Unit 3 Payment of Wages Act 1936

7/30/2019 Unit 3 Payment of Wages Act 1936

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PAYMENT OF

WAGES ACT,

1936


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OBJECTIVES OF THE ACT Regulating the payment of wages, imposition of

fines and deductions from wages, and

Eliminating all malpractices by laying down wageperiods and time and mode of payment of wages.The act therefore ensures payment of wages in aparticular form at regular intervals withoutunauthorized deductions

The act provides for a speedy and effectiveremedy to the employees in respect of their claimsarising out of illegal deductions or unjustified delaymade in paying the wages to them


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APPLICATION OF THE ACT

This act extends to whole of India. It cameinto force on 28th march 1937. This act appliesto:

i. Persons employed in any factory

ii. Persons employed upon any railwayadministration

iii. Person employed upon any railway eitherdirectly or through a sub-contractor,

iv. And to persons employed in an industrial orother establishment


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The State Government may, after giving three

months notice of its intention of so doing, by

notification in the Official Gazette, extend the

provisions of this Act or any of them to the

payment of wages to any class of persons

employed in any establishment or class of

establishments specified by the CentralGovernment or a State Government

The wage limit for the applicability of the act is

Rs.1600 per month. This act does not apply to

a person whose average wage is Rs.1600 or

more per month


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DEFINITIONS

Factory

means a factory as defined in clause (m) of

section 2 of the Factories Act, 1948.


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Industrial or Other Establishment"

means any-

tramway service , or motor transport service engaged incarrying passengers or goods; air transport service;dock, wharf or jetty; inland vessel, mechanicallypropelled; mine or oil-field; plantation; workshop orother establishment in which articles are produced,

adapted or manufactured, with a view to their use,transport or sale;

Establishment in which any work relating to theconstruction, development or maintenance ofbuildings, roads, bridges or canals, or relating to

operations connected with navigation, irrigation, orto the supply of water or relating to the generation,transmission and distribution of electricity or anyother form of power is being carried on.


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Wages"

means all remuneration (whether by way of salary,

allowances, or otherwise) expressed in terms ofmoney 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 suchemployment, and includes-


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(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 a bonus or by any

other name);

(d) any sum which by reason of the termination of

employment of the person employed is payable

under any law or contract

(e) any sum to which the person employed is entitledunder any scheme framed under any law for the time

being in force,


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But does not include-

(1) any bonus, which does not form the part of

remuneration payable under the terms of employment(2) the value of any house-accommodation, or of the

supply of light, water, medical attendance or other

amenity

(3) any contribution paid by the employer to any pensionor provident fund, and the interest which may have

accrued thereon;

(4) any travelling allowance or the value of any travelling

concession;

(5) any sum paid to the employed person to defray special

expenses entailed on him by the nature of his

employment; or

(6) any gratuity payable on the termination of employment


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RULES REGARDING

PAYMENT OFWAGES

(SECTION 3 - 6)


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PERSON RESPONSIBLE TO PAY WAGES

(Sec-3)

Every employer shall be responsible for the payment topersons employed by him of all wages required to be paidunder this Act. In addition to the employer, the followingpersons shall also be responsible for the payment ofwages:

(a) in factories, if a person has been named as the managerof the factory

(b) in industrial or other establishments, if there is a personresponsible to the employer for the supervision and controlof the industrial or other establishments and

(c) In railways (otherwise than in factories), if the employer isthe railway administration and the railway administrationhas nominated a person in this behalf for the local areaconcerned.


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FIXATION OF WAGE PERIODS

(Sec-4)1) Every person responsible for the payment of wages

under section 3 shall fix periods (in this Act referred toas wage-periods) in respect of which such wages shallbe payable.

2) No wage-period shall exceed one month.3) The main purpose of fixing the wage periods is to

ensure that ordinance delay is not caused in paymentof wages and a long time is not elapsed before wagesare paid for a period for which an employee has

worked4) Wages cannot be fixed as payable quarterly, half

yearly or yearly but they may be fixed as payable daily,weekly , fortnightly and monthly


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TIME OF PAYMENT OF WAGES

(Sec-5)

The following rules have been laid downregarding the time of payment of wages:

(1) The wages of every person employed

upon or in industrial or otherestablishment where less than onethousand persons are employed, shall bepaid before the expiry of the seventh day,

(2) Where the number of workers exceed1000, shall be paid before the expiry ofthe tenth day,


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(3) Where the employment of any person is

terminated by or on behalf of the

employer, the wages, earned by him shallbe paid before the expiry of the second

working day from the day on which his

employment is terminated(4) The state govt. may by any order exempt

any person responsible for the payment of

wages from any provisions in this section.(5) All payments of wages shall be made on

a working day.


