Payment of Wages Act, 1936

The Payment of Wages Act, 1936 was passed to regulate the payment of wages to certain classes of persons employed in industry. THE OBJECT OF THE ACT: Is to avoid unnecessary delay in payment of wages and to prevent unauthorized deductions from the wages. The Act is applicable to the payment of wages to persons employed: (i) (ii)
(iii)

In factories, Upon railways, In other establishments specified in sub-clauses (a) to (g) of section 2(ii) of the Act.

The Act empowers the state Government to extend its provisions to the persons employed in any establishments over and above the aforesaid establishments. Wages averaging less than Rs. 10,000 per month only are covered or protected by the Act.

Prescribed Sec. 2(iv): It means prescribed by rules made under this Act: Wages:
Wages mean all remuneration (whether by way of salary, allowances or otherwise) expressed in term of money or capable of being so expressed would, if the term 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 term of employment

(whether called a bonus or by any other name).

(d) Any sum which by person the termination of employment of the person employed is payable under any law, contract or instrument which provide 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.

But does not include:

(a) Any bonus (whether under a scheme of profit sharing or otherwise)

which does not form part of the remuneration payable under the term of employment or which is not payable under any award or settlement between the parties or order of a court.
(b)The value of any house accommodation, or of the supply of light,

water, medical attendance or other amenity or any service excluded from the computation of wages by a general or special order of the (appropriate Government). (c) Any contribution paid by the employer to any person or provident fund, and interest which many have accrued thereon. (d) Any travelling allowance or the value of any travelling concession.

(e) Any sum paid to the employed person to defray special expenses

entailed on him by the nature of his employment, or

(f) Any gratuity payable on the termination of employment in cases other than those specified in sub-clause (d).

Responsibility for payment of wages:

(1) Every employer shall be responsible for the payment of wages required to be paid under this Act to persons employed by him and in any case of person employed.
a. In factories, the person, if any, who has been named as the

manager of the factory. If the manager resigns or is dead or is removed then the responsibility to pay the wages becomes the responsibility of the employer.
b. In industrial or other establishments, the person, if any

responsible to the employer for the supervision and control of the industrial or other establishment,
c. Upon railways (other than in factories), if the employer is the

railway administration has nominated a person in this behalf for the local area concerned. d. In the case of contractor , a person designated by such contractor who is directly under his charge and
e. In the case of contractor, a person designated by the

employer as a person responsible for complying with the provisions of the Act.
(2)Notwithstanding anything contained in, it shall be the responsibility

of the employer to make payment of all wages required to made under this Act in case the contractor or the person designated by the employer fails to make such payment.

FIXATATION OF WAGE-PERIOD (SEC. 4):

Every person shall be responsible for the payment of wages under shall fix periods, known as wage-periods, in respect of which such wages shall be payable . A wage-period may be daily, weekly, fortnightly but shall not exceed one month.

The purpose of fixing a wage period is to ensure that inordinate delay is not caused in payment of wages.

Time of Payment:
Wages must be paid on a working day and not on a holiday. Establishment employing less than 1,000 persons must pay wages before the expiry of the 7th day of every month and other establishments must pay wages before the expiry of the 10th day of every month. When the employment of any person is terminated, the wages earned by him must be paid before the expiry of second working day from the day of termination. The weekly and other recognized holidays must be excluded in computing the second working day. In case of persons employed on docks, wharf, or jetty or mine, the balance of wage 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 from the date of such completion.

METHOD OF PAYMENT:
Wages must be paid in current coin or currency notes or in both and not in kind. Where the amount of any bonus payable to an employed person exceeds an amount equal to one-fourth of his earning (exclusive of dearness allowance) for the year to which the bonus relates, such excess shall be paid or invested in the manner prescribed.

Deduction from the wages payable to an employed person:

The Act prohibits all kind of deductions except those which are authorized by or under the Act.

Explanation 1: Any loss of wages resulting from the imposition, for good and sufficient cause, upon a person employed of any of the following penalties namely (a) The withholding of increment or promotion (including the stoppages of increment at an efficiency bar), (b) The reduction to a lower post or time-scale or to a lower stage in a time-scale, or

(c)

Suspension,

Shall not be deemed to be a deduction from wages In any case where the Rules framed by the employer for the imposition of any such penalty are in conformity with the requirements if any, which may be specified in this behalf by the (appropriate Government) by notification in the official Gazette.

