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Name: Adrita Kachroo Roll No.

M1007 PAYMENT OF WAGES ACT, 1936


Payment of Wages Act 1936 is an act that regulates the payment of wages for certain select classes of employed people. It extends to the whole of India. This Act is applicable to the payment of wages to persons employed in factories, in railways and in other establishments such as tramway services, air transport services, dock, mine, oilfield, plantation, workshops or other establishments in which articles are produced or construction is done. The main objective of this Act is to avoid unnecessary delay in the payment of wages and to prevent unauthorized deductions from wages. Wages averaging less than Rs. 6500 per month only are covered or protected by this Act with effect from 11th September 2005 {Section 1(6)}. Wages means contractual wages and not overtime wages. Wages must be paid in current coin or currency notes or in both and not in kind. It is, however, permissible for an employer to pay wages by cheque or by crediting them in the bank account, if so authorized in writing by an employed person {Section 6}. "Wages" means all remuneration (whether by 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. The following are the requirements of the Act in respect of time of payment of wages: a. Wages must be paid on a working day and not on a holiday.
b.

Establishments employing less than 1000 persons must pay wages before the expiry of the 7th day of every month and other

establishments must pay wages before the expiry of the 10th day of every month.

c.

When the employment of any person is terminated, the wages earned by him must be paid before the expiry of the second working day from the day of termination {Section 5}.

The provisions of the Act regarding the imposition of fines on the employed person: a. The employer must exhibit on his premises a list of acts or omissions for which fines can be imposed. b. Before imposing a fine on an employed person he must be given an opportunity of showing cause against the fine.
c.

The amount of fine must not exceed 3 % of the wages.

d. A fine cannot be imposed on an employed person who is under the age of 15 years. e. A fine cannot be recovered by installments or after 90 days from the day of the act or omission for which it is imposed. f. The moneys realized from fines must be applied to purposes beneficial to employed persons. {Section 8} Deduction under section 9-13 i) Deductions for the absence from duty: Such deduction must not exceed an amount bearing the same proportion to his wages for the wage period as the period of his absence bears to the total period during which he should have been at work. ii) Deductions for damages to or loss of goods: These goods are expressly entrusted to the employed person for custody, or for loss of money for which he is required to account, where such damage or loss

is directly attributed to his negligence or default: Such deductions cannot exceed the amount of the damage of loss caused. iii) Deductions for house accommodation: Deductions can be made, equivalent to the value thereof for house accommodation supplied by the employer or by Government or any statutory housing board or any other specified authority provided that the house-accommodation have been accepted by the person employed. iv) Deductions for amenities as authorized by the Government: Deductions can be made, equivalent to the value thereof for amenities or services (other than tools and raw materials) supplied by the employer or by Government or any statutory housing board or any other specified authority provided that the amenities or services have been accepted by the person employed. v) Deduction for recovery of advances and interest, and for adjustment of over payment of wages: These advances can be recovered by installment, spread over not more than 12 months and the installments must not exceed One-third, or if the wages are not more than Rs. 20/one fourth of the wages for any wage-period. vi) Deduction of premium for LIC policy or for post office saving scheme on written authorization of the employed person: Some amount is deducted from salary of employee on his written request. At the end of said period, employee is awarded with the total amount and interest on that amount accrued during that period. vii) Deduction for contribution to Prime Ministers' National Relief Fund: This deduction can be for any such other fund as notified by Central Govt. with the written authorization of the employed person: In case of any natural or national calamity, employees have a free choice to contribute towards PMs relief funds or such other funds. It can be either half or full day salary. Some other deductions are listed below:
a. b.

Deduction for income-tax, Deductions for subscription and repayment of advance from any provident fund

c. Deduction for payments to cooperative sectors, etc.

It is also provided by this Act that the total amount of deductions should not exceed 75% of wages of the employed person in any wage period if whole or part of the deduction is meant for payment to cooperative societies. In other cases it should not exceed 50%. Where irregular deductions are made from wages, an employed person can make an application in the prescribed form within 6 months to the authority appointed by the Local Government for the purpose. The authority may award compensation to the employed person in addition to ordering the refund of illegal deductions. If a malicious or vexatious complaint is made, the authority may impose a penalty not exceeding Rs. 50/-on the applicant and order that it be paid to the employer.

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