Payment of wages act

Indian Railways study material

1. Payment Of Wages Act
By
MOHANDAS P
ASST. PROFESSOR (PM)
N.A.I.R-VADODARA
1

2. Intheearlierdays,theimpositionoffinewasa
fairlygeneralpracticeinperennialfactoriesandrailways.
Thereusedtobeotherdeductionsfromthewagespaid
totheworkers,suchasformedicaltreatment,education,
interestonadvancesoftheworkers’ownwages,
charities,andreligiouspurposesselectedbythe
employer.
Animportantfeaturewhichaddedtothe
embarrassmentoftheworkersatvariousplaceswas
paid.Therewasnouniformityinthepaymentofwages.
Longcomparativelythelongerperiodinrespectofwhich
wageswereintervalsbetweenwagepaymentsinvariability
added to the in convenience of the
workers.
Evolution of concept of wages in India.
2

3. TheRoyalCommissiononLabourinitsreport
(1931)recommended, among otherthings,that
legislationondeductionfromwagesandfineswas
necessaryanddesirable.Thecommissionexaminedthe
delaysinthepaymentofwagesandthepracticeof
deductionsfromthewagesofanemployedperson.In
thelightofitsrecommendations,theGovernmentof
IndiaintroducedaBillseekingtoregularthedelays
anddeductioninthepaymentofwagestoindustrial
andplantationlabour.TheBillwaspassedin1936and
theActcameintoforcefrom28
th
March,1937.In
exerciseofthepowersconferredundertheAct,the
MaharashtraGovernmentframedrulesknownasthe
MaharashtraPaymentofWagesRules,1936.
3

4. The Act is in three parts.
1.Part I deals with the regular and payment of wages
by the employer.
2.Part 2 specifies the heads under which deduction
can be made from wages.
3.Part 3 provides a machinery for enforcing specific
claim arising out of delayed payments, deduction
from wages, appeals, etc. It is a self –contained Act
and provides its own machinery for the disposal of
the claims. The Act contains 26 sections.
4

5. INTRODUCTION
ThePaymentofWagesAct,1936waspassedto
regulatethepaymentofwagestocertainclassesof
personsemployedinindustry.Itensurespaymentof
wagesinaparticularformandatregularintervals
withoutunauthorizeddeductions.TheActextendsto
thewholeofIndia[Sec.1(2)].Itwasextendedto
JammuandKashmirbytheCentralLabourLaws
(ExtensiontoJammuandKashmir)Act,1970.
5

6. Thepaymentofwagestopersonsemployedinany
factory,topersonsemployed(otherwisethanina
factory)uponanyrailwaybyarailwayadministration
andtoanindustrialorotherestablishment.Invarious
StatestheActhasbeenextendedtoshopsand
establishmentsalso.TheActdoesnotapplyto
personswhosewagesexceedRs.6500permonth.
ThislimitwasraisedfromRs,1,600toRs,6500by
thepaymentofWages(Amendment)Act.
Itisprovidedthat,inrelationtothecentral
governmentownedestablishment,anynotification
willbeissuedonlyaftertheconcurrenceofcentral
government.
6

7. DEFINITION OF WAGES
Wages:-
‘Wages’meansallremuneration(whetherbywayof
salary,allowancesorotherwise)expressedinterms
ofmoneyorcapableofbeingsoexpressedwhich
would,ifthetermsofemployment,expressorimplied,
werefulfilled,bepayabletoapersonemployedin
respectofhisemploymentorofworkdoneinsuch
employment.Simplystated‘wages’meansall
remunerationduetoanyworkeroremployeeifthe
termsofcontractofemploymentarefulfilled.The
definitionof‘wages’includesthefollowing:
7

8. (a)Anyremunerationpayableunderanyawardor
settlementbetweenthepartiesororderofa
court;
(b)Anyremunerationtowhichtheperson
employedisentitledinrespectofovertime
workorholidaysoranyleaveperiod:
(c)Anyadditionalremunerationpayableunder
thetermsofemployment(whethercalleda
bonusorbyanyothername);
(d)Anysumwhichbyreasonofthetermination
ofemploymentofthepersonemployedis
payableunderanylaw,contractorinstrument
whichprovidesfor
8

