The Payment Of Wages Act

The Payment of Wages Act, 1936 I. Introduction: a) History: In earlier days, during British rule the imposition of fines and deductions was a common practice in factories and railway services. There was no uniformity in the payment of wages. Also the longer intervals in the payment of wages added to the inconvenience of the worker. The Royal Commission on labour in its report in 1931 recommended that legislation on payment of wages and fines was necessary and desirable. In the light of its recommendation The Government of India introduced a Bill seeking to regulate the delays and deduction in payment of wages. The Bill was passed in 1936 and the Act came into force from 28th march, 1937. b) Brief: The Payment of Wages Act, 1936 regulates the payment of wages of the persons employed in factory, upon any railway by a railway administration or through subcontractor in a railway and to persons employed in any other industrial establishment Sec(1). This act guarantees payment of wages on time and without any deductions except from those who are authorised under the act. This act also provides that a worker cannot contract out of the rights conferred upon him by the act. This act does not apply to person whose wages exceeds ₹1600 per month. Earlier it was ₹1000 but was raised to ₹1600 by the Payment of Wages (Amendment) Act, 1982. II. Important Definitions (Sec 2): i) “Employed person” includes the legal representative of a deceased (dead) person. ii) “Employer” includes the legal representative of a deceased person. iii) “Factory” includes the premises of area within the walls of a particular building wherein ten or more workers are working or were working on any day of the previous 12 months and in any part of which a manufacturing process is

being carried on with the help of power or without it ordinarily carried so on. iv) “Industrial or other establishment” includes (a) Tramway or motor services engaged in transportation by roadway, (b) Air transport service other than such services belonging to governmental organisation, (c) Dock wharf or jetty, (d) Mine quarry or oil field, Inland vehicle mechanically propelled, (e) Plantation, (f) Workshop or other establishment which produces articles for their transport or sale, (g) Establishment related to construction, development and maintenance of buildings, roads, canals, irrigation and distribution of electricity v) “Wages” means all remuneration expressed in terms of money (salary or other allowances) in respect of the employment of the worker employed. It also includes any remuneration which he is entitled to get as a award for settlement according to the order of a court, payment of overtime work, bonuses, pensions, travelling allowances, etc III.Important Sections: 1) Sec 3: Responsibility for the Payment of wages i) Every employer shall be responsible for the payment of the wages to the persons appointed by him of all the wages which are provided under the act. 2) Sec 4: Fixation of Wage period i) Every employer shall fix the wage period for the payment of the wages which should not exceed the period of one month.  Wage period is the period within which the wages of the persons employed should be paid. 3) Sec 5: Time of Payment of Wages

i) The wages of the employed person in any railway factory or industry or other establishment having less the 1000 persons should be paid before the expiry of the 7th day and in having more than 1000 persons should be paid before the expiry of the 10th day which are counted from the last day of wage period. ii) If the employment of a person is terminated or removed by the employer the wage of the person should be paid within 2 days from the day on which he was terminated or removed. iii) With the consultation of the central government, state government can change the person responsible for the payment of the wages in Railways, or person responsible for the payment of the daily-rated workers in the Public Works Department of the Central Government or the State Government. iv)Except for the payment of wage of the terminated employee, all the wages of the employees should be paid by their employer on the working day only. 4) Sec 6: Wages to be paid in Current Coin or Currency Notes i) All the wages shall be paid in current coins and currency notes or in both. ₹2000, ₹500, ₹100, ₹50, ₹20, ₹10, ₹5 are the current currency notes and the currently used coins are of ₹10, ₹5, ₹2, ₹1. (If an employer obtains the written authorisation of the employed person he may pay him the wages in cheque or by crediting the wages in his bank account.)** 5) Sec 7: Deductions which may be made from wages i) The wages of the employed person shall be paid to him without any kind of deductions except those authorised under this act. For the purpose of this act, Deduction may be defined as the payment made by the employed person to the employee.  Following cannot be called as deduction, but they should have good and sufficient cause: i. The stoppage of the increment or promotion ii. Reduction to a lower post iii. Suspension ii) Deduction made by the employer should be made in accordance with this act only. The following are said to be the deductions and which are acceptable according to this act:  Fines  Deductions for absence of duty

