PAYMENT OF

WAGES ACT,
1936
 INTRODUCTION

Recommended by Royal Commission of labour to regulate delays &

deductions in payment of wages to industrial plantation labour.
Act came into force from 28th March 1937
On same grounds, Maharashtra Payment of Wages Rules passed in
1963.
This Act is in 3 parts:

PART I PART II PART III

Regulation and Specifies head under Provides machinery
payment of wages which deductions can enforcing specific claims
be made.
 ACT 4 OF 1936 The Payment of Wages Bill,
1935 having been passed by the Legislative
Assembly received its assent on 23rd April,
1936. It came on the Statute Book as THE
PAYMENT OF WAGES ACT, 1936 (4 of 1936).
 OBJECTIVES OF THE ACT
Regulating the payment of wages, imposition of
fines and deductions from wages, and

Eliminating all malpractices by laying down wage

periods and time and mode of payment of wages.
The act therefore ensures payment of wages in a
particular form at regular intervals without
unauthorized deductions

The act provides for a speedy and effective

remedy to the employees in respect of their claims
arising out of illegal deductions or unjustified delay
made in paying the wages to them
 APPLICATION OF THE ACT
This act extends to whole of India. It came
into force on 28th march 1937. the act applies
to:

i. Persons employed in any factory

ii. Persons employed upon any railway
administration
iii. Person employed upon any railway either
directly or through a sub-contractor,
iv. And to persons employed in an industrial or
other establishment
 The State Government may, after giving three
months notice of its intention of so doing, by
notification in the Official Gazette, extend the
provisions of this Act or any of them to the
payment of wages to any class of persons
employed in any establishment or class of
establishments specified by the Central
Government or a State Government

The wage limit for the applicability of the act is

Rs.1600 per month. This act does not apply to
a person whose average wage is rs.1600 or
more per month
 OBJECT OF THE ACT
To regulate the payment of wages to certain classes of
employees in industry in particular form and at regular intervals.
To prevent unauthorised deductions from the wages.
Merely concerned with fixation of wage periods and not fixation
of wages.
APPLICABILITY
Applicable to persons employed in any factory, railway & such
other establishments wherein State Government can extend
provision of Act by Notification after giving 3months notice to that
effect.
Persons drawing less than Rs.6,500 per month in respect of a wage
period are covered under this Act.
 AMENDMENT TO PAYMENT OF WAGES ACT, 1936
MINISTRY OF LABOUR AND EMPLOYMENT NOTIFICATION
Dated 11th September 2012.
S.O. No. 2260(E)- In exercise of the powers conferred by sub-
section (6) of Section 1 of Payment of Wages Act, 1936 (4 of 1936),
the Central Government, on the basis of figures of the Consumer
Expenditure Survey, published by the National Sample Survey
Organization, hereby specifies Rupees eighteen thousand per
month as the wages under said sub-section (6).
[ F.No.S-31018/3/2007-WC]
T.K. BASU, Dy. Director General
(Published in the Gazette of India (extraordinary) Part - II, Section
3, Sub section (ii) dated 20th September 2012.)
 DEFINITIONS

"factory"
means a factory as defined in clause (m) of
section 2 of the Factories Act, 1948.
 "industrial or other establishment"
means any-
i. tramway service , or motor transport
service engaged in carrying passengers or
goods

ii. air transport service

iii. dock, wharf or jetty;

iv. inland vessel, mechanically propelled;

v. mine, 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
 "wages"
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, be payable to a person employed in
respect of his employment or of work done in such
employment, and includes-

(a) any remuneration payable under any award or

settlement between the parties or order of a court;
(b) any remuneration to which the person employed is
entitled in respect of overtime work or holidays or any
leave period;
(c) any additional remuneration payable under the
terms of employment (whether called a bonus or
by any other name);

