
assembly line. While
Salary is a set amount of money
paid to an employee each month
or year, no matter how many
hours he works.

1.1.1) Pros of Wages and


Salaries

• Wages can be increase


(over time)
• You get salary any how
inspite of doing less work

1.1.2). Cons of Wages and


Salaries

• Wages can be decrease


(doing less work)
• You can’t earn extra money
(more than your salary)
inspite of doing more work
(overtime)

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1.2 Explanation of Wages

1. "Wages" means all remuneration, earnings, allowances, tips


and service charges or compensation received by
workers in exchange for their labor
2. Wage is Compensation i.e. monetary benefit given to labor
in return for the services provided by them.

While Allowances including traveling


allowances, attendance allowances,
commission and overtime pay are
within the definition of wages. However,
it does not include:

• The value of any accommodation,


education, food, fuel, water, light or
medical care provided by the
employer or government
• Employer's contribution to any
retirement scheme;
• Non-recurrent traveling allowance
• Any sum payable to the employee to
defray special expenses incurred by
him by the nature of his
employment;
• Gratuity payable on completion or
termination of a contract of
employment.

Note
Gratitude payable: a small sum of money given as a reward for good
service; a tip.

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Recurrent: Actual traveler
Defray: to pay expenses
Part 2nd PAYMENT OF WAGES ACT

2.1 Payment of Wages

Payment for labor or services to a worker, especially


remuneration on an hourly, daily, or weekly basis or by the piece

2.2 Payment of Wages Act

The history of labor relations is a


long and complicated struggle
between employers, labor unions,
governments and individual
workers.
In some cases, laws govern how
employers treat their workers and
what types of behaviors are illegal.
These laws take many forms,
including payment of wages acts.

2.2.1) Definition

A payment of wages act is


a law that is primarily concerned
with protecting worker's rights to
receive fair pay for performing
their jobs. An act may only apply to
a specific group of workers, or it
may apply to everyone employed
within the borders of the
government that establishes the
act.

2.2.2) Object of the Act

• To avoid unnecessary delay in the payment of wages


• To prevent unauthorized deductions from wages

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2.2.3) Basic Components
• A list of prohibited behaviors for employers like illegal
deductions from paychecks, inconsistent payments to
workers and payments
• It state whether employers must offer paid leave or
overtime compensation
• Responsibility of payments
• Fixation of wage periods
• Time of payment of wages
• Medium of payments
• A list of legal deductions from the wages of employee

2.4) Types of Payment of Wages

2.4.1) Hourly Wage

Hourly wage is a fixed earning paid to


an employee for services per hour.

2.4.2) Piece-Rate Wage

Piece wages are those that are paid


according to output.

2.4.3) Overtime Wages

Overtime wages are payment made to


a worker for services rendered beyond
normal working hours.

2.4.4) Minimum Wages

A minimum wage is the lowest hourly,


daily or monthly remuneration that
employers may legally pay to workers.

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Part 3rd PAYMENT OF WAGES ACT
OF
PAKISTAN

3.1 Payment of wages act 1936

In Pakistan, law concerned with


Payment of wages is contained in
payment of wages act 1936. It
consists of 26 section and 5
appendices.

3.1.1) Authority

The authority is given to


Provincial government i.e. they
have authorization to apply this
act

3.1.2) Application

The Payment of Wages Act, 1936


extends to whole of Pakistan.
According to the Act, it is
applicable to the persons
employed

 in any factory
 by railway administration
or, either directly or
through a sub-contractor
 In an industrial or other
establishments.

3.1.3) Limitation

This act will not apply in case of workmen who get monthly wages
exceeding Rs.7000 (sec1)

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3.2 Responsibility for payment of wages

Every employer shall be responsible for the payment to persons


employed by him of all wages required to be paid under this Act.
(sec3)

In the case of persons employed


(otherwise than by a contractor)

3.2.1) In factories

If a person has been named as the


manager of the factory

3.2.2) In industrial or other


establishments

If there is a person responsible to the


employer for the supervision and control
of the industrial or other establishments

3.2.3) Upon railways (otherwise


than in factories)

The railway administration nominates a


person on their behalf for the local area
concerned. The person is assigned or
allocated according to the area. The
person so named, or the person so
nominated shall be responsible for such
payment.

