Abstract of the Payment of Wages Act, 1936
and the Rules made thereunder
Whom the Act affects
1. The Act applies to the payment of wages to persons in the factory or industrial establishment receiving less than Rs. 400 a month.
2. No employed person can give up by contract, or agreement, his rights under the Act.
Definition of Wages
3. “Wages” means all remuneration payable to an employed person on the fulfillment of the terms of his employment.
(a) Any remuneration payable under any award or settlement between the parties or order of a Court.
(b) Any remuneration payable in respect of overtime work or holidays or 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 is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions but does not provide for the time within which the payment is to be made.
(e) Any sum payable under any framed under any law for the time being in force.
It does not include:
(1) Any bonus which does not from 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.
(2) The 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 an order of the State Government;
(3) Any contribution paid by the employer to any pension or provident fund, and the interest, which may have accrued thereon.
(4) Any traveling allowance or the value of any traveling concession;
(5) Any sum paid to the employed person to defray special expenses entitled on him by the nature of his employment; or
(6) Any gratuity payable on the termination of employment in case other than those specified in sub-clause (d)
Responsibility for and Method of Payment
4. The manager of the factory is responsible for the payment under the Act of wages to persons employed under him, and any contractor employing persons is responsible for payment to the persons he employed and in the case of an industrial establishment, the person responsible, if any, and employer are jointly and severally responsible for such payment.
5. Wage-periods shall be fixed for the payment of wages at intervals not exceeding one month.
6. Wages shall be paid on a working day within 7 days of the end of the wage-period or within 10 days if 1030 or more persons are employed.
7. Payments in kind are prohibited. However, when an employed person gets bonus exceeding one-fourth of his earning) exclusive of dearness allowance) for the year to which the bonus relates, such excess shall be paid or invested in the manner prescribed by the State Government.
Fines and deductions
8. No deductions shall be made from wages except those authorized under the Act (See paragraph 9-16 below). Any loss of wages resulting from the imposition for good and sufficient cause, of any of the following penalties, namely –
(1) The withholding of increment or promotion (including the stoppage of increment at an efficiency bar);
(2) The reduction to a lower post or time scale or to a lower stage in a time scale; or
In any case where the rules framed by the employer for the imposition of any such penalty are in conformity with the requirements, if any, which may be specified in this behalf by the State Government, shall not be deemed to be a deduction from wages.
9. (1) Fines can be imposed only for such acts and omissions as the employer may, with the previous approval, in the case of establishments, belonging to Municipalities of the Municipal Commissioner, or the Chief Officer, or Secretary, as the case may be, within whose jurisdiction the establishment is situated, and in other cases of the Chief Inspector of Factories, specify by a notice displayed at or near the main entrance of the Factory or industrial establishment and after giving the employed person an opportunity for explanation.
(2) Fines: -
(a) Shall not exceed three paise in the rupee;
(b) Shall not be recovered by installments, or later then sixty days of the date of imposition:
(c) Shall be recorded in a register an applied to such purposes beneficial to the employed persons employed in the factory or establishment as are approved by the Municipal Commissioner, Chief Officer, Secretary or Chief Inspector of Factories, as the case may be, but in case of any factory or establishment to which the Bombay Labour Welfare Fund Act, 1953 applied all such realizations shall be paid into the fund constituted under the said Act.
(d) Shall not be imposed on a child.
10. (a) deductions for absence from duty can be made only on account of the absence of the employed person at times when he should be working and such deductions must not exceed an amount which is in the same proportion to his wages for the wage-period, as the time he was absent in that period is to the total time he should have been at work.
(b) If ten or more employed persons, acting and concert, absent themselves, without reasonable cause and without due notice, the deduction for absence can include wages for eighty days in lieu of notice but -
(i) No deduction for breaking a contract can be made from a person under fifteen years or a woman.
(ii) There must be a provision in writing which forms part of the contract of the employment, requiring that a specific period of notice of intention to cease work not exceeding fifteen days or the period of notice which the employer has to give to discharge a worker must be given to the employer and that wages may be deducted in lieu of such notice.
(iii) The above provision must be displayed at or near the main entrance of the factory or industrial establishment.
(iv) No deductions of the nature can be made until a notice that this deduction is to be made has been posted at or near the main entrance of the factory or industrial establishment.
(v) No deduction must exceed the wages of the employed person for the period of which the notice he gives of leaving employment is less than the notice he should give under his contract.
11. Deductions can be made for damage to or loss of goods expressly entrusted to an employed person or for loss of money for which he is required to account, where such damage or loss is due to his neglect or default.
