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MODULE 2
Payment of Wages Act, 1936
Object, Application and Scope of the Act.
Object: The Payment of Wages Act regulates the payment of wages to certain classes of persons
employed in industry and its importance cannot be under-estimated.
 The Act guarantees payment of wages on time (S-5)and without any deductions except
those authorised under the Act. (S-7(1))
 The Act provides for the responsibility for
1. Payment of wages,
2. fixation of wage period, (S-4)
3. time and mode of payment of wages, (S-5)
4. permissible deduction (S-7(2))
5. as also casts upon the employer a duty to seek the approval of the Government
for the acts and permission for which fines may be imposed by him and also
sealing of the fines (S-8), and
 Also for a machinery to hear and decide complaints regarding the deduction from wages
or in delay in payment of wages, penalty for malicious and vexatious claims.
 The Act does not apply to persons whose wage is Rs. 24,000/- or more per month.
 The Act also provides to the effect that a worker cannot contract out of any right
conferred upon him under the Act.
Application: According to Section 1(4)
This act applies in the first instance to the payment of wages
to persons employed in any factory
to persons employed (otherwise than in a factory) upon any railway by a railway administration
or either directly or through a sub-contractor by a person fulfilling a contract with a railway
administration and
to persons employed in an industrial or other establishment specified in subclauses (a) to (g) of

clause (ii) of section 2.
Scope: According to Section 1(2)
It extends to the whole of India.
Definition of Wage:
"Wages" [sec 2 (vi)] 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 (CAPABLE OF BEING
EXPRESSED DOES MEAN THE WAY OF PAYING THE WAGES SHOULD BE
MENTIONED UNDER AN AGREEMENT)
 payable to a person employed in respect of his employment or of work done in such
employment
and includes –
 AWARD AND SETTLEMENT

 OVERTIME, PAID HOLIDAYS AND PERMISSIBLE LEAVE
 ADDITIONAL REMUNERATION EXAMPLE BONUS THAT IS MENTIONED
UNDER A TERM OF EMPLOYMENT
 ANY SUM PAYABLE BY THE APPLICATION OF CONTRACT, LAW, OR BY
INSTRUMENT
 ANY SCHEME UNDER WHICH PERSON IS ENTITLED TO RECEIVE MONEY
but does not include –
 BONUS THAT IS NOT MENTIONED IN TERMS OF EMPLOYEMENT

 VALUE OF ANY SERVICES RENDERED BY EMPLOYER
 CONTRIBUTION BY EMPLOYER TO ANY SOCIAL SECURITY
 ANY TRAVELLING ALLOWANCE AND REIMBURSEMENT
 ANY SUM PAID TO EMPLOYEE FOR THE FULFILLMENT OF HIS DUTY
BECAUSE NATURE OF HIS EMPLOYMENT FORCES HIM TO SPEND MONEY
 ANY GRATUITY PAYABLE BY AN EMPLOYER WHICH IS NOT A PART OF
ANY CONTRACT, LAW, INSTRUMENT
RESPONSIBILITY FOR PAYMENT OF WAGES
Section 3
Responsibility for payment of wages.—
1. Every employer shall be responsible for the payment of all wages required to be paid
under this Act to persons employed by him and in case of persons employed
 In the case of the factory, manager of that factory shall be liable to pay the wages to
employees employed by him.
 In the case of industrial or other establishments, persons responsibility of supervision
shall be liable for the payment of the wage to employees employed by him.
 In the case of railways, a person nominated by the railway administration for specified
area shall be liable for the payment of the wage to the employees.
 In the case of contractor, a person designated by such contractor who is directly under
his charge shall be liable for the payment of the wage to the employees.
 In any other case, a person designated by the employer as a person responsible for
complying with the provisions of the Act
2. Notwithstanding anything contained in sub-section (1), it shall be the responsibility of

the employer to make payment of all wages required to be made under this Act in case
the contractor or the person designated by the employer fails to make such payment.
FIXATION OF WAGE PERIOD
Section 4
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-period) in respect of which such wages shall be payable.
(2) No wage-period shall exceed one month.
[Sec 5 (3)] With the consultation of the central government, state government having power and can
change the person responsible for the payment of the wages in Railways, or person responsible to
daily rated workers in the Public Works Department of the Central Government or the State
Government.
TIME OF PAYMENT OF WAGES
Time Of Payment Of Wages. [Section 5]
1. The wages of every person employed upon or in

 In railway, factory or industrial or other establishment, if there are less than 1000
employees, wages of employees should be paid before the expiry of the 7th day after
the last day of the wage period. (ex:- wages should be paid on starting of present month
within 7 days i.e. before 7th date if wage is paid on 1st in previous month )
 In other railway, factory or industrial or other establishment, if there are more than
1000 employees, wages of employees should be paid before the expiry of the 10th
day after the last day of the wage period. (ex:- wages should be paid on starting of
present month within 10 days i.e. before 10th date if wage is paid on 1st in previous
month )
 For employees of port area, mines, wharf or jetty, wages of employees should be
paid before the expiry of the 7h day after the last day of the wage period.
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: 12
[Provided that where the employment of any person in an establishment is
terminated due to the closure of the establishment for any reason other than a weekly
or other recognised holiday, the wages earned by him shall be paid before the expiry of
the second day from the day on which his employment is so terminated.]
Section 6. Wages to be paid in current coin or currency notes
All wages shall be paid in current coin or currency notes or by cheque or by crediting the wages
in the bank account of the employee:
Provided that the appropriate Government may, by notification in the Official Gazette, specify
the industrial or other establishment, the employer of which shall pay to every person employed
in such industrial or other establishment, the wages only by cheque or by crediting the wages
in his bank account."

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MODULE 2

Payment of Wages Act, 1936

Object, Application and Scope of the Act.

Application: According to Section 1(4)

This act applies in the first instance to the payment of wages

to persons employed in any factory

to persons employed in an industrial or other establishment specified in subclauses (a) to (g) of

It extends to the whole of India.

"Wages" [sec 2 (vi)] means

 all remuneration (whether by way of salary allowances or otherwise)

 AWARD AND SETTLEMENT

but does not include –

 BONUS THAT IS NOT MENTIONED IN TERMS OF EMPLOYEMENT

2. Notwithstanding anything contained in sub-section (1), it shall be the responsibility of

FIXATION OF WAGE PERIOD

(2) No wage-period shall exceed one month.

Time Of Payment Of Wages. [Section 5]

1. The wages of every person employed upon or in

2. Where the employment of any person is terminated by or on behalf of the employer,

Section 6. Wages to be paid in current coin or currency notes

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