9. thepaymentofsuchsum,whetherwithorwithout
deductions,butdoesnotprovideforthetimewithinwhich
thepaymentistobemade;
(e)Anysumtowhichthepersonemployedisentitledunder
anyschemeframedunderanylawforthetimebeingin
force.
Theexpression‘wages’doesnotinclude:
(1)Anybonus(whetherunderaschemeofprofit-sharingor
otherwise)whichdoesnotformpartoftheremuneration
payableunderthetermsofemploymentorwhichisnot
payableunderanyawardorsettlementbetweenthe
partiesororderofaCourt;
9

10. (2)Thevalueofanyhouseaccommodation,orofthe
supplyoflight,water,medicalattendanceorother
amenityorofanyserviceexcludedfromthecomputation
ofwagesbyageneralorspecialorderoftheState
Government:
(3)Anycontributionpaidbytheemployertoanypensionor
providentfund,andtheinterestwhichmayhave
accruedthereon:
(4)Anytravellingallowanceorthevalueofanytravelling
concession:
10

11. (5) Any sum paid to the employed person to defray
special expenses entailed on him by the nature of
his employment:
(6)Anygratuitypayableontheterminationof
employmentincasesotherthanthosespecifiedin
Clause(d)above.
11

12. APPLICABILITY
TheActisapplicabletopersonsemployedinany
factory,railway,andtosuchotherestablishmentsto
whichtheappropriateGovernmentmay,bynotification,
extendtheprovisionsoftheActaftergivingthree
months’noticetothateffect.Inthecaseofindustrial
establishmentsownedbytheCentralGovernmentthe
notificationcanbeissuedwiththeconcurrenceofthe
CentralGovernment.
12

13. ThisActappliestowagespayabletoanemployed
personinrespectofawageperiodifsuchwagesfor
thatwageperioddonotexceedRs.10,000permonth
orsuchotherhighersum,whichonthebasisoffigures
oftheConsumerExpenditureSurveypublishedbythe
NationalSampleSurveyOrganisation,theCentral
Governmentmay,aftereveryfiveyears,bynotification
intheOfficialGazette,specify.
13

14. RULES FOR PAYMENT OF WAGES
(SECS. 3 TO 6)
Responsibility for Payment of Wages (Sec.3)
Fixation of Wage-Periods (Sec.4)
Time of Payment of wages(Sec. 5)
Mode of payment of wages (Sec. 8)
14

15. 1)ResponsibilityforPaymentofWages(Sec.3):-
Everyemployershallberesponsibleforthepayment
topersonsemployedbyhimofallwagesrequiredtobe
paidunderthePaymentofWagesAct.Butinthecase
ofpersonsemployed(otherwisethanbyacontractor)in
factories,industrialestablishmentoruponrailway,the
followingpersonsshallalsoberesponsibleforthe
paymentofwages:
(a)Infactories,thepersonnamedasthemanager;
(b)Inindustrialorotherestablishment,theperson,
ifany,whoisresponsibletotheemployerfor
thesupervisionandcontroloftheindustrialor
otherestablishment;
15

16. (c)Uponrailways(otherwisethaninfactories),the
personnominatedbytherailwayadministrationinthis
behalfforthelocalareaconcerned(Sec.3)
Thepersonsonamed,thepersonsoresponsible
totheemployer,orthepersonsonominated,asthe
casemaybe,shallalsoberesponsibleforsuch
payment.
16

17. 2)FixationofWage-Periods(Sec.4):-
Everypersonresponsibleforthepaymentofwages
shallfixperiods,knownaswage-periods,inrespectof
whichsuchwagesshallbepayable.Awage-periodshall
notexceedonemonth.
17

18. 3)TimeofPaymentofwages(Sec.5):-
(i)Wagestobepaidbefore7
th
or10
th
day:-
Thewagesofeverypersonemployeduponorin
anyrailway,factoryorindustrialorotherestablishment
uponorinwhichlessthan1,000personsareemployed,
shallbepaidbeforetheexpiryof7
th
dayofthefollowing
wage-period.Incasethenumberofworkersexceeds
1,000,thewagesshallbepaidbeforetheexpiryofthe
10
th
ofthefollowingwage-period.Inthecaseofpersons
employedonadock,wharforjettyorinamine,the
balanceofwagesdueoncompletionofthefinaltonnage
accountoftheshiporwagons,loadedorunloaded,as
thecasemaybe,shallbepaidbeforetheexpiryofThe
secondworkingdayfromthedayonwhichhis
employmentisterminated:
18

