UNIVERSITY OF PETROLEUM AND ENERGY STUDIES

COLLEGE OF LEGAL STUDIES

DEHRADUN

LABOUR LAW –II PROJECT ON

SALIENT FEATURES OF THE PAYMENT OF WAGES ACT, 1936

Submitted to: Submitted by:

Ms. Priya Misra Anika Bajpai

Asst. Professor B.A LLB (Hons) (VIIIth Sem)

COLS,UPES Roll No. 18 Sec ‘A’

SAP ID: 500012061

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ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been possible

without the kind support and help of many individuals. I am highly indebted to Ms.

Priya Mishra, my subject teacher for her guidance and constant supervision as well

as for providing necessary information regarding the project & also for her support

in completing the project.

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INDEX

Introduction

Breif on Payment of Wages Act

Summary of the Provisions of the Act

Relevant Provisions of the Act

Relevant Cases

Conclusion

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INTRODUCTION

The Payment of Wages Act, 1936 is a central legislation which applies to the persons employed

in the factories and to persons employed in industrial or other establishments specified in sub-

clauses (a) to (g) of clause (ii) of section 2 of this Act. This Act does not apply on workers whose

wages payable in respect of a wage period average Rs. 1600/- a month or more. Since the

minimum wages in Delhi are much higher, this Act has become almost redundant in its present

form. The Ministry of Labour has already initiated the process for suitable amendment of this

Act.

The main objective of the Act is to avoid unnecessary delay in the payment of wages and to

prevent unauthorized deductions from the wages. Every person employed in any factory, upon

any railway or through sub-contractor in a railway and a person employed in an industrial or

other establishment. The State Government may by notification extend the provisions to any

class of persons employed in any establishment or class of establishment. The benefit of the

Act prescribes for the regular and timely payment of wages (on or before 7th day or 10th day

of after wage period is greater than 1000 workers) and Preventing unauthorized deductions

being made from wages and arbitrary fines.

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BRIEF ON PAYMENT OF WAGES ACT

Wages are averaging less than Rs. 6500.00 per month only are covered or protected by the Act

by the amendment in 2005 by {Section 1(6)}.Wages means contractual wages and not

overtime wages. They are not to be taken into account for deciding the applicability of the Act

in the context of section 1(6) of the Act. 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

of by crediting them in the bank account if so authorized in writing by an employed person.

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Summary of the provisions of the Act

The provisions of the Act regarding the imposition of fines on the employed person are as

follows such as, The employer must exhibit on his premises a list of acts or omissions for

which fines can be imposed, Before imposing a fine on an employed person he must be given

an opportunity of showing cause against the fine, The amount of fine must not exceed 3

percent of the wages, A fine cannot be imposed on an employed person who is under the age of

15 years, A fine cannot be recovered by installments or after 90 days from the day of the act or

omission for which it is imposed, The moneys realized from fines must be applied to purposes

beneficial to employed persons.

Subsection 8(3), 10(1-A) & Rule 15} deals with Any person desiring to impose a fine on an

employed person or to make a deduction for damage or loss shall explain personally or in

writing to the said person the act or omission, or damage or loss in respect of which the fine or

deduction is proposed to be imposed, and the amount of fine or deduction, which it is proposed

to impose, and shall hear his explanation in the presence of at least one other person, or obtain

it in writing.

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RELEVANT PROVISIONS OF THE ACT

The objective of the Act is two fold:

1. The date of Payment of Wages.

2. The deduction from the wages whether as fine or otherwise.

WAGE•

Wage includes any remuneration:-

• Payable under any award or settlement between the parties or order of a Court;

• Over time work or holiday or any leave period;

• Any additional remuneration under the terms of employment. Wage does not includes any

bonus, pension fund or provident fund, travelling allowance and any gratuity.

WAGES TO BE PAID IN CURRENT COINS OR CURRENCY NOTES.

All wages shall be paid in current coins or currency notes or in both.b. After obtaining the

authorization, either by Cheque or by crediting the wages in employees banks Account {Section

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6}Andhra Pradesh State Amendment: “Provided further that the State Government may, by

notification in the Andhra Pradesh Gazette, specify the industrial establishments , the employers

of which shall pay to the persons employed therein, the wages either by cheque or by crediting

the wages in their bank account”-[Vide Andhra Pradesh Act 15 of 1982, sec.2 (w.e.f 7-10-1982).

