Wage Policy of

India

• Payment of Wages Act 1936

• Minimum Wages Act 1948
• Payment of Bonus Act 1965
•Equal Remuneration Act 1976
Payment of Wages Act
1936
Objective of the Act:
• Regulating Payment of Wages, Imposition
of Fines and Deductions from Wages

• Eliminating all malpractices by laying

down wages periods and time and mode
of payment of wages
Applicability of the Act
• The Act applies to the whole of India.
• The Act applied to the payment of wages to
> Persons employed in any factory
> Persons employed in any Railway
establishments by a Railway administration
or by a person fulfilling a contract with
Railway Administration
• The Act apply to persons who are drawing
average 1600/- or more per month.
Wages – Section 2 (vi)
• Wages means all remuneration whether
by way of salary, allowance 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 the person
employed in respect of his employment
or work done in such employment
Conditions for Payment
of Wages
• Responsibility for Payment of Wages – Section 3
Persons responsible for the payment of all
wages
(i) Manager of the Factory
(ii) Persons responsible to the employer for
supervision and control of the industrial or other
establishments
(iii) Persons nominated by the railway
administration for the local area concerned
Conditions for Payment
of Wages
• Fixation of Wage Period – Section 4

Persons responsible for the payment

of all wages has to fix the wage
period.

Wage Period shall not exceed one

month
Conditions for Payment
of Wages
• Time for Payment of Wages – Section 5
If the number of employees in an
establishments is less than 1000, Wages
have to be paid before the expiry of seventh
day of every month
If the number exceeds 1000, the wages
have to be paid before the expiry of tenth day
of every month
Incase of termination of service of an employee
wages earned by him have to be paid before
the expiry of second working day on which
he has been terminated
Conditions for Payment
of Wages
• Mode of Payment – Section 6

All the wages have to be paid to the

workers in current coins or currency
notes or in both. It cannot be in kind
The employer can, after obtaining the
written authorisation of the employed
person, pay him wages either by cheque
or by crediting the wages in his bank
account.
Deduction from Wages –
Section
• Fines
7
• Deduction for Absence of Duty
• Deduction for Damage or Loss
• Deduction for House Accommodation
• Deduction for Amenities and Services
• Deduction for Recovery of Advances or for
Adjustments of Payments Made
• Deduction for Recovery of Loans
• Deduction for Recovery of Loans Granted for House
Building
• Deduction of Income Tax
• Deduction by order of Court
• Deduction for subscription to any Provident Fund
• Deduction for Payment for Insurance Schemes
Minimum Wages Act
1948
Objective of the Act
• To Promote the welfare of workers by fixing
minimum rates of wages where labour is not
organised and sweated labour is more prevalent
• To Prevent exploitation of workers by ensuring
that they are paid the minimum wages which
would provide for subsistence and preserve their
efficiency

Applicability of the Act

• The Act applies to whole of India

Wages – Section 2 (h)
• All remuneration capable of being expressed in
terms of money, which would , if terms of contract
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.
Classification of Wages
> Living Wage
> Fair Wage
> Minimum Wage
Fixing of Minimum Wages –
Section 3
• Depending upon the nature of employment the appropriate government is responsible for
fixing Minimum wages.
• Appropriate Government may fix :
> Minimum rate of wages for Time work ( Minimum Time Rate )
> Minimum rate of wages of Piece work ( Minimum Piece Rate )

• Appropriate Government may fix different minimum rates of wages for

(i) Different classes of work
(ii) Adults, adolescents children and apprentices
(iii) Different localities
Fixing of Minimum Wages –
Section 3
• Fixing of Minimum rate of wage by any one or
more wage period
> By the hour
> By the Day
> By the Month
> By such other large wage period as may be
prescribed

• If any wage period have been fixed under Section

4 of Payment of Wages Act 1936, minimum wages
shall be fixed in accordance therewith
Procedure for Fixing and Revising Minimum
Wages – Section 5

