The Payment of Wages Act, 1936 is a central legislation which has been enacted to regulate the payment of wages to workers employed in certain specified industries and to ensure a speedy and effective remedy to them against illegal deductions and/or unjustified delay caused in paying wages to them. It applies to the persons employed in a factory, industrial or other establishment, whether directly or indirectly, through a sub-contractor.
The Central Government is responsible for enforcement of the Act in railways, mines, oilfields and air transport services, while the State Governments are responsible for it in factories and other industrial establishments.
The basic provisions of the Act are as follows:
The person responsible for payment of wages shall fix the wage period up to 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 authorization 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.
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 authorization of the employee for payment of any premium on his life insurance policy or purchase of securities.
Responsibility for payment of wages:
Every employer shall be responsible for the payment to persons employed by him of all wages required to be paid under this Act:
(a) In factories, if a person has been named as the manager of the factory under clause f of sub-section 1 of section 7 of the Factories Act, 1948 (63 of 1948).
(b) In industrial or other establishments, if there is a person responsible to the employer for the supervision and control of the industrial or other establishments.
(c) Upon railways (otherwise than in factories), if the employer is the railway administration and the railway administration has nominated a person in this behalf for the local area concerned.
Fixation of wage-periods:
(1) Every person responsible for the payment of wages under section 3 shall fix periods (in this Act referred to as wage-periods) in respect of which such wages shall be payable.
(2) No wage-period shall exceed one month.
Time of payment of wages:
(1) The wages of every person employed upon or in-
(a) Any railway, factory or industrial or other establishment upon or in which less than one thousand persons are employed, shall be paid before the expiry of the seventh day,
(2) Where the employment of any person is terminated by or on behalf of the employer, the wages, earned by him shall be paid before the expiry of the second working day from the day on which his employment is terminated:
(3) The State Government may, by general or special order, exempt, to such extent and subject to such conditions as may be specified in the order, the person responsible for the payment of wages to persons employed upon any railway (otherwise than in a factory) or to persons employed as daily-rated workers in the Public Works Department of the Central Government or the State Government from the operation of this section in respect of wages of any such persons or class of such persons:
(4) Save as otherwise provided in sub-section 2, all payments of wages shall be made on a working day.
Deductions for absence from duty:
(1) Deductions may be made under clause b of sub-section 2 of section 7 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) The amount of such deduction shall in no case bear to the wages payable to the employed person in respect of the wage-period for which the deduction is made in a larger proportion than the period for which he was absent bears to the total period, within such wage-period, during which by the terms of his employment, he was required to work:
Deductions for damage or loss:
(1) A deduction under clause c or clause o of sub-section 2 of section 7 shall not exceed the amount of the damage or loss caused to the employer by the neglect or default of the employed person.
(2) 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.
Deductions for recovery of advances:
Deductions under clause f of sub-section 2 of section 7 shall be subject to the following conditions, namely:
(a) 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, but no recovery shall be made of such advances given for traveling-expenses;
(b) 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.
Deductions for recovery of loans:
Deductions for recovery of loans granted under clause f of sub-section 2 of section 7 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 there on.
Maintenance of registers and records:
(1) Every employer shall maintain such registers and records giving such particulars of persons employed by him, the work performed by them, the wages paid to them, the deductions made from their wages, the receipts given by them and such other particulars and in such form as may be prescribed.
(2) Every register and record required to be maintained under this section shall, for the purposes of this Act, be preserved for a period of three years after the date of the last entry made there.
Procedure in trial of offences:
(1) No court shall take cognizance of a complaint against any person for an offence under sub-section 1 of section 20 unless an application in respect of the facts constituting the offence has been presented under section 15 and has been granted wholly or in part and the authority empowered under the latter section or the appellate Court granting such application has sanctioned the making of the complaint.
(2) Before sanctioning the making of a complaint against any person for an offence under sub-section 1 of section 20, the authority empowered under section 15 or the appellate Court, as the case may be, shall give such person an opportunity of showing cause against the granting of such sanction, and the sanction shall not be granted if such person satisfies the authority or Court that his default was due to-
(a) A bona fide error or bona fide dispute as to the amount payable to the employed person.
(b) The occurrence of an emergency or the existence of exceptional circumstances, such that the person responsible for the payment of the wages was unable, though exercising reasonable diligence, to make prompt payment.
(c) The failure of the employed person to apply for or accept payment.
(3) No Court shall take cognizance of a contravention of section 4 or of section 6 or of a contravention of any rule made under section 26 except on a complaint made by or with the sanction of an Inspector under this Act.
(4) Imposing any fine for an offence under sub-section 1 of section 20 the court shall take into consideration the amount of any compensation already awarded against the accused in any proceedings taken under section 15.
Display by notice of abstracts of the Act:
The person responsible for the payment of wages to persons; employed in a factory or an industrial or other establishment shall cause to be displayed in such factory or industrial or other establishment a notice containing such abstracts of this Act and of the rules made there under in English and in the language of the majority of the persons employed in the factory, or industrial or other establishment, as may be prescribed.
(1) 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.
(2) The State Government may, by notification in the Official Gazette, make rules for the purpose of carrying into effect the provisions of this Act.
(3) In particular and without prejudice to the generality of the foregoing power, rules made under sub-section 2.
(a) require the maintenance of such records, registers, returns and notices as are necessary for the enforcement of the Act prescribe the form there of and the particulars to be entered in such registers or records;
(b) require the display in a conspicuous place on premises where employment is carried on of notices specifying rates of wages payable to persons employed on such premises;
(c) Provide for the regular inspection of the weights, measures and weighing machines used by employers in checking or ascertaining the wages of persons employed by them;
(d) Prescribe the manner of giving notice of the days on which wages will be paid;
(e) Prescribe the authority competent to approve under sub-section 1 of section 8 acts and omissions in respect of which fines may be imposed;
(f) Prescribe the procedure for the imposition of fines under section 8 and for the making of the deductions referred to in section 10;
(4) 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 two hundred rupees.
(5) All rules made under this section shall be subject to the condition of previous publication, and the date to be specified under clause 3 of section 23 of the General Clauses Act, 1897 (10 of 1897), shall not be less than three months from the date on which the draft of the proposed rules was published.