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THE PAYMENT OF WAGES ACT, 1936

Objectives
The Payment of Wages Act, 1936 was enacted with the object of (i) regulating payment of wages, imposition of fines and deductions from wages, and (ii) eliminating all malpractices by laying down wage periods and time and mode of payment of wages. The Act, therefore, ensures payment of wages in a particular form at regular intervals without unauthorized deductions.

Scope and Coverage
The Payment of Wages Act extends to the whole of India. It applies to any factory, any railway establishment and any industrial or other establishment or any other establishment notified by the Central or State Government.

Employees Entitled
The Act is applicable to the employees receiving wages below Rs. 1,600 p.m. Persons employed in a railway establishment, either directly or through a contractor, are also covered under the Act.

Administrative Authority
The Act is administered by the State Governments in their respective States. However, in case of railways, mines, oil-fields and Central air transport service, it is administered by the Central Government. The Central and State Governments are empowered to appoint the inspectors and payment of wages authority and make rules for enforcement of the provisions of the Act. (Secs. 24 & 26)

Central Advisory Board
The Central Government has appointed a Central Advisory Board for advising the Central and State Governments in the matters of the fixation and revision of minimum rates of wages and other matters, and for co-ordinating the work of the Advisory Boards.

Wages- Definition and Meaning
As per section 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 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 terms of employment (whether called as bonus or by any other name);
d) Any sum which by reason of termination of employment of the person employed is payable under any law, contract or instrument which provides 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;

In other words, 'wages' means all emoluments expressible in terms of money and payable to the employee including any sum payable for termination of service, wages in lieu of holidays or leave, overtime wages and bonus payable under the Bonus Act or under the terms of employment. However, 'wages' does not include value of any house accommodation, supply of light, water, medical attendance or any other amenity, contribution to any pension or provident fund, travelling allowance, reimbursement of any special expense and gratuity. Nor does it include suspension / subsistence allowance given during suspension period of an employee.

Obligations of Employers
1. Responsibility for payment of wages
Every employer is primarily responsible for payment of wages to his employees. Besides the manager of a factory, or the person responsible for supervision and control of an industrial or other establishment or the person nominated by the employer is also responsible for payment of wages to the employees of the factory or establishment.

2. Fixation of Wage-Periods
Every employer or the person responsible for payment of wages, should fix the wage-period, which may be per day, per week or per month, etc. But in no case it should exceed one month. (Sec. 4)

3. Time of Payment
Every employer / manager should make timely payment of wages. If the number of persons employed in an establishment is less than 1000, then wages must be paid within 7 days of the expiry of the wage period and in other cases within 10 days of the expiry of the wage period. (Sec. 5)

In case of termination of employees service within 2 days of date of termination.

4. Mode of Payment
The employer should pay the wages in cash i.e. in current coins or currency notes. However, wages may be paid either by cheque or by crediting in employee's bank account, after obtaining his written consent. (Sec. 6)

5. Not to make Unauthorised Deductions
The employer should not make any deduction from wages other than the following :
a) Fines in respect of an act or omission which has been approved by the Government and notified at the factory or establishment. No fine should be imposed on an employee, unless he has been given an opportunity of showing cause against the fine. Imposition of fines on employees below 15 years of age is prohibited under the Act. The amount of fine imposed during a wage period, should not exceed 3% of the wages payable, in respect of that wage period and should be recovered within 60 days from the day of its imposition. Fines are not to be recovered in installments.

b) Deduction for absence from duty which should not exceed an amount equal to -

Wages Payable for the wage period X Period for which he was absent Total period for which he was required to work during the wage period

c) Deduction for damage or loss of goods or money, expressly entrusted to the employee's custody, not exceeding the amount of actual damage or loss caused due to his neglect or default.

d) Deduction for house accommodation and other amenities or services as notified by the Government provided by the employer. The housing accommodation, amenity or service should have been accepted by the employee as a term of employment or otherwise. The amount of deduction should not exceed the value of the accommodation, amenity or service provided. Supply of tools and protectives is not an amenity or service provided.

e) Deduction for recovery of advances (including those for travelling and conveyance allowance) and interest thereon, shall be made in accordance with section 12 and the rules made by the State Government.

f) Deduction for recovery of loans made from any labour welfare fund, and housing loans, alongwith interest thereon shall be made in accordance with section 12A and the rules made by the State Government.

g) Deduction for income tax payable by the employee.

h) Deduction required to be made by order of a court or other competent authority.

i) Deduction for subscription to provident fund and repayment of advances from provident fund.

j) Deduction for payment to co-operative societies approved by the Government, or an insurance scheme of Post Office.

k) Deductions can be made, with the written authorisation of the employee, for payment of any life insurance premium, purchase of the government securities, deposits in any post office Saving Bank, contribution to any labour welfare fund set up by the employer or the trade union, membership fees of any trade union, contribution to the Prime Minister's National Relief Fund etc.

l) Deductions for payment of insurance premia on Fidelity Guarantee Bonds and contribution to any insurance scheme framed by the Central Government.

Limit of Deductions
The total amount of permissible deductions in any wage period should not exceed :
a) In case where deductions are wholly or partly made for payment to co-operative societies, 75% of the wages; and
b) In any other case, 50% of the wages.

6. Payment of wages in case of death of an employee

In case of death of an employee, or in case his whereabouts are not known, all amounts payable to him as wages shall be either paid to his nominee or where there is no nominee for any reason it shall be deposited with the prescribed authority, whereupon the employer shall be discharged of his liability to pay those wages.

7. Return, Registers and Records
The employer is required to submit an annual return of wages in Form No. IV in respect of every year by the 15th February of the succeeding year.

The employer / manager is required to maintain the following registers and records :
a) Register of payment of wages giving particulars of persons employed, nature of the work performed by them, wages paid and the deductions made therefrom, the receipts given by them and other prescribed particulars. (Sec. 13A)
b) Register of fines imposed and realisation thereof, in the prescribed form. Sec.8(8)
c) Register of deductions for damage or loss and realisations thereof in the prescribed form. Sec. 10 (2)

8. Display of Notice
The employer / manager should ensure that a notice containing the abstracts of the Act and the rules made thereunder, is displayed at a prominent place in the factory/establishment. The notice shall be in the prescribed form, in English and in the local language of the majority of the persons employed. (Sec. 25)

Rights of Employers
1. Right to make permissible deductions from the wages of an employee. (Sec. 7)
2. Right to appeal against an order directing the employer to refund deductions wrongfully made or to pay the delayed wages or compensation to the employee under section 15(3) or an order imposing penalty under Section 15(4).

Rights of Employees
The obligations of employers are really the rights of employees. Besides these, the employees have some more rights -

1. Right to claim unpaid or delayed wages, unauthorised deductions from wages and fines imposed, alongwith some compensation. The application for such claims may be presented within 12 months, by the employee himself or through a legal practitioner or an official of a registered trade union, authorised in this behalf.

2. Right to appeal against an order of the payment of wages authority if the amount of wages claimed to have been withheld exceeds Rs. 20/- or against an order imposing penalty under Section 15(4) for making a malicious or vexatious claim against an employer. (Sec. 17)

Contracting out is Void
Any contract or agreement whereby an employee relinquishes his right under the Act, shall be null and void in so far as it purports to deprive him of such right. (Sec. 23)

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