 Deductions for the damage and loss of good due to his negligence  Deductions for house-accommodation supplied by the employer or government  Deductions for the amenities services supplied by the employer  Deductions for recovery of advances connected with the excess payments or advance payments of wages,  Deductions for recovery of loans made from welfare labour fund,  Deductions for recovery of loans granted for housebuilding or other purposes,  Deductions of income-tax payable by the employed person,  Deductions by order of a court,  Deduction for payment of provident fund,  Deductions for payments to co-operative societies approved by the State Government,  Deductions for payments to a scheme of insurance maintained by the Indian Post Office  Deductions made if any payment of any premium on his life insurance policy to the Life Insurance Corporation with the acceptance of employee,  Deduction made if any contribution made as fund to trade union with the acceptance of employee,  Deductions, for payment of insurance premium on Fidelity Guarantee Bonds with the acceptance of employee,  Deductions for recovery of losses sustained by a railway administration on account of acceptance by the employee of fake currency,  Deductions for recovery of losses sustained by a railway administration on account of failure by the employee in collections of fares and charges,  Deduction made if any contribution to the Prime Minister’s National Relief Fund with the acceptance of employee,  Deductions for contributions to any insurance scheme framed by the Central Government for the benefit of its employees with the acceptance of employee,

iii) The total amount of deductions from wages of employees should not exceed 50%, but only in case of payments to cooperative societies, deduction from wages of employee can be made up to 75%. 6) Sec 8: Fines i) Fine should be imposed by the employer on employee in respect of any act or omission with the approval of the state government or prescribed authority ii) A notice specifying fines for such act or omission and containing activities that should not be made by the employee shall be displayed publicly in the prescribed manner in the premises of employment iii) Fine should not be imposed on the employee until he gives the explanation and cause for the act or omission he made. iv)Total amount of fine should not exceed 3% of his wage. v) Fine should not be imposed on any employee who is under the age of 15 years. vi)Fine should not be recovered from the employed person in instalments or after the expiry of 60 days from the day on which it was imposed. vii) Fine should be imposed on day act or omission made by the employee. viii) All fines collected from the employee should be recorded in a register and should be credited to common fund and utilize for the benefit of the employees.

7) Sec 9: Deduction for absence of duty i) Deductions can be made by the employer for the absence of duty by the employee for one day or for any period. ii) The amount deducted for absence from the duty should not exceed a sum which is payable in respect of the wage-period iii) If 10 or more persons together absent for the duty without any notice and without reasonable cause, employer can make 8 day of wages as deduction from their wage.

8) Sec 10: Deduction for damage or loss i) Employer should give an opportunity to the employee to explain the reason and cause for the damage or loss happened and deductions made by employer from the employee wage should not exceed the value or amount of damage or loss made by the employee. . ii) All such deduction and all realizations thereof shall be recorded in a register to be kept by the person responsible for the payment of wages under section 3 in such form as may be prescribed.

9) Sec 11: Deductions for the services rendered i) If House-accommodation amenity or services provided by the employer are accepted by the employee, then the employer can make deduction from the wage of the employee. Deduction should not exceed an amount equivalent to the value of the houseaccommodation amenity or service supplied.

10) Sec 12: Deductions for recovery of advances i) In case of advance paid to the employees by the employer before employment began, such advance should be recovered by the employer from the first payment of the wages to the employee. But employer should not recover the advance given for the travelling expense for the employee.

11) Sec 12A: Deductions for recovery of loans i) Deductions for recovery of loans granted for house-building or other purposes shall be subject to any rules made by the State Government regulating the extent to which such loans may be granted and the rate of interest payable.

12) Sec 13: Deductions which may be made from wages i) Deductions for payments to co-operative societies and for premium of life insurance policy shall be subject to such conditions as the State Government may impose.