Deductions from the wages: (1) Fines:

(a) The employer, with prior approval of the appropriate

Government, must exhibit on his premises a list of acts or omissions for which fines can be imposed.

(b) Before imposing a fine on an employed person he must be given the opportunity of showing cause against the fine. (c) The amount of fine must not exceed 3% of the wages payable to him in respect of that wage period. (d) A fine can not be imposed on an employed person who is under the age of 15vb years.
(e) A fine cannot be recovered by installments or after 90 days

from the day of the act or omission for which it is imposed.

The procedure prescribed for the imposition of fine:

Any person desiring to impose a fine on an employed person or to make a deduction for damage or loss shall explain personally or in writing to the said person the or omission, or damage or loss in respect of which the fine or deduction is proposed to be imposed, and the same amount of fine or deduction, which is proposed to be imposed and shall hear his explanation in the presence of at least one other person, or obtain it in writing.

(2) Deduction for absence from duty:

The amount of such deductions shall in no case bear to the wages payable to the employed person in respect of the wage period for which the deduction is made, a larger proportion than the period for which he was absent bears to the total period, during which, by the terms of his employment, he has required to work.

(3) Deductions from 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 where such damage or loss is directly attributable to his neglect or default. Deduction under this clause shall not exceed the amount of the damage or loss caused to the employer by the neglect or default of the employed person. A deduction for damage or loss shall not be made until the employed person has been given opportunity of showing cause against his deduction.

(4) Deductions for house accommodation supplied by the employer

or by the Government or any housing board set up under any law for the time being in force (whether the Government or the board is the employer or not) or any other authority engaged in the business of subsidizing house-accommodation which may be specified in this behalf by the by notification in the official gazette.

(5) Deductions for such amenities and services supplied by the

employer as the appropriated Government or any officer specified by it in this behalf may, by general or special order authorize.

(6) Deductions for the recovery of advances of whatever nature

(including advances for travelling allowances or conveyance allowance), as the interest due in respect thereof or for adjustment of over-payment of wages, subject to the rules made by the appropriate Government.

(7) Deductions for the recovery of loans made from any fund
constituted for the welfare of labour with the rules approved by the (appropriate Government), and the interest due in respect thereof.

(8) Deductions for the recovery of loans granted for house building
or other purpose approved by the (appropriate Government) and

the interest due in respect thereof. This deduction shall be subject to any rules made by the appropriate Government regulating the extent to which such loans may be granted and the rate of interest payable thereon.

(9) Deductions of income-tax payable by the employed person,.

(10)

Deductions required to be made by order of Court or other authorities component to make such order.

(11)

Deductions for subscriptions to, and for re-payment of advance from any provident fund to which the provident funds Act, 1925, applies or any recognized provident fund approved in this behalf by the (appropriate Government) during the continuance of such approval.

(12)

Deductions for payment to co-oprative societies by the (appropriate Government) or any officer specified by it in this behalf or to a scheme of insurance maintained by the Indian Post Office, for being deposited in any post office Savings Bank.

(13)

Deduction made with the authorization of the person employed for payment of any premium on his life insurance policy to Life Insurance Corporation of India established under the Life Insurance Corporation act, 1958 or of any other insurance company permitted to operate in India, for the purchases of securities of the Government of India or of any State Government or furtherance of any saving scheme of any such Government.

(14)

Deduction made with the authorization of the employed person, for the payment of his contribution to any fund constituted

by the employer or the trade union registered under the Trade Union Act, 1926.

(15)

Deductions for the payment of insurance premium on Fidelity Guarantee Bonds and for payments to co-oprative societies, subject to conditions prescribed by the appropriate Government.

(16)

Deduction made with the authorization of the employed person, for contribution to the Prime Minister`s National Relief Fund or to such other Fund as the Central Government may, by notification of Official Gazette, specify.

(17)

Deductions for contribution to any insurance scheme framed by the Central Government for the benefit of its employees.