3.4 Wage period (Fixation of wage-periods)

• Payment of wages shall fix.


• No wage period shall exceed one month.

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• 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.
(Sec4)

3.5 Time of payment of wages

Following are the rules and


regulation for the time of payments
(sec5)

• Any 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,
• Any other railway,
factory or industrial or other
establishment, shall be paid
before the expiry of the tenth
day, after the last day of the
wage period in respect of which
the wages are payable:
• 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
• The provincial Government may exempt persons
employed in a railways (otherwise in a factory) from the
operation of this law
• All payments of wages shall be made on a working
day

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3.6 Medium of payments

• According to section 6 of the Payment of Wages Act, 1936


all wages shall be paid in current coin or currency notes or in
both provided that 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.
• This clearly shows that none of the payment other than that
of wages of an employee & that is also with the written
authorization the employee can be transfer to the bank
account.

3.7 Deductions from Wages

Deductions from the wages of an


employed person shall be made
only in accordance with the
provisions of this Act. An employer
is prohibited from deducting wages
from his employee, except under
the following circumstances (sec7-
13)

3.7.1) Fines

Following are the condition for


imposing the fines according to the
act

• Fines can be imposed


for wrongful acts or
omissions under some
special circumstances.
• A list of fine must be
mentioned in the display
notice in a prescribed
manner

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• An opportunity must be given to employee of showing
cause before any fine is imposed
• Amount of fine shall not exceed an amount equal to
3% of the wages.
• An employed person under the age of fifteen years
cannot be fined.
• Fine cannot be recovered by installments or after the
expiry of 90 days from the day on which it was imposed.
• Fine shall be deemed to have been imposed on the
day of the act.
• All fines and all realizations thereof shall be recorded
in a register.
• Fine recovered shall be spent on the welfare of the
employees.

3.7.2) Deduction for absence


of duty


Deductions for absence
from work, the sum to be
deducted should be
proportionate to the
period of time the
employee is absent from
work;
• If 10 or
more employed persons
remains absent then such
deduction may not exceed
his wages for 8 days.

3.7.3) Deductions for damage to or loss

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• Deductions for damage to or loss of the employer's goods,
equipment, or property by the employee's neglect or
default
• Such deduction shall not exceed the amount of the damage
or loss caused to the employer.
• Employee is given an opportunity of showing cause.
• All such deduction shall be recorded in a register.

3.7.4) Services rendered

• Deductions of the value of


food and accommodation,
tangible or intangible benefits
or other services, the
employer supplies to the
employee
• It can be made only when the
employer had accepted these
benefits of his free will as a
term of his employment.
• Such deduction shall not
exceed the value of food and
accommodation, tangible or
intangible benefits or other
services supplied to the
employee

3.7.5) Advances and overpayments of wages

• Deductions for the recovery of any advanced or over-paid


wages to the employee include the following conditions
• Recovery of advance given before employment began shall
be made from the first payment in respect of complete
wage period
• Advance payments for traveling expenses cannot be
deducted
• Recovery of an advance of wages not already earned shall
be subject to such conditions as the Provincial Government
may impose.

3.7.6) Cooperative societies and insurance scheme

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Deduction may be allowed to employer for the payments to
cooperative societies approved by the Provincial government or
to scheme of insurance maintained by Pakistan
Post office

3.7.7) Income tax

Employer is allowed to deduct income tax


payable by an employed person

3.7.8) Provident fund

Deduction is permitted for the contribution payable by the


employed person to the provident fund under Provident Fund Act
1925

3.7.9) Orders of Court

Deductions for outstanding maintenance


payment owed by the employee pursuant to
the Attachment of Income Order issued by the
court

3.7.10) Written authorization

Deductions, at the written authorization of the employee in case


of any war saving scheme approved by Provincial government for
the purchase the securities of government of Pakistan or the
government of UK

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