Amity Law School, LucknoW

LABOUR LAW ASSIGNMENT

On

Payment of Wages Act, 1936-Object,

Scope and Application

Submitted to: Submitted by:

Mr. Panchdev Rishi Animesh Kumar

B.A.LL.B.(H), VI Sem.

Enrl. No. A8108309035

Payment of Wages Act, 1936 2012

A

ACKNOWLEDGMENT

This assignment is intended to cover the topic “Payment of Wages Act, 1936-Object, Scope

and Application” of Labour Law. Basic and pre-requisite information has been included.

I acknowledge the inspiration and blessing of my respected faculty Mr. Panchdev Rishi. He

made my all doubt crystal clear.

I am full of gratitude to my seniors Pratik Mishra, Mayank Dubey, Prateek Mishra, Richa

Srivastava and Yash Bhardwaj for the patience shown and encouragement given to complete

this assignment.

My heartful thanks are due to my friends Priyanshu, Priyesh, Smriti, Aishwarya, Priya, and

Gaurav (Chacha) for providing inspiration and relevant resources.

In the last but not the least, my sense of gratitude is due to AMITY LAW SCHOOL,

LUCKNOW.

Every effort has been made to avoid errors and mistakes; however their presence cannot be

ruled out.

Animesh Kumar

Payment of Wages Act, 1936 2012

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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 or in a railway, whether directly or indirectly, through a sub-contractor.

Further, the Act is applicable to employees drawing wages upto Rs. 1600/- a month.

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 upto 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 authorisation 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.

Although the wages of an employed person shall be paid to him without deductions of

any kind, 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

Payment of Wages Act, 1936 2012

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approved by the State Government or to a scheme of insurance maintained by the

Indian Post Office; (x) deductions made with the written authorisation of the

employee for payment of any premium on his life insurance policy or purchase of

securities.

The Act prescribes following rules for fines:-

Fines shall be imposed for approved list of acts and omissions.

A notice specifying such list shall be exhibited in the prescribed manner on the

premises in which the employment is carried on or at the prescribed places in case a

person is employed in railways.

No fine shall be imposed on any employed person until he has been given an

opportunity of showing cause against the fine, or other-wise, than in accordance with

such procedure as may be prescribed for the imposition of fines.

The total amount of fine which may be imposed in any one wage period on any

employed person shall not exceed an amount equal to three per cent of the wages

payable to him in respect of that wage-period.

No fine shall be imposed on any employed person who is under the age of fifteen

years.

No fine imposed on any employed person shall be recovered from him by instalments

or after the expiry of sixty days from the day on which it was imposed.

All fines and all realisations thereof shall be recorded in a register to be kept by the

person responsible for the payment of wages.

Hence, the main object of the Act is to eliminate all malpractices by laying down the time and

mode of payment of wages as well as securing that the workers are paid their wages at

regular intervals, without any unauthorised deductions. The Act was amended by the

Payment of Wages (Amendment) Act, 2005Rs. in order to enlarge its scope and provide for

more effective enforcement. The main amended provision is the enhancement of wage ceiling

from 1600/-per month to Rs. 6500/-per month for the applicability of the Act as well as

empowering the Government to enhance the ceiling by notification in future.

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

Payment of Wages Act, 1936 2012

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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 Payment of Wages Act, 1936 was enacted to regulate payment of wages to workers

employed in Industries and to ensure a speedy and effective remedy to them against illegal

deductions and/or unjustified delay caused in paying wages to them. The existing wage

ceiling under Payment of Wages Act, 1936, was fixed at Rs. 1600/- pm in 1982. With a view

to enhance the wage ceiling to Rs. 6500/- p.m. for applicability of the Act, to empower the

Central Government to further increase the ceiling in future by way of notification and to

enhance the penal provisions etc., the Payment of Wages (Amendment) Act, 2005, which was

passed by both Houses of Parliament, has been notified on 6.9.2005 as an Act 41 of 2005 by

the Ministry of Law & Justice. Subsequently, the Ministry of Labour & Employment has

issued the Notification No. S.O 1577(E) to make the Payment of Wages (Amendment) Act,

2005 effective from the 9 November 2005. Further, in exercise of the powers conferred by

sub-section (6) of Section 1 of the Act, the Central Government, on the basis of figures of the

Consumer Expenditure Survey published by National Sample Survey Organization, has

enhanced the wage ceiling, further, to Rs. 10,000/- per month vide gazette notification No.

S.O. 1380 (E) dated 8th August, 2007.

Enforcement Machinery

The Central Government is responsible for the administration of the Act in railways, mines,

oilfields and air transport services, while State Governments are responsible in factories and

other industrial establishments. In respect of major ports, State Governments have appointed

officers of the Central Industrial Machinery as Inspector for enforcing the Act.

Penal provisions

In respect of any of the contravention to the provisions of the Act like unauthorized

deductions, delayed payments etc, the Act provides for various penal provisions against

defaulting employer.