The Payment of Wages Act, 1936

Introduction:

The Payment of Wages Act, 1936 came into force on 23rd April 1936.
This Act was passed to regulate the payment of wages,

it ensures the payment of wages in a prescribed manner and at regular intervals without unauthorized deductions.

Applicability of the Act:

  1. This Act applies to the whole of India.
  2. Section 1(4): This Act applies to the payment of wages to the persons employed:
    i. in any factory

ii. by the railway administration

iii. in an industrial establishment

  1. Section 1(5): Empowers the Appropriate Govt. to extend the whole or part of the Act, for payment of wages to any class of persons employed in the establishment or class of establishments.
    Subject to conditions :
  1. 3 months’ prior notice must be issued and
  2. Notification of the extension.
    (Provided that, the extension of the applicability of the Act to the establishments owned by the Central Govt., no notification shall be issued)

Object of the Act:

· Safeguarding the wages of employees.

· Regulate the payment of wages.

· Ensure timely payment.

· Provide for a speedy and effective remedy to the employees.

· Constitution of authorities for hearing the claims of the persons employed.

· Safeguard the wages of the employees from unlawful deductions.

· Protect the employees from unjustified delay in payment of wages.

Salient Features of the Act:

  1. The Act was enacted with the ensuring of timely payment of wages to the workers without unauthorized deductions.
  2. The Act applies to wages payable to the unemployed person in a wage period
    if such wages do not exceed rupees Rs. 24,000 per month.
    (Central Govt. decides the wages every 5 years by notification in Official Gazette)
  3. The Act requires that salaries must be paid to workers in an industrial establishment by:
Less than 1,000 workers –7th day of every month
More than 1,000 workers –10th day of every month
  1. The Act requires that a worker, who has not been paid wages or unauthorized deductions have been made from his wages, can file a claim under this Act, before the authorities appointed.
    The power of hearing claims vested with the Presiding Officer of the Labour Court.

‘Wages’ as per the Act:
Section 2(vi) – ‘Wages’ –

All remuneration (whether by way of salary, allowances or otherwise)
expressed in terms of money or capable of being so expressed in terms of money

if the terms of employment were fulfilled (expressly or impliedly)
be payable to a person employed

in respect of employment or work done.


In such employment wages include:

  1. any remuneration payable under any award for settlement between the parties order of a court
  2. any remuneration to which a person employed is entitled in respect of overtime work or holidays or any leave period
  3. any additional remuneration payable under the terms of employment

(call by bonus or any other name)

  1. any sum payable by reason of the termination of employment of the person employed
  2. Any sum to which the person employed is entitled under any scheme framed by any law being in force

But does not include

  1. any bonus
  2. Traveling allowance
  3. Contribution by the employer to the provident fund
  4. Value of house accommodation
  5. Value of supply of necessities at concessional rate
  6. Any gratuity payable on the termination of employment

The definition of wages is comprised of three parts:

  1. The first part says: ‘Wages’ means all remuneration which would be payable to the employed person, if the terms of employment provides expressly or impliedly.
  2. The second part says: ‘Wages’ shall include any bonus or other remuneration which would be so payable in accordance with the terms of the contract
  3. The third part says: ‘Wages’ includes sum payable to such person by reason of the termination of his employment and sum payable under the provisions of any law.

Section 3: Responsibilities for payment of wages –

Every  employer shall be responsible for the payment of wages to persons employed by him :

  1.  in Factory
    – manager of the factory is responsible
  2.  In Industrial or other establishments
    – a person responsible to the employer for supervision and control of the establishment
  3.  in Railway
    – the person nominated by Railway Administration for that  particular local area
  4. in case of a Contractor
    a person appointed by the contractor who is directly under his charge
  5. in other cases
    – a person appointed by the employer 

Section 4: Fixation of wage period –

  • The person responsible for the payment of wages u/s 3 shall fix the wage period for which wages shall be payable.
  • Wage period shall not exceed one month in any case.

Section 5:  time payment of wages –

A: If the number of persons employed in a Factory, industrial or other establishments or
      Railway –

S. 5(1)Are Less Than 1,000  –Wages to be paid before the 7th Day of every month.
S. 5(2)Are More Than 1,000 – Wages to be paid before the 10th day of every month.
S. 5(3)in case of Dock, Wharf or Jetty or in MineBefore the expiry of 2nd working day, from the day of his employment is terminated.

B: Wages in cases of termination of employment –

  1. before the expiry of 2nd  working day
  2. in case of closure of the establishment, the wages must be paid before the expiry of 2nd day from the day of termination of employment
    (other than weekly or recognized holiday)

C: Exemption –
    The state govt. may give a general or special order to exempt the person responsible for making payment of wages. 

D: Wages to be paid on a working day, otherwise provided.

Section 6: Mode of Payment of Wages –

All wages must be paid in currency notes or coins or both.
Provided that, the employer after obtaining written authorization from the employed person, pay him the wages either by cheque or by crediting in his bank account

Section 7: Deductions

A: Section 7(1): lays down General Prohibition against any deduction from the wages of
                            a worker.
    An employer can not make deductions except those expressly mentioned, from the
    wages payable to an employee. 

     Explanation 1: Every payment made by the employed person to the employer shall be
    deemed deduction from wages for the purpose of this Act.

B: Section 7(2): Authorized Deductions
    Permissible deductions which may be made from the wages only in accordance
    with the provisions of the Act.

  1. FINES –
  2. DEDUCTIONS FROM ABSENCE OF DUTY –
  3. DEDUCTION FOR DAMAGE TO GOODS OR LOSS TO GOODS –
  4. DEDUCTION FOR HOUSE ACCOMMODATION – 
  5. DEDUCTION FOR AMENITIES AND SERVICES –
  6. DEDUCTION RECOVERY OF ADVANCES –
  7. DEDUCTION FOR RECOVERY OF LOANS –
  8. DEDUCTION FOR INCOME TAX –