Chapter 5(A) Payment of Wages Act, 1936 – CS Professional Labour Laws and Practice Notes is designed strictly as per the latest syllabus and exam pattern.
Payment of Wages Act, 1936 – CS Professional Labour Laws and Practice Study Material
Question 1.
What constitutes ‘wages’ in terms of Payment of Wages Act, 1936?
Answer:
- “Wages” is defined under Section 2(vi) of Payment of Wages Act.
- It 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 by payable to a person employed in respect of his employment or of work done in such employment
- Includes –
- Remuneration payable under any award/settlement between the parties or order of a court
- Overtime or leave period work remuneration
- Bonus
- Amount paid in relation to termination
- Any other amount entitled under any scheme framed under any law for the time being in force,
- Excludes
- Bonus which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a court
- Value of any house-accommodation or of the supply of light water medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of Appropriate Government
- Any contribution paid by the employer to any pension or provident fund and the interest which may have accrued thereon
- Any travelling allowance or the value of any travelling concession;
- Any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment
- Any gratuity payable on the termination of employment.
Question 2.
Define Industrial establishment as per Payment of Wages Act, 1936.
Answer:
- Section 2(ii) of Payment of Wages Act, 1936 defines the term ‘ Industrial Establishment’
- Industrial or other establishment” means any –
- tramway service or motor transport service engaged in carrying passengers or goods or both by road for hire or reward
- air transport service other than such service belonging to or exclusively employed in the military naval or air forces of the Union or the Civil Aviation Department of the Government of India
- dock wharf or jetty
- inland vessel mechanically propelled
- mine quarry or oil-field
- plantation
- workshop or other establishment in which articles are produced adapted or manufactured with a view to their use transport or sale;
- establishment in which any work relating to the construction development or maintenance of buildings roads bridges or canals or relating to operations connected with navigation irrigation or to the supply of water or relating to the generation transmission and distribution of electricity or any other form of power is being carried on;
- any other establishment or class of establishments which the Appropriate Government may having regard to the nature thereof the need for protection of persons employed therein and other relevant circumstances specify by notification in the Official Gazette.
Question 3.
What is the dual objective of Payment of Wages Act, 1936?
Answer:
The two fold objective of Payment of Wages Act, 1936 is to:
- Regulate the payment of wages to certain classes of persons employed in the industry.
- Prevent exploitation of workers by ensuring timely payment without unauthorised deductions.
Question 4.
Who is responsible for payment of wages?
Answer:
- As per the provisions of Section 3 of Payment of Wages Act, 1936, Every employer shall be responsible for the payment to persons employed by him of all wages required to be paid under this Act.
- Employer includes legal representatives of deceased employer.
- However, in following cases if there is a person nominated or designated, person responsible to the employer shall in turn be responsible for such payment.
- Persons employed in factories: Person named as the manager of the factory
- Persons employed in industrial or other establishments: Person responsible to the employer for the supervision and control of the industrial or other establishments
- Persons employed upon railways : Person nominated by railway administration for the concerned area
- Persons employed in the work of contractor: Person designated by such contractor who is directly under his charge
Question 5.
What are the provisions regarding fixation of wage period & time of payment of wages?
Answer:
- Wage period should not exceed one month.
- In case an employee is engaged in an establishment in which less than one thousand persons are employed, wages shall be paid before the expiry of the seventh day after the last day of wage period.
- In case an employee in an establishment in which more than one thousand persons are employed, wages shall be paid before the expiry of the tenth day after the last day of wage period.
- Wages to be paid in current coins and currency notes or in both.
Question 6.
Can deductions be made from wage payable, if yes, which deductions are allowed?
Answer:
Following deductions can be made by an employer while making payment of wages :
- fines.
- deduction for absence of duty.
- deduction for damage to or loss of goods expressly entrusted to the employed person.
- deduction for house accommodation supplied by an employer.
- deduction for amenities and services provided by the employer.
- deduction for recovery of advances provided by employer.
- deduction for recovery of loan given by employer.
- deduction required to be made by order of a Court.
- deduction for subscription to, and for repayment of advances from any provident fund.
- deduction made with the written authorisation of the person employed for payment of any premium on his Life Insurance Policy.
- deduction for contribution to fund made for welfare of employees.
- deduction for contributions to any insurance scheme framed by the Central Government for the benefit of its employees.
Question 7.
What are the permissible modes of Payment as per Payment of Wages Act?
Answer:
Section 6 of Payment of Wages Act provides that:
- Wages can be paid in coins or currency notes or both
- Employer may pay by cheque or by crediting the wages in Bank A/c with written consent of employee.
Question 8.
Discuss about maintenance of Register and Record under the Payment of Wages Act, 1936
Answer:
- An employer shall maintain registers and records giving full particulars of the person employed by him, work performed by them, wages paid to them, the deduction made from wages etc.
- Registers and Records shall be preserved for 3 years.
Payment of Wages Act, 1936 Notes
Objective and Scope of the Payment of Wages Act, 1936
- Regulates the payment of wages to certain classes of persons employed in the industry.
- Prevents exploitation of workers by ensuring timely payment without unauthorised deductions.
- The scope of this act is limited to the person drawing the wages for the month, which does not exceed INR 24,000.
- The department is enforcing this legislation to the persons employed at the registered factories.
- Applies to whole of India including J&K.
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.
- Employer includes legal representatives of deceased employer.
Fixation of wage period & time of payment of wages
- Wage period should not exceed one month.
- In case an employee is engaged in an establishment in which less than one thousand persons are employed, wages shall be paid before the expiry of the seventh day after the last day of wage period.
- In case an employee in an establishment in which more than one thousand persons are employed, wages shall be paid before the expiry of the tenth day after the last day of wage period.
- Wages to be paid in current coins and currency notes or in both.
Deduction which may be made from wages
Following deductions can be made by an employer while making payment of wages :
- fines.
- deduction for absence of duty.
- deduction for damage to or loss of goods expressly entrusted to the employed person.
- deduction for house accommodation supplied by an employer.
- deduction for amenities and services provided by the employer.
- deduction for recovery of advances provided by employer.
- deduction for recovery of loan given by employer.
- deduction required to be made by order of a Court.
- deduction for subscription to, and for repayment of advances from any provident fund.
- deduction made with the written authorisation of the person employed for payment of any premium on his Life Insurance Policy.
- deduction for contribution to fund made for welfare of employees.
- deduction for contributions to any insurance scheme framed by the Central Government for the benefit of its employees.
Mode of Payment
- Wages can be paid in coins or currency notes or both
- Employer may pay by cheque or by crediting the wages in Bank A/c with written consent of employee.
Maintenance of registers and records
- An employer shall maintain registers and records giving full particulars of the person employed by him, work performed by them, wages paid to them, the deduction made from wages etc.
- Registers and Records shall be preserved for 3 years.
Claims arising out of deduction from wages or delay in payment of wages and penalty for malicious or vexatious claims.
- The Appropriate Government shall appoint an authority to hear and decide claims arising out of deductions from the wages, or delay in payment of wages.
- An aggrieved person can apply to the authority appointed by The State Government.
- Where an application is made by an applicant, the authority shall hear the applicant and the employer. After hearing and further enquiry the authority can direct the refund to the employed person of the amount deducted or the payment of delayed wages.
Other Noteworthy Points
- Includes contract employees
- Deduction in relation to fine imposed cannot exceed 3% of wage