19. (ii)Wagesincaseofterminationofemployment:-
Wheretheemploymentofanypersonisterminated
byoronbehalfoftheemployer,thewagesearnedby
himshallbepaidbeforetheexpiryofthe2
nd
working
dayfromthedayonwhichhisemploymentis
terminated.Wheretheemploymentofanypersoninan
establishmentisterminatedduetotheclosureofthe
establishmentforanyreasonotherthanaweeklyor
otherrecognisedholiday,thewagesearnedbyhim
shallbepaidbeforetheexpiry.
19

20. ofthe2
nd
dayfromthedayonwhichhis
employmentissoterminated.
(iii)Exemption:-
TheStateGovernmentmay,bygeneralor
specialorder,exemptthepersonresponsibleforthe
paymentofwagesfromtheoperationoftheabove
provisionsincertaincases.
(iv)Wagestobepaidonaworkingday:-
Allpaymentofwagesshallbemadeona
workingday.
20

21. 4) Mode of payment of wages (Sec. 8) :-
section 6 provides that all wages shall be paid in
currency coin or currency notes or in both:
It is provided that the employer may, after
obtaining the written authorization of employed person,
pay him the wages either by cheque or by crediting the
wages in his bank account.
All wages shall be paid in current coins or
currency notes or both. Payment of wages in kind is not
permitted. The process of payment of wages in cash is
very cumbersome where the number of workers is very
large. It is also risky where the sum involved is large
and the factory or industrial establishment is situated at
a remote place.
21

22. In order to obviate these difficulties and save the worker
from carrying cash on the pay day and mis-spending it,
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.
22

23. DEDUCTIONS FROM WAGE (SECS. 7
TO 13)
Deductionwhichmaybemadefromwages(Sec.
7):-Thewagesofanemployedpersonshallbepaid
tohimwithoutdeductionsofanykindexceptthose
authorisedbyorunderthePaymentofWagesAct,
1936.thedeductionsfromwagesofanemployed
personmaybeofthefollowingkindsonly,namely;
1)Deductionsforfines:-
(a)Nofineshallbeimposedonanyemployedperson
saveinrespectofsuchactsoromissiononhispart
astheemployer,withthePrevious
23

24. approvaloftheStateGovernmentoroftheprescribed
authority,mayhavespecifiedbyanotice.
(b)Thenoticespecifyingtheactsandomissionsforwhich
finesmaybeimposedshallbeexhibitedintheprescribed
manneronthepremises(andincaseofpersons
employeduponarailway,attheprescribedplaceor
places)inwhichtheemploymentiscarriedon.
(c)Nofineshallbeimposedonanemployedpersonuntil
hehasbeengivenanopportunityofshowingcause
againstthefineandhascompletedtheageof15years.
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25. (d)Thetotalamountoffinewhichmaybeimposedin
onewageperiodonanyemployedpersonshallnot
exceed3percentofthewagespayabletohimin
respectofthatwage-period.Suchafineshallnotbe
recoveredfromtheemployedpersonbyinstallmentsor
aftertheexpiryof60daysfromthedayonwhichitwas
imposed[Sec.8(6)]
2)Deductionsforabsencefromduty:-
Deductionmaybemadeonaccountoftheabsence
ofanemployedpersonfromdutyfromtheplaceor
placeswhere,bythetermsofhisemployment,heis
requiredtowork.Buttheratiobetweentheamountof
suchdeductionsandthe
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26. wagespayableshallnotexceedtheratiobetweenthe
periodofabsenceandtotalperiodwithinsuchwage-
period.IthashoweverbeenheldinK.S.R.T.
Employees’Assn.VsGeneralManager,K.S.R.T.,
(1985)thatinastrikebyworkersinapublicutility
serviceliketransportservice,ifemployeesabsentfor
apartofthedaywithoutnotice,deductionoffullday’s
wageswouldnotbeunjustifiedorillegal.
3)DeductionsforDamageorLoss:-
Adeductionfordamagetoorlossofgoods
expresslyentrustedtotheemployedpersonfor
custodyorforlossofmoneyforwhichheisrequiredto
accountsshallnotexceedtheamount
26