13) Sec 13A: Maintenance of Registers and Records i) Every employer shall maintain registers and records giving particulars about wages, deductions, receipts and other particulars as prescribed. ii) Every register should be maintained for a period of three years after the date of last entry made.

14) Sec 14: Inspectors i) An Inspector shall be appointed by the State Government for the purpose of this act. ii) Inspector may (a) Make inquiry or examination to check whether the provisions of the act are followed (b) Inspect and search any premises of railway factory or industrial or other establishment (c) Supervise the payment of wages to persons employed (d) Seize or take copies of registers or documents in respect of an offence under this act (e) Every Inspector shall be deemed to be a public servant within the meaning of the Indian Penal Code (45 of 1860).

15) Sec 14A: Facilities to be provided to inspectors i) Every employer shall provide the inspector all reasonable facilities for making any inspection, supervision, enquiry or examination

16) Sec 15: Claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims i) To hear and decide all claims arising out of deductions from the wages, or delay in payment of the wages, of persons employed or paid, including all matters, incidental to such claims, there will be a officer mentioned below appointed by the appropriate government. (a) a presiding officer of any Labour Court or Industrial Tribunal constituted under the Industrial Disputes Act 1947 (b) any Commissioner for Workmen's Compensation (c) other officer with experience as a Judge of a Civil Court or as a Stipendiary Magistrate ii) In contrary to the provisions of the act if any employer deducts from the wages of employee or makes any delay in payment then in such case any lawyer or any Inspector under this Act or official of a registered trade union authorized to write an application to the authority appointed by government for direction of payment of wages according to this act  Every such application shall be presented within 12 months from the date on which the deduction from the wages was made or from the date on which the payment of the wages was due to be made. Time of making an application can be accepted if there is reasonable cause. iii) After receiving of the application the authority shall give an opportunity to hear the applicant and the employer or other person responsible for the payment of wages and conducts the enquiry if necessary. If it is found that there is mistake with employer; authority shall order the employer for payment of the wage or refund to the employee of the amount deducted unreasonably or the payment of the delayed wages, together with the payment of such compensation as the authority may think fit which should not exceed 10 times the amount of deducted or not exceeding the 25₹ There will not be any compensation payable by employer if there is a reasonable and genuine cause in delay in the payment of wages.

17) Sec 16: Single application in respect of claims from unpaid group i) There is no necessity of many applications if there are many employees whose wages has not been paid. Such all employees can make one application to the authority for payment of wages according to this act. 18) Sec 17:Appeal i) In the following situation the parties who ever dissatisfied can appeal to the district court within 30 days of the date on which the order was made   

If the application dismissed by above authorities Employer imposed with compensation exceeding 300/rupees by the authorities. If the amount exceeding 25/- rupees withheld by the employer to single unpaid employee. 50/- in case of many unpaid employees

19) Sec 17A: Conditional attachment of property of employer or other person responsible for payment of wages i) When an application is filed against an employer by an employed person and the court is satisfied that the employer is responsible for the payment of wages then it may order for the payment. If the employer is likely to evade the payment, then the court may direct the attachment of property of employer or other person responsible for the payments of wages. 20) Sec 18: Powers of the authorities appointed under section 15 i) Every authority appointed shall have the powers of taking evidence and of enforcing the attendance of witnesses and compelling the production of documents. 21) Sec 19 was repealed(abolished) in 1964