• Appropriate Government may fix or revise rates of

wages based on the following

1. Appoint as many committees and sub

committees as it considers necessary to hold
enquiries and advise it in respect of such fixation or
revision
2. By notification in the official gazette, publish its
proposal for the information of persons likely to be
affected thereby and specify a date not less than
two months from the date of notification on which
the proposals will be taken into consideration
Payment of Bonus Act
1965
Objective of the Act

• To impose statutory liability upon

employers of the establishments covered
by the Act to pay bonus to employees in
the establishments
• To provide for payment of minimum and
maximum bonus
• To Provide machinery for the enforcement
of the liability for payment of bonus with a
view to minimising the dispute on this
account
Applicability of the Act
• Act extends to the whole of India and is
applicable to every factory and to every
other establishments wherein 20 or more
workmen are employed on any day during
an accounting year.
Employees Entitled
• Employees receiving a salary or wages up to
3500/- and engaged in any skilled, unskilled,
managerial, supervisory, manual work & if
he/she has worked for 30 days
Administrative Authority
• Administered by both Central and State
Governments through the Inspectors
appointed by them.
Minimum Bonus
• A minimum bonus which is required to pay
even if there is a loss or there is no Allocable
Surplus (60% of Available Surplus) is:
>> 8.33% of the Salary or wages during
the accounting year
>> Rs 100/- in case of employees above
15 years and Rs 60/- in case of
employees who were below 15 years, at
the beginning of the accounting
year, whichever is higher, whether or
not employer has any Allocable Surplus
>> According to Section 10 employer is
bound to pay the minimum bonus even
if he suffers loses
Maximum Bonus
• If the Allocable Surplus exceeds the amount of
minimum bonus payable to employees the
employer shall pay a maximum of 20% of Salary/
Wages as Bonus.
Bonus on Arrears of Wages
• Employees will be entitled for bonus and the same
will be calculated based on the arrears of wages
which has been paid
Mode and Time Limit for Payment of Bonus
• Bonus must be paid in cash and within a period of 8
months from the close of accounting year or one
month from enforcement of award. The period may
go from 8 months to 2yrs in case there is an
Industrial Dispute regarding Payment of Bonus
Set On and Set Off
• In case Allocable Surplus exceeds amount
of maximum bonus the remaining may
carried forward for being set on in the
succeeding four Accounting years.
• If there is no Allocable Surplus or Allocable
Surplus fall short of the minimum bonus
payable, then such deficiency be met out
of the amount brought forward for being
set on from the previous accounting year.
Deductions permissible from Bonus
Bonus in case of of New Establishments
Equal Remuneration Act
1976
Objective of the Act
• The Equal Remuneration Act in India was
enacted to prevent discrimination between
workers on grounds of gender.
• The purpose of the act is to make sure that
employers do not discriminate on the basis
of gender, in matters of wage fixing,
transfers, training and promotion.
Applicability of Act
• The Act extends to the whole of India
• The Act is extended to all Establishments,
Employments, Public or Private, including
domestic service
 Payment of Wages at Equal Rates
to Men & Women Workers – Section
4
• The Equal Remuneration Act seeks to
address the issue of payment of unequal
wages to men and women.
• It makes it compulsory for employers to
pay women wages equal to those paid to
men for performance of the same work.
• According to Section 4(1) No employer shall pay
to any worker, employed by him in an
establishment or employment, remuneration,
whether payable in cash or in kind, at rates less
favourable than those at which remuneration is
paid by him to the workers of the opposite sex in
such establishment or employment for performing
the same work or work of a similar nature.
 No Discrimination to be made
while Recruiting Men and Women
Workers – Section 5
• Equal Remuneration Act specifically forbids
employers from discriminating against women
during recruitment
• No employer shall, while making recruitment for
the same work or work of a similar nature, or in
any condition of service subsequent to
recruitment such as promotions, training or
transfer, make any discrimination against women
• The provision of this section shall not affect any
priority or reservations for Scheduled Castes or
Scheduled Tribes, Ex-Servicemen,
Retrenched employees or any other class or
category of persons in the matter of Recruitment
to a post in establishment or employment