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WAGES TO BE PAID IN CURRENT COINS OR CURRENCY

NOTES

(Sec-6)

All wages shall be paid in current coin or currency

notes or in both

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.


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DEDUCTIONS FROM WAGES

Sec 7-13 of the act deals deductions whichcan be made from the wages of the workers

The object of sec-7 is to make everyemployer liable to pay wages of an

employee without deductions of any kindexcept those authorized under this act

Sec-7(2) enumerates the deductions whichare authorized under this act

Every payment made by an employedperson to the employer or his agent istreated as deduction from wages


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PERMISSIBLE DEDUCTIONS

Sec-7(2)]

1)Fines;

2)Deductions for absence from duty;

3)Deductions for damage to or loss of goods

4)Deduction for services rendered5)Deductions for recovery of advances or for adjustment of

overpayment of wages

6)Deductions for recovery of loans made for the welfare of labor

7)Deductions for recovery of loans granted for house building, etc8)Deductions for payment to co-operative societies and insurance

schemes

9)Other deductions


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DEDUCTION FOR FINES (Sec-8)Fine shall be imposed

1) With the previous approval of the State Government or of the prescribed

authority,2) After exhibiting a notice specifying such acts and omissions in theprescribed manner on the premises in which the employment is carried onor in the case of persons employed upon a railway (otherwise than in afactory), at the prescribed place or places.

3) He has to be given an opportunity of showing cause against the fine.

4) The total amount of fine imposed in any one wage-period on any employedperson shall not exceed an amount equal to three per cent of the wagespayable to him in respect of that wage-period.

5) Fine shall not be imposed on any employed person who is under the ageof fifteen years.

6) No fine imposed on any employed person shall be recovered from him byinstallments or after the expiry of sixty days from the day on which it wasimposed.

7) Shall be recorded in a register

8) Shall be deemed to have been imposed on the day of the act or omissionin respect of which it was imposed.


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DEDUCTIONS FOR ABSENCE FROM

DUTY (Sec-9)

1) Deductions may be made under only on account of the

absence of an employed person from the place or places

where, by the terms of his employment, he is required to

work, such absence being for the whole or any part of the

period during which he is so required to work.

2) This absence must be voluntary and without the permission of

the employer

3) An employed person shall be deemed to be absent if,

although present, he refuses to carry out his work

4) Section 9 further authorizes the employer to deduct to the

extent of eight days wages, if 10 or more persons acting in

the concert absent themselves from duty without reasonable

cause and without any notice


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DEDUCTION FOR DAMAGE OR LOSS

(SEC-10)

1) A deduction shall not exceed the amount of thedamage or loss caused to the employer by theneglect or default of the employed person.

2) Employer cannot make profit out of suchdeductions

3) Shall not be made until the employed person hasbeen given an opportunity of showing cause

against the deduction4) All such deduction and all realizations thereof

shall be recorded in a register to be kept by theperson responsible for the payment of wages


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DEDUCTIONS FOR SERVICES RENDERED

(Sec-11)

A deduction shall be made from the wages of an

employed person,

Only when the house-accommodation amenity orservice has been accepted by him, as a term of

employment or otherwise,

Such deduction shall not exceed an amount

equivalent to the value of the house-accommodation amenity or service supplied


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DEDUCTION FOR THE RECOVERY OF ADVANCES OR

FOR ADJUSTMENT OF OVERPAYMENT OF WAGES

(SEC-12)

1) Recovery of an advance of money given before

employment began shall be made from the first payment

of wages in respect of a complete wage-period.

2) Recovery of advances of wages not already earned shall

be subject to any rules made by the State Government

regulating the extent to which such advances may be

given and the installments by which they may be

recovered.


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DEDUCTIONS FOR RECOVERY OF LOANS

MADE FOR THE WELFARE OF LABOUR

Deductions for recovery of loans granted for house-

building or other purposes under this act shall be subject

to any rules made by the State Government regulating theextent to which such loans may be granted and the rate of

interest payable thereon.