21) Sec 20: Penalties for the offences under the act i) Whoever contravenes(break) the provisions in sec 5 except subsec (4), sec 7, sec 8 except sub-sec (8), sec 9, sec 10 except sub-sec (2), sec 11, 12 and 13 shall be punishable with fine not less than ₹200 and which may extend up to ₹1000 ii) Whoever contravenes the provisions of section 4 sub-section (4) of section 5 section 6 sub-section (8) of section 8 sub-section (2) of section 10 or section 25 shall be punishable with fine which may extend to ₹500. iii) Whoever, (a) Fails to maintain records (b) Wilfully refuses or neglects to provide necessary information which might be false sometimes (c) Refuses to answers or answers false answer of the information needed, Shall be punishable with fine not less than ₹200 and which may extend up to ₹1000. iv) Whoever, (a) obstructs an Inspector in the discharge of his duties under this Act (b) Wilfully refuses to produce any register or other document on the demand of an Inspector (c) refuses or wilfully neglects to provide an Inspector any reasonable facility for making any entry, inspection, examination, supervision, or inquiry authorized by or under this Act v) Whoever repeats the same offence committed before, shall be imprisoned for a term of 1-6 months and a fine between ₹500₹3000. vi) If any person fails or wilfully neglects to pay the wages of any employed person by the date fixed by the authority he shall face any other action that may be taken against him be punishable with an additional fine which may extend to ₹100 for each day for which such failure or neglect continues. 22) Sec 21: Procedure in trial of offences i) Unless the application filed under sec 15 of this act is granted by the authority appointed the court can’t take into consideration the complaint file against any person.

ii) Before sanctioning the making of complaint, the court shall give an opportunity to the person for showing the cause of committing the offence 23) Sec 22: Bar of Suits i) The court shall not entertain the cases for recovery of wages or of deductions if the sum so claimed (a) Forms the subject of application under sec 15 which is pending before the authority appointed (b) Has formed the subject in favour of sec 15 24) Sec 22A: Protection of action taken in good faith i) No proceeding shall lie against the government or any government official for the act done in good faith. 25) Sec 23: Contracting out i) Any contract or agreement made in which the employed person voluntarily gives up any rights provided to him by the act shall be null and void. 26) Sec 24: Application of Act to railways air transport services mines and oilfields i) The powers conferred upon the State Government in relation to railways, air transport, mines and oilfields shall be the powers of Central Government. 27) Sec 25: Display by the notice containing the abstracts of the act i) The person responsible for the payment of the wages to the employed persons shall display a notice containing abstracts of the act and rules in English or majority language in the premises of employment. 28) Sec 25A: Payments of unpaid wages in case of death of employed person i) If the wages could not be paid to the employee due to his death, then the amount will be paid to

(a) The person nominated by him (b) If no such nomination is made, then to the prescribed authority who shall decide the amount to be deposited 29) Sec 26: Rule making power i) The State Government may make rules to regulate the procedure to be followed by the authorities and courts referred to in sections 15 and 17. ii) The State Government may by notification make rules for the purpose of carrying into effect the provisions of this Act. iii) In making any rule under this section the State Government may provide that a contravention of the rule shall be punishable with fine which may extend to ₹200.

IV. Amendments: i. The payment of wages (amendment) bill, 2017 removed ‘If an employer obtains the written authorisation of the employed person he may pay him the wages in cheque or by crediting the wages in his bank account’ from section 6. V. Case for reference : a. D. Baliah and Ors. vs. Secretary, Indian Detonators (1976) IILLJ 247 AP The petitioners are the employees in the respondent company. The petitioners in group went on an illegal strike in the factory. They were notified that their wages for 8 days would be deducted. Consequently their wages of 8 days was deducted. So, the petitioners filed a petition under sec 15(2). The authority which was entitled to hear the application dismissed it with the contention that the deduction was in accordance with law. The petitioners appealed to Chief Judge, City Civil Court, Hyderabad under sec 17. The court dismissed the application. The petitioners filed the revision petition in the Andhra High Court against the order of the learned Chief Judge, City Civil Court, and the revision being under Section 115 CPC. High court too

dismissed the petition since no contention of any party was accepted. VI. Opinion : The payment of Wages act is a regulation drawn to protect the rights and interests of the employee from being infringed by the employer. The employee has the prime right to enjoy the Wages on time and without deductions which is protected by this act. It has given the protection to a number of employees and will be doing so.

-Shubham Gurav 1st year BA. LL. B, ILS Law college, Pune