TIME OF PAYMENT OF WAGES•

The wages of every person employed is paid. When less than 1000 persons are employed shall

be paid before the expiry of the 7th day of the following month. When more than 1000 workers,

before the expiry of the 10th day of the following month. (Section 5).

COVERAGE OF EMPLOYEES

Drawing average wage upto Rs.6500 pm as amended with effect from 6th September 2005.

DEDUCTION MADE FROM WAGES

Deductions such as, fine, deduction for amenities and services supplied by the employer,

advances paid, over payment of wages, loan, granted for house-building or other purposes,

income tax payable, in pursuance of the order of the Court, Provident Fund contributions,

cooperative societies, premium for Life Insurance, contribution to any fund constituted by

employer or a trade union, recovery of losses, Employees State Insurance contribution etc.

(Section 7).

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DEDUCTION FOR ABSENCE FROM DUTIES FOR UNAUTHORISED ABSENCE

Absence for whole or any part of the day – If ten or more persons absent without reasonable

cause, deduction of wages upto 8 days {Section 9}

DEDUCTION FOR DAMAGE OR LOSS

For default or negligence of an employee resulting into loss. Show cause notice has to be given

to the employee. {Section 10}

DEDUCTIONS FOR SERVICE RENDERED

When accommodation amenity or service has been accepted by the employee. {Section 11}

Deductions for recovery of Advance.• Deduction for recovery of loans.• Deductions for

payment to co-operative societies and Insurance schemes.

AUTHORITIES UNDER THIS ACT

INSPECTORS- AUTHORITY TO HEAR CLAIMS.

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Any commissioner for Workmen’s Compensation; or Any Regional Labour Commissioner. Any

Assistant Labour Commissioner Presiding Officer of any Labour Court or Industrial Tribunal.

APPEAL:

An Appeal may be preferred from the following orders or directions of the Authority:-an order

directing the employer or the persons responsible for payment of wages, to refund the deductions

wrongfully made or to pay the delayed wages ;an order directing payment of compensation to the

employee under Section 15(3);an order imposing penalty whether on the employee or the

employer under Section 15(4).An Appeal can be made within thirty days of the date on which

the order or direction was made before the District Court within whose jurisdiction the industrial

establishment is situated.

PENALITIES

Makes contravention of Sec’s.5, 7, 9, 11 and 13 of the Act, by any person responsible for the

payment of wages to an employed person, punishable with fine which shall not be less than one

thousand five hundred rupees but which may extend to seven thousand five hundred rupees.

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RELEVANT CASES

In N. E Railway v/s Durga Prasad (1980) Lab IC 390 (All):

It was held that the Act applies to persons employed in any factory or/ and to persons employed

upon by Railway or by a person fulfilling a contract with a Railway Administration.

In Raghunathmal Bank Ltd. v/s Labour Court, Hyderabad 1977 Lab IC 1295 {AP}

It was held that An employee whose monthly wages are more than what is prescribed under

Section 1 (b) is barred from invoking the provisions of the Act.

In Steel and General Mills v/s Addl District Judge, (1972) I LLJ 284

It was held that the Amount claimed by employees for the periods of lay- off falls within the

definition of wages.

In Managing Director, Mining & Allied Machinery Corpn v/s R.K. Bhattacharya, 1971

Lab IC 1339 (Cal.)

If the employee refuses to carry out his work in pursuance of stay in strike or any other cause

which is not reasonable or a tool down strike or any other cause, it will be deemed to amount to

absence from duty.

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CONCLUSION

The Payment wages act is a regulation drawn up to protect the employee’s rights from being

infringed by the employer. The employee should be paid on time and should not be harassed

for anything. The employer is at a stronger position always and hence the Act has been made

so as to empower the worker and make his position stronger and to save him from being

exploited at the hands of the employer.

It also gives legal remedies to the worker if the employer takes the undue advantage of his

position and has a malafide intention with regard to his wages and payments .

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