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DEDUCTIONS FOR PAYMENT TO

CO-OPERATIVE SOCIETIES AND INSURANCE

SCHEMES(Sec-13)

Deductions shall be subject to such conditionsas the State Government may impose.


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OTHER DEDUCTIONS

It includes: Deductions of income-tax payable by the employed

person;

Deductions required to be made by order of a court

or other competent authority

Deductions, made with the written authorization of

the employed person, for payment of the fees

payable by him for the membership of any trade

union registered under the Trade Union Act, 1926

Deductions for payment of PF, Insurance Premium,

etc.


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PERMISSIBLE TOTAL DEDUCTIONS

The total amount of deductions which may be madeunder any wage-period from the wages of anyemployed person shall not exceed-

1) In cases where such deductions are wholly or

partly made for payments to co-operative societiesseventy-five per cent of such wages, and

2) In any other case, fifty per cent of such wages:

3) Provided that where the total deductions

authorized exceed seventy five per cent or, as thecase may be, fifty per cent of the wages, theexcess may be recovered in such manner as maybe prescribed.


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MAINTENANCE OF REGISTERS

AND RECORDS

Every employer shall maintain such registers andrecords giving such Particulars of persons employed by him,

Work performed by them,

Wages paid to them,

Deductions made from their wages,

Receipts given by them

Such other particulars

Every register and record required to be maintainedunder this section shall, for the purposes of this Act, bepreserved for a period of three years after the date ofthe last entry made therein.


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INSPECTORS

Appointment of inspectors by the state govt. for the

purpose of enforcing compliance with the provisions of thisact

In respect of persons employed in factories, an inspector

of factories under the factory act, 1948 shall be an

inspector The State Government may appoint Inspectors in respect

of all persons employed upon a railway (otherwise than in

a factory) to whom this Act applies.

The State Government may, by notification in the OfficialGazette, appoint such other persons as it thinks fit to be

Inspectors for the purposes of this Act, and may define the

local limits within which they shall exercise their functions


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POWERS OF INSPECTORS

Make such examination and inquiry as he thinks fit

in order to ascertain whether the provisions of thisAct or rules made there under are being observed;

Enter, Inspect and Search any premises at any

reasonable time

Supervise the payment of wages to persons

employed

Require by a written order the production at such

place, as may be prescribed, of any registermaintained in pursuance of this Act and take on the

spot or otherwise statements of any persons which

he may consider necessary for carrying out the

purposes of this Act


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POWERS OF INSPECTORS

Seize or take copies of such registers or documentsor portions thereof as he may consider relevant in

respect of an offence under this Act which he has

reason to believe has been committed by an

employer;


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AUTHORITY TO HEAR CLAIMS

The following may be appointed as an authority: Presiding officer of any Labor Court or Industrial

Tribunal, constituted under the Industrial Disputes Act,

1947

any Commissioner for Workmens Compensation or

other officer with experience

as a Judge of a Civil Court or

as a Stipendiary Magistrate


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PRESENTATION OF APPLICATION

When contrary to the provisions of section 7 to 13any deduction has been made from his wages.

When there has been any delay in the payment ofwages

The application may be presented by:

the employed person

a legal practitioner

an official of a registered trade union authorized inwriting to act on behalf of the employed person

An inspector appointed


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PRESENTATION OF APPLICATION

Application shall be presented within twelvemonths from the date on which the

deduction from the wages was made or from

the date on which the payment of the wageswas due to be made

Any application may be admitted after the

said period twelve months when theapplicant satisfies the authority that he had

sufficient cause for not making the

application within such period.

OC


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PROCEDUREWhen any application under the section is entertained,

The authority shall hear the applicant and the employeror other person responsible for the payment of wages

under section 3, or give them an opportunity of being

heard

Authority makes further inquiry as may be necessary

Authority may direct refund to the employed person of

the amount deducted wrongfully or delayed payment

Compensation not to exceed10 times the amount

improperly deducted or Rs. 25 in case of delayed

wages


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RECOVERY OF AMOUNT

The amount directed to be paid may be recovered:

If the authority is a Magistrate, by the authority

himself

If the authority is not a Magistrate, by any Magistrate

to whom the authority makes application for therecovery of the amount

Unit 3 Payment of Wages Act 1936

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