The Payment of wages 1936

Objectives
(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 the payment of wages in a particular form at regular intervals without unauthorized deductions.
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Scope and Coverage

The act extends to the whole of India. It applies to any factory, any railway establishment and any industrial or other establishment like tramway service, motor transport service, air transport services, dock, wharf, jetty, inland vessel, mine, quarry, oil field, plantation, workshop or other establishment producing and adopting or manufacturing any article, establishments engaged in constructions, navigation, irrigation or supply of water, generation, transmission and distribution of electricity / power and any other establishment notified by the central or state government.
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Employees entitled
The act is applicable to the employees receiving wages upto Rs 10,000 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 appropriate govt, that is State Govt in their respective states, and the Cental Govt in case of railways, mines, oilfields and air transport service. The appropriate govt is empowered to appoint the inspectors and payment of wages authority and make rules for enforcement of the provisions of the act.
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Wages Definition and Meaning

The term wages has been defined very comprehensively and exhaustively in the act.
wages [sec 2(vi)] means all remuneration (whether by the 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

Wages include
Any remuneration payable under any award or settlement between the parties or order of a court. Any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period. Any additional remuneration payable under the terms of employment (whether called as bonus or any any other name) Any sum which by reason of the 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. Any sum to which the person employed is entitled under any scheme framed under any law for the time 7 being in force.

But does not include

any bonus( whether under a scheme of profit sharing or otherwise) which does not form part of the remuneration payable under the terms of employment of which is not payable under any award or settlement between the parties or order of a court. The value of any house accommodation or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the state government. Any contribution paid by the employer to any pension or PF and the interest which may have accrued thereon. Any traveling allowance or the value of any traveling concession Any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment any gratuity on the termination of employment in cases other than those specified in sub clause (d)

Wages means
In summary, The 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 any value of any other amenity, contribution to any pension of PF, traveling allowances, reimbursement of any special expenses and Gratuity, nor does it include suspension / subsistence allowance given during suspension period of an employee.

Obligations of Employers / Rules of Payment of wages

Responsibility for payment of wages (Sec 3) Fixation of Wage Periods (Sec 4) Time of Payment of wages (Sec 5)
Wages to be paid before the expiry of 10th / 7th day of the following wage-period Payment of wages in case of termination of employment expiry of 2nd day of working day Wages to be paid on a working day

Mode of payment (Sec6): The employer should pay the wages in cash, (in current coins / notes) However the wages may be paid either by cheque or by crediting in employees bank account, after obtaining his written consent. Not to make unauthorized Deductions (Sec 7-13) 10

Obligations contd.
Payment of wags in case of death of an employee
In case of death of an employee, the amount is payable to him as wages shall be either paid to his nominee or where there is no nominee, or amount cannot be paid paid to the nominee, for any reason, it shall be deposited with the prescribed authority.

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 is required to maintain (Sec 13-A)
Register of payment of wages Register of fines imposed and realization thereof Register of deductions for damage or loss and realizations thereof in the prescribed form.

Display of Notice (Sec 25)

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 or in the local language.
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Deductions (Sec 7 13)

The employers should not make any deduction from wages other than the following.(Sec 8) Fines in respect of an act or omission which has been approved by the govt 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 90 days from the day of its imposition

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Contd.
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.(Sec 9)
How ever, in case of 10 or more employees acting in concert absent themselves, without due notice and reasonable cause, an amount not exceeding his wages for 8 days or as may by any such terms be due to the employer in lieu of due notice, may be deducted from the wages of an employee. An employee on strike where it is illegal and unjustified , shall be deemed to be absent from his duty. Tool down or stay in strike is also amounts to absence from duty.
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Contd
Deduction for damages or loss of goods or money (Sec 10) Deduction for house accommodation and other amenities or services as notified by the govt, provided by the employer.(Sec 11) Deduction for the recovery of advances ( including those for traveling and conveyance allowance) (Sec 12) Deduction for the recovery of loans made from any labour welfare fund and housing loans (Sec 12-A) Deduction for income tax payable by the employee ( Deduction required to be made by order of a court or other competent authority Deduction for subscription to PF and repayment of advances from provident fund

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Contd
Deduction for the payment to co-operative societies approved by the govt. or an insurance scheme of post office. (Sec 13) Deduction can be made with the written authorization of the employee, for payment of any life insurance premium, purchase of the government securities, deposits in any post office savings 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 Ministers National Relief Fund etc Deduction for payment of insurance premia on Fidelity Guarantee Bonds and Contribution to any insurance scheme framed by the central govt.(ESI)
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Limit on Deductions
The total amount of permissible deductions in any wage period should not exceed :
In case where deductions are wholly or partly made for the payment to co-operative societies, 75 % of the wages In any other case, 50 % of the wages.

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Rights of Employers
Right to make permissible deductions from the wages of an employee(Sec6). 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 sec 15 (3) or an order imposing penalty under sec 15 (4) . The appeal can be made if the order directs the payment of wages and compensation exceeding Rs. 300 or imposes a financial liability exceeding Rs 1000. The appeal should be made within 3 days of the order. 17

Rights of Employees
Right to claim unpaid or delayed wages, unauthorized deductions from wages and fines imposed along with some compensation.
The applications for such claims may be presented within 12 months, by the employee himself or through a legal practioner or an official of a registered trade union, authorised in this behalf. An appln filed after 12 months can also be entertained provided there was sufficient cause for the delay.

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 sec 15(4) for making a malicious or vexatious claim against an employer. (Sec 17)
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Contracting out is void (Sec 23)

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. No unauthorized deduction shall be made under an agreement though true.

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Offences and Penalties

Refer Offences and penalties

Case 1
In Statesman Ltd. Vs. Their Workmen, certain workmen went on an illegal strike.Thereupon the management declared a lock-out. The question arose whether the workmen are entitled to wages for the period of illegal strike or illegal lock-out?

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 The Supreme Court observed:

If the strike is illegal wages during the period will ordinarily be negativated unless considerate circumstances constrain diff course.Likewise,if the lock-out is illegal full wages for the closure period have to be worked out, if one may use the expression. Strictly speaking, the whole field is left to the judicious discretion of the tribunal. Where the strike is illegal and the sequel of a lock-out legal, we have to view of whole course of developments not stop with examining the initial ligitimacy.If one side or other behaved unreasonably or the over all interests of good industrial warrant the Tribunal making such justice, fair play and pragmatic wisdom, there is no error in doing so. His power is flexible.
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Case 2
Sohan and his 9 friends remained absent from duty without any information for continuous 10 days? Which amount needs to be deducted from his wages as per the payment of wages Act.

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Case 3
Ram remained in the workplace without doing any work which was given by the employer. Yet he claimed for full day salary. Is the employer liable to pay him full day salary or half day salary.

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Case 4
Sohil wanted to come to the factory but was prohibited to enter the premises by certain workers who were on illegal strike . Can Sohil claim for the wages?

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Thank you