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Payment of wages is the most important thing for a worker. Unless he is paid his
wages without delay and without any undue deductions, he will feel disturbed and
lose interest in the work.
It may become difficult for him to survive (live). Therefore, it was felt necessary that
there should be a legislation (law) to protect the wages earned by a worker.
Keeping this in view, the Government enacted the Payment of Wages Act, 1936 to
ensure that there was no delay in payment to the workers, non-payment of wages
should be avoided, and the employers should not make deductions from the wages
on account of fines imposed by him.
The Act safeguards the wages of employees under certain conditions. The Act
applies to employees drawing not more than Rs. 1600/- per month. The State
Government has the power to make the Act applicable to any class of persons
employed in any establishment or class of establishment by giving 3 months notice.
Application:
The Act applies to the whole of India. It came into operation on 28th March, 1937.
Under the Act, following categories of workers are covered:
The employer should fix the wage period in respect of his employees. This period
should not exceed one month.
The employer should also fix time of payment of wages to his workmen. For this
purpose certain conditions have been specified under the Act.
The employer should make only the authorised deductions from the salary of
workers working in his factory. He can make authorised deductions in respect of
loan taken by the workers or for recovery of losses.
But total deductions should not exceed fifty percent of the wages. In cases where
such deductions are made to co-operative societies the deductions should not
exceed 75 per cent of the wages?
If a Court or other authorities competent to make order for deduction, orders for
deduction from salary, it is allowed under the Payment of Wages Act, 1936.
Deductions towards fine can be made from the salary of a factory worker only in
accordance with the provisions of this Act.
Other deductions like deductions for absence from duty, deductions for damage or
loss of goods by the worker, deductions for loss of money for which the worker is
directly responsible, deductions towards house rent on account of accommodation
provided by the factory owner, deductions towards recovery of advances, income
tax, etc. can be deducted from the wages of factory workers only in accordance with
the rules framed under this Act.
(1) Employers cannot withhold the wages earned by workers nor can they make any
unauthorised deductions from the wages.
(2) Payments must be made before the fixed pay day after the wage period.
(3) Fines can be imposed for only those acts of omission which have been approved
by the appropriate government. These must not be more than an amount equal to
three paise in a rupee of the wage payable.
(4) If the payment of wages is delayed or wrongful deductions are made, the
workers or their trade unions can file a claim.
(6) Wages should be paid according to the rules, as contained in the Act.
The Payment of Wages (Amendment) Act, 1976 is applicable to the whole of India
and applies to persons employed in any factory as defined in the Factories Act, 1948
and in any railway, receiving wages and salaries which on an average are below Rs.
1,000 a month.
This amount has been raised to Rs. 1,600/- per month through Amendment of the
Act in 1982.
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The person responsible for payment of wages shall fix the wage period upto which wage payment is
to be made. No wage-period shall exceed one month.
All wages shall be paid in current legal tender, that is, in current coin or currency notes or both.
However, the employer may, after obtaining written authorisation of workers, pay wages either by
cheque or by crediting the wages in their bank accounts.
All payment of wages shall be made on a working day. In railways, factories or industrial
establishments employing less than 1000 persons, wages must be paid before the expiry of the
seventh day after the last date of the wage period. In all other cases, wages must be paid before
the expiry of the tenth day after the last day of the wage period. However, the wages of a worker
whose services have been terminated shall be paid on the next day after such termination.
Although the wages of an employed person shall be paid to him without deductions of any kind, the
Act allows deductions from the wages of an employee on the account of the following:- (i) fines; (ii)
absence from duty; (iii) damage to or loss of goods expressly entrusted to the employee; (iv)
housing accommodation and amenities provided by the employer; (v) recovery of advances or
adjustment of over-payments of wages; (vi) recovery of loans made from any fund constituted for
the welfare of labour in accordance with the rules approved by the State Government, and the
interest due in respect thereof; (vii) subscriptions to and for repayment of advances from any
provident fund;(viii) income-tax; (ix) payments to co-operative societies approved by the State
Government or to a scheme of insurance maintained by the Indian Post Office; (x) deductions made
with the written authorisation of the employee for payment of any premium on his life insurance
policy or purchase of securities.
A notice specifying such list shall be exhibited in the prescribed manner on the premises in
which the employment is carried on or at the prescribed places in case a person is
employed in railways.
No fine shall be imposed on any employed person until he has been given an opportunity of
showing cause against the fine, or other-wise, than in accordance with such procedure as
may be prescribed for the imposition of fines.
The total amount of fine which may be imposed in any one wage period on any employed
person shall not exceed an amount equal to three per cent of the wages payable to him in
respect of that wage-period.
No fine shall be imposed on any employed person who is under the age of fifteen years.
No fine imposed on any employed person shall be recovered from him by installments or
after the expiry of sixty days from the day on which it was imposed.
All fines and all realisations thereof shall be recorded in a register to be kept by the person
responsible for the payment of wages.
Hence, the main object of the Act is to eliminate all malpractices by laying down the time and mode of
payment of wages as well as securing that the workers are paid their wages at regular intervals, without any
unauthorised deductions. The Act was amended by the Payment of Wages (Amendment) Act,
2005Rs. in order to enlarge its scope and provide for more effective enforcement. The main amended
provision is the enhancement of wage ceiling from 1600/-per month to Rs. 6500/-per month for the
applicability of the Act as well as empowering the Government to enhance the ceiling by notification in
future.
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to prevent unauthorized deductions
Any orders, agreements etc that override the Payment of Wages Act are invalid to the extent
of their conflict with the Act. However, anything above the act for the benefit of the workmen are
welcome. Orders may supplement but should not supplant them.
House rent is not included in wages but includes overtimne work or holidays or leave period.
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lmtroduction
In the previous unit, we have discussed ......................................... In this unit an attempt is being taken to discuss the
Payment of Wages Act. 1936 and its objects, application and other important aspects. The payment of wages Act. 1936 has
recently been amended in 2005 by the Payment of wages (Amendment) Act 2005. The way structure of an Industrial
enterprise is built on the premise that each job has its own price depending on the skill and training. Moreover, it depends on
commensurate responsibility, which is determined by systematic Job evaluation method or by 'going rate' in the particular
market area. By the payment of wages Act 1936, the payment system, rate, deduction, etc. important aspects of wages of
certain classes of employed persons are regulated. Through this unit, students can understand all about the important legal
matters of the Payment of wages Act. 1936.