(d) any sum which by reason of the termination of

employment of the person employed is payable
under any law or contract

(e) any sum to which the person employed is

entitled under any scheme framed under any law
for the time being in force,
 but does not include-
(1)any bonus, which does not form the part
of remuneration payable under the terms
of employment
(2) the value of any house-accommodation,
or of the supply of light, water, medical
attendance or other amenity
(3) any contribution paid by the employer to
any pension or provident fund, and the
interest which may have accrued thereon;
(4) any travelling allowance or the value of
any travelling concession;
 Wages

Remuneration payable to person employed in respect of his

employment or work done

Includes Excludes
Rem. under award/settlement Bonus not forming
Overtime/holiday/leave part of terms
Sum payable on termination General/Special order
Any scheme under law of SG
Employers Contri. To
PF/Pension & Interest
there upon
Travel Concession
Sum paid to defray
expense due to
employment
Gratuity
RULES REGARDING
PAYMENT OF
WAGES
(SECTION-3 to 6)
 PERSON RESPONSIBLE TO PAY WAGES
(Sec-3)
Every employer shall be responsible for the payment to persons
employed by him of all wages required to be paid under this Act. In
addition to the employer, the following persons shall also be
responsible for the payment of wages:

(a) in factories, if a person has been named as the manager of the factory

(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 and

(c) In 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.

If the manager of the factory resigns or is removed then the

responsibility to pay wages again become the responsibility of the
employer
 FIXATION OF WAGE PERIODS
(Sec-4)
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.
3) The main purpose of fixing the wage periods is to ensure
that ordinance delay is not caused in payment of wages
and a long time is not elapsed before wages are paid for a
period for which an employee has worked
4) Sec-4 is merely concerned with fixation of wage periods
and not with the fixation of wages
5) Wages cannot be fixed as payable quarterly, half yearly or
yearly but they may be fixed as payable daily, weekly ,
fortnightly and monthly
 TIME OF PAYMENT OF WAGES
(Sec-5)
The following rules have been laid down regarding the 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,
(b) any other railway, factory or industrial or other
establishment, where the number of workers exceed 1000,
shall be paid before the expiry of the tenth day,
In the case of persons employed on a dock, wharf or jetty or
in a mine, the balance of wages found due on completion of
the final tonnage account of the ship or wagons loaded or
unloaded, as the case may be, shall be paid before the expiry
of the seventh day from the day of such completion.
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:

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 recognized
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
(3) The state govt. may by any order exempt any
person responsible for the payment of wages
from any provisions in this section.

(4) All payments of wages shall be made on a

working day.
Less than 1000 persons 7th day from expiry

Other cases 10th day from expiry

WAGES TO BE PAID IN CURRENT COINS OR CURRENCY
NOTES
(Sec-6)

All wages shall be paid in current coin or currency

notes or in both:

PROVIDED that the employer may, after obtaining

the written authorization of the employed person,
pay him the wages either by cheque or by crediting
the wages in his bank account.
 DEDUCTIONS FROM WAGES

Sec 7-13 of the act deals deductions which can be

made from the wages of the workers

The object of sec-7 is to make every employer liable

to pay wages of an employee without deductions of
any kind except those authorized under this act