27. ofthedamageorlosscausedtotheemployerbythe
neglectordefaultoftheemployedperson.Sameisthe
caseasregardslossessustainedbyarailway
administrationonaccountofanyrebatesorrefunds
incorrectlygrantedbytheemployedperson.
4)Deductionsforservices:-
Adeductionforhouseaccommodationandsuch
amenitiesandservicessuppliedbytheemployeras
havebeenauthorisedbytheStateGovernmentshallnot
bemadefromthewagesofanemployedperson,unless
suchserviceshavebeenacceptedbyhimasatermof
employmentorotherwise.Deductionsin
27

28. respectoftheseservicesshallnotexceedthevalue
thereof.Incaseofdeductionsasregardsservicesand
amenities,theStateGovernmentmayimpose
conditions.
5) Deductions for recovery of advances:-
Adeductionforrecoveryofanadvancegiventoan
employedpersonissubjecttothefollowingconditions
viz.,(i)recoveryofanadvanceofmoneygivenbefore
employmentbeganshallbemadefromthefirst
paymentofwagesinrespectofcompletewage-period,
butnorecoverycanbemadeofsuchadvancegivenfor
travellingexpenses:(ii)recoveryofanadvanceof
moneygivenafteremployment
28

29. beganshallbesubjecttosuchconditionsastheState
Governmentmayimpose:(iii)recoveryofadvancesof
wagesnotalreadyearnedshallbesubjecttoanyrules
maybytheStateGovernmentinthisregard.TheState
Governmentmayregulatetheextenttowhichsuch
advancesmaybegivenandtheinstalmentsbywhich
theymayberecovered.
6)Deductionsforrecoveryofloans:-
Deductionsforloansgrantedforhouse-buildingor
otherpurposesandtheinterestdueinrespectthereof
approvedbytheStateGovernmentshallbesubjectto
anyrulesmadebytheStateGovernmentregulatingthe
extenttowhichsuchloansmaybe
29

30. grantedandtherateofinterestpayablethereon.
7)Deductionsforpaymentstoco-operative
societiesandinsuranceSchemes:-
Thesedeductionsshallinclude(a)deductionsfor
paymentstoco-operativesocietiesapprovedbythe
StateGovernmentortoaschemeofinsurance
maintainedbytheIndianPostOffice;and(b)
deductionsmadewiththewrittenauthrisationofthe
personemployedforthepaymentofanypremiumofhis
lifeinsurancepolicytotheLifeInsuranceCorporation
(LIC)ofIndiaorforthepurchaseofsecuritiesofthe
GovernmentofIndiaorofany
30

31. StateGovernmentorforbeingdepositedinanyPost
OfficeSavingBankinfurtheranceofanysavingscheme
ofanysuchGovernment.
8)OtherDeductions:-
Thefollowingdeductionsshallalsobepermitted
undertheAct:(a)deductionsofincome-taxpayableby
theemployedperson.(b)deductionsrequiredtobe
madebyorderofaCourtorotherauthoritycompetent
tomakesuchorder[Sec.7(2)(h)](c)deductionsfor
contributionstoanyinsuranceschemeframedbythe
CentralGovernmentforthebenefitofitsemployees.
31

32. MAINTENANCE OF REGISTERS AND
RECORDS (SECTION -13 A)
1)Everyemployershallmaintainsuchregistersand
recordsgivingsuchparticularsofpersonsemployedby
him,theworkperformedbythem,thewagespaidto
them,thedeductionsmadefromtheirwages,thereceipts
givenbythemandsuchotherparticularsandinsuch
formsasmaybeprescribed.
2)everyregisterandrecordrequiredtobemaintained
underthissectionshall,forthepurposeofthisact,be
preservedforaperiodofthreeyearsafterthelastentry
madetherein.
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33. 33