Such deduction cannot exceed the amount of the damage or loss caused and be made only after giving the employed person an opportunity for explanation.
12. Deductions can be made equivalent to the value thereof -
(1) For house accommodation supplied by the employer or by Government or any Housing Board set up under any law for the time being in force (whether the Government or the Board is the employer or not) or nay other authority engaged in the business of subsiding house accommodation which may be specified in this behalf by the State Government; or
(2) For amenities or services (other than the supply of tolls and raw materials) required for the purposes of employment, supplied by the employer.
The deductions referred to above can be made if house accommodation, amenity or service is accepted by the employed person as a term of his employment and in the case of amenity and service if such amenity or service is authorized by the order of the State Government.
13. (a) Deductions can be made for the recovery of advances, or for adjustments of overpayment of wages
(b) Advances made before the employment began can only be recovered from the first payment of wages for a complete wage period but no recovery can be made of advances given for traveling expenses before employment began.
(c) Advances of unearned wages can be made at the paymaster’s discretion during employment but must not exceed the amount of four months’ wages without the permission of an Inspector.
These advances can be recovered by installments, spread over not more than 12 months and the installments must not exceed one-third or if the wages are not more than Rs. 20/- one-forth of wages for any wage-period.
14. Deductions can be made for subscription to and for repayment of advances from any recognized provident fund.
15. Deduction can be made for payments to co-operative societies approved by the State Government or to the postal insurance subject to any conditions imposed by the State Government.
16. Deduction can be made with the written authorization of the person employed for payment of any premium on his life insurance policy to the Life Insurance Corporation of India or for the purchase of securities of the Government of India or of any State Government in furtherance of any savings scheme of any such Government.
17. An Inspector can enter on any premises, and can exercise powers of inspection (including examination of documents and taking of evidence), as he may deem necessary for carrying out the purposes of the Act.
Complaints of Deductions or Delays
18. (1) Where irregular deductions are made from wages, or delays in payment take place, an employed person can make an application in he prescribed form within one year to the Authority appointed by the State Government for the purpose. An application delayed beyond this period may be rejected unless sufficient cause for the delay in shown.
(2) An Inspector under the Act or a representative union registered as such under the Bombay Industrial Relations Act, 1946 or any law corresponding to that Act in force in any part of the State, or when authorities in writing by the employed person, any legal practitioner or official of registered trade union, or with the permission of the Authority, any other person can apply to the Authority for a direction under sub-section (3) of Section 1 on behalf of an employed person. In case an employed person is dead, his legal representative can also make an application for a similar direction.
(3) A single application may be presented by or on behalf of any member of person belonging to the same factory or industrial establishment the payment of whose wages has been delayed.
19. The Authority may award compensation to the employed person in addition to ordering the payment of delayed wages or the refund of illegal deduction, it may also direct the payment of such compensation in cases, where the amount deducted or the delayed wages are paid by the employer to the employed person or his legal representative before the disposal of the application.
If a malicious or vexatious complaint is made, the Authority may impose a penalty not exceeding Rs. 50/- on the applicant and order that it be paid to the employer.
Appeal against the Authority
20. An appeal against an order or a direction made by the Authority may be preferred within thirty days, in Greater Mumbai to the Court of Small Causes and elsewhere to the District Court.
(a) by the paymaster if the total amount directed to be paid exceeds Rs.300 and the amount payable under the order appealed against is deposited with the Authority.
(b) By an employed person or any legal practitioner or any official of a registered trade union authorized in writing to act on his behalf or a representative union registered as such under the Mumbai Industrial Relations Act, 1946 or any law corresponding to that Act in force in any part of the State or any Inspector under the said Act or any other person authorized by an Authority to make an applicant under sub-section (2) of Section 15 and in the case of death of the employed person by his legal representative, if the total amount of wages withheld from him or his co-workers, exceeds fifty rupees;
Punishment for Breaches of the Act
21. Any one delaying he payment of wages beyond the due date, or making any unauthorized deduction from wages is liable to a fine up to Rs. 2000/- but only if prosecuted with the sanction of the State Government or any officer authorized by it in this behalf. No court shall take congnisance of such complaint unless the application for refund of the amount deducted or for payment of delayed wages has been granted wholly or in part by the Authority or the Appellate Court.
22. The paymaster who –
(1) Does not fix a wage-period or
(2) Makes payment in kind or
(3) Fails to display at or neat the main entrance of the factory this Abstract in English and in the language of the majority of the employed person. Or
(4) Breaks certain rules made under the Act, is liable to a fine not exceeding Rs. 200/-
A complaint to this effect can be made only by the Inspector or with his sanction.