Sec-7(2) enumerates the deductions which are

authorized under this act
 WHAT IS DEDUCTION?
Every payment made by an employed person to
the employer or his agent is treated as
deduction from wages
 LIST OF AUTHORISED/PERMISSABLE
DEDUCTIONS Sec-7(2)
Deduction for FINES
Deduction for ABSENCE FROM DUTY
Deduction for DAMAGE/LOSS
Deduction for HOUSE ACCOMODATION
Deduction for AMMENITIES + SERVICES
Deduction for RECOVERY OF ADVANCES
Deduction for RECOVERY LOANS MADE FOR THE
WELFARE OF LABOUR
Deduction for RECOVERY LOANS GRANTED FOR HOUSE
BUILDING
Deduction for PAYMENT TO CO-OPERATIVE SOCITIES AND
INSURABLE SERVICES
 Deduction Of INCOME TAX
Deduction made UNDER ORDERS OF COURT
Deduction for CONTRIBUTION TO PROVIDENT FUND
Deduction for CONSTITUTION OF A WELFARE FUND FOR
EMPLOYED PERSON + FAMILY MEMBERS
Deduction in respect of FEES PAYABE FOR MEMBERSHIP
TO TRADE UNION
Deduction for PAYMENT OF INSURANCE PREMIA ON
FIDELITY GUARANTEE BONDS
Deduction for RECOVERY OF LOSSES SUSTAINED BY
RAILWAY ADMINISTRATION
Deduction for CONTRIBUTION TO PRIME MINISTERS
NATIONAL RELEF FUND
 DEDUCTION FOR FINES
(Sec-8)
1) No fine shall be imposed on any employed person save in
respect of such acts and omissions on his part as the employer,
with the previous approval of the State Government or of the
prescribed authority,

(2) A notice specifying such acts and omissions shall be exhibited in

the prescribed manner on the premises in which the employment
is carried on or in the case of persons employed upon a railway
(otherwise than in a factory), at the prescribed place or places.

(3) No fine shall be imposed on any employed person until he has

been given an opportunity of showing cause against the fine.
4)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.

5) No fine shall be imposed on any employed

person who is under the age of fifteen years.

6) No fine imposed on any employed person shall

be recovered from him by installments or after
the expiry of sixty days from the day on which it
was imposed.
7) Every fine shall be deemed to have been imposed
on the day of the act or omission in respect of
which it was imposed.

(8) All fines and all realisations 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; and
all such realisations shall be applied only to such
purposes beneficial to the persons employed in
the factory or establishment as are approved by
the prescribed authority.
 DEDUCTIONS FOR ABSENCE FROM
DUTY (Sec-9)

1) Deductions may be made under 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) This absence must be voluntary and

without the permission of the employer
3. It cannot cover the absence of the employee when
he is forced by circumstances created by the
employer from carrying out his duties

4. An employed person shall be deemed to be absent

from the place where he is required to work, if,
although present, he refuses to carry out his work
in pursuance of a stay in strike or for any other
cause which is not reasonable in the
circumstances
5. No deduction from the wages can be made
when the absence from duty is for the period
between his dismissal and reinstatement as
the absence from duty cannot be said to be
voluntary.

6. Section 9 further authorizes the employer to

deduct to the extent of eight days wages, if 10
or more persons acting in the concert absent
themselves from duty without reasonable
cause and without any notice.
 DEDUCTION FOR DAMAGE OR LOSS
(SEC-10)

A deduction shall not exceed the amount of

the damage or loss caused to the employer
by the neglect or default of the employed
person.
Employer cannot make profit out of such
deductions
A deduction shall not be made until the
employed person has been given an
opportunity of showing cause against the
deduction
 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
 DEDUCTIONS FOR SERVICES RENDERED
(Sec-11)

A deduction shall not be made from the wages

of an employed person, unless the house-
accommodation amenity or service has been
accepted by him, as a term of employment or
otherwise, and such deduction shall not
exceed an amount equivalent to the value of
the house-accommodation amenity or service
supplied
DEDUCTION FOR THE RECOVERY OF ADVANCES
OR FOR ADJUSTMENT OF OVERPAYMENT OF
WAGES
(SEC-12)

Deductions shall be subject to the

following conditions, namely:

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.
 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
MADE FOR THE WELFARE OF LABOUR

Deductions for recovery of loans granted

under this act 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 thereon.
 DEDUCTIONS FOR RECOVERY OF LOANS
GRANTED FOR HOUSE BUILDING

Shall subject to any rules made by the

state government. It shall regulate the
extent to which loans may be granted
and the rate of interest payable thereon
 DEDUCTIONS FOR PAYMENT TO CO-
OPERATIVE SOCIETIES AND
INSURANCE SCHEME
(Sec-13)

Deductions shall be subject to such conditions

as the State Government may impose.
 OTHER DEDUCTIONS
IT INCLUDES:

Deductions of income-tax payable by the

employed person;

Deductions required to be made by order of

a court or other competent authority
 Deductions, made with the written
authorization of the employed person,
for payment of the fees payable by him
for the membership of any trade union
registered under the Trade Union Act,
1926
 PERMISSIBLE TOTAL DEDUCTIONS
The total amount of deductions which may be
made under any wage-period from the wages
of any employed person shall not exceed-
(i) In cases where such deductions are wholly or
partly made for payments to co-operative
societies seventy-five per cent of such wages,
and
(ii) In any other case, fifty per cent of such wages:
PROVIDED that where the total deductions
authorized exceed seventy five per cent or, as
the case may be, fifty per cent of the wages,
the excess may be recovered in such manner
as may be prescribed.
 MAINTENANCE OF REGISTERS
AND RECORDS
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
such other particulars
 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 therein.
 INSPECTORS
The payment of wages act, 1936 makes
provision for the appointment of inspectors
by the state govt. for the purpose of enforcing
compliance with the provisions of this act

in respect of persons employed in factories,

an inspector of factories under the factory act,
1948 shall be an inspector
 The State Government may appoint Inspectors
for the purposes of this Act in respect of all
persons employed upon a railway (otherwise
than in a factory) to whom this Act applies.

The State Government may, by notification in the

Official Gazette, appoint such other persons as it
thinks fit to be Inspectors for the purposes of this
Act, and may define the local limits within which
they shall exercise their functions
 POWERS OF INSPECTORS
Make such examination and inquiry as he
thinks fit in order to ascertain whether the
provisions of this Act or rules made there
under are being observed;

enter, inspect and search any premises of

any railway, factory or industrial or other
establishment at any reasonable time for the
purpose of carrying out the objects of this Act;
 Supervise the payment of wages to persons
employed upon any railway or in any factory
or industrial or other establishment.

Require by a written order the production at

such place, as may be prescribed, of any
register maintained in pursuance of this Act
and take on the spot or otherwise statements
of any persons which he may consider
necessary for carrying out the purposes of
this Act
 Seize or take copies of such registers or
documents or portions thereof as he may
consider relevant in respect of an offence
under this Act which he has reason to believe
has been committed by an employer;
AUTHORITY TO HEAR CLAIMS
The following may be appointed as an authority:
a presiding officer of any Labour Court or
Industrial Tribunal, constituted under the
Industrial Disputes Act, 1947
any Commissioner for Workmens Compensation
or
other officer with experience
as a Judge of a Civil Court or
as a Stipendiary Magistrate
 PRESENTATION OF APPLICATION
When contrary to the provisions of section 7 to
13 any deduction has been made from his
wages.
When there has been any delay in the
payment of wages

The application may be presented by:

the employed person

a legal practitioner
an official of a registered trade union authorized
in writing to act on behalf of the employed
person
 An inspector appointed under Sec-14

Every such application shall be presented

within twelve months from the date on which
the deduction from the wages was made or
from the date on which the payment of the
wages was due to be made

Any application may be admitted after the said

period twelve months when the applicant
satisfies the authority that he had sufficient
cause for not making the application within
such period.
 PROCEDURE
When any application under the section is
entertained, the authority shall hear the
applicant and the employer or other person
responsible for the payment of wages under
section 3, or give them an opportunity of
being heard, and, after such
 Further inquiry (if any) as may be necessary,
may, without prejudice to any other penalty to
which such employer or other person is liable
under this Act, direct the refund to the employed
person of the amount deducted, or the payment
of the delayed wages, together with the payment
of such compensation as the authority may think
fit, not exceeding ten times the amount deducted
in the former case and not exceeding twenty-five
rupees in the latter,
 No direction for the payment of compensation
shall be made in the case of delayed wages if the
authority is satisfied that the delay was due to-
(a) a bona fide error or bona fide dispute as to the
amount payable to the employed person, or
(b) the occurrence of an emergency, or the
existence of exceptional circumstances, or
(c) the failure of the employed person to apply for
or accept payment.
 RECOVERY OF AMOUNT
The amount directed to be paid under sec-15 may
be recovered:

If the authority is a Magistrate, by the authority

himself

If the authority is not a Magistrate, by any

Magistrate to whom the authority makes
application for the recovery of the amount
 PENALTIES
1. Whoever being responsible for the payment
of wages to an employed person contravenes
any of the provisions of any of the following
sections, shall be punishable with fine which
shall not be less than two hundred rupees but
which may extend to one thousand rupees.
For not fixing the wage periods in accordance
with the provisions of the act, or paying the
wages on the day other than working day, or
not paying the wages in current coins or
currency notes or not recording the fines, the
employer shall be punishable with a fine which
may extend to Rs500 for each offence
3.Whoever being required under this Act to maintain
any records or registers or to furnish any
information or return-
(a) fails to maintain such register or record; or
(b) willfully refuses or without lawful excuse neglects
to furnish such information or return; or
(c) willfully furnishes or causes to be furnished any
information or return which he knows to be false; or
(d) refuses to answer or willfully gives a false answer
to any question necessary for obtaining any
information required to be furnished under this Act,
shall, for each such offence, be punishable wit
fine which shall not be less than two hundred
rupees but which may extend to one thousand rupees
4. Whoever-
(a) willfully obstructs an Inspector in the discharge of his duties
under this Act; or

(b) refuses or willfully neglects to afford an Inspector any

reasonable facility for making any entry, inspection,
examination, supervision, or inquiry authorized by or under this
Act in relation to any railway, factory or industrial or other
establishment or

(c) willfully refuses to produce on the demand of an Inspector any

register or other document kept in pursuance of this Act; or

(d) prevents or attempts to prevent or does anything which he has

any reason to believe is likely to prevent any person from
appearing before or being examined by an Inspector acting in
pursuance of his duties under this Act;
shall be punishable with fine 45[which shall not be less than
two hundred rupees but which may extend to one thousand
rupees.]
 If any person who has been convicted of
any offence punishable under this Act is
again guilty of an offence involving
contravention of the same provision, he
shall be punishable on a subsequent
conviction with imprisonment for a term
which shall not be less than one month
but which may extend to six months and
with fine which shall not be less than five
hundred rupees but which may extend to
three thousand rupees
 If any person fails or willfully neglects to pay
the wages of any employed person by the
date fixed by the authority in this behalf, he
shall, without prejudice to any other action
that may be taken against him, be punishable
with an additional fine which may extend to
47[one hundred rupees for each day for which

such failure or neglect continues.

 LIST OF AMENDING ACTS, ORDINANCE AND ADAPTATION ORDERS
1. The Government of India (Adaptation of Indian Laws) Order, 1937.
2. The Repealing and Amending Act, 1937 (20 of 1937).
3. The Payment of Wages (Amendment) Act, 1937 (22 of 1937).
4. The Payment of Wages (Amendment) Ordinance, 1940 (3 of 1940).
5. The Indian Independence (Adaptation of Central Acts and Ordinances) Order,
1948.
6. The Adaptation of Laws Order, 1950.
7. The Part B States (Laws) Act, 1951 (3 of 1951).
8. The Payment of Wages (Amendment) Act, 1957 (68 of 1957).
9. The Payment of Wages (Amendment) Act, 1964 (53 of 1964).
10. The Central Labour Laws (Extension to Jammu and Kashmir) Act, 1970 (51 of
1970).
11. The Repealing and Amending Act, 1974 (56 of 1974).
12. The Payment of Wages (Amendment) Act, 1976 (29 of 1976).
13. The Payment of Wages (Amendment) Act, 1977 (19 of 1977).
14. The Payment of Wages (Amendment) Act, 1982 (38 of 1982).
15. The Payment of Wages (Amendment) Act, 2005 (41 of 2005)