The Payment of Wages Act 1923, 1936 & Amendment

The Payment of Wages Act, 1936 regulates payment of wages to employees (direct and indirect). The act is intended to be a remedy against unauthorized deductions made by employer and/or unjustified delay in payment of wages. The main objective for the introduction of the Payment of Wages Act, 1936, is to avoid unnecessary delay in the payment of wages and to prevent unauthorized deductions from the wages.

Purpose of the Act

The main objective of the Act is to avoid unnecessary delay in the payment of wages and to prevent unauthorized deductions from the wages. Every person employed in any factory, upon any railway or through sub-contractor in a railway and a person employed in an industrial or other establishment.The State Government may by notification extend the provisions to any class of persons employed in any establishment or class of establishment. The benefit of the Act prescribes for the regular and timely payment of wages (on or before 7th day or 10th day of after wage period is greater than 1000 workers) and Preventing unauthorized deductions being made from wages and arbitrary fines.

Salary statics

Wages are averaging less than Rs. 6500.00 per month only are covered or protected by the Act by the amendment in 2005 by {Section 1(6)}.Wages means contractual wages and not overtime wages. They are not to be taken into account for deciding the applicability of the Act in the context of section 1(6) of the Act. Wages must be paid in current coin or currency notes or in both and not in kind. It is, however, permissible for an employer to pay wages by cheque of by crediting them in the bank account if so authorized in writing by an employed person.

Summary of the provisions of the Act

The provisions of the Act regarding the imposition of fines on the employed person are as follows such as, The employer must exhibit on his premises a list of acts or omissions for which fines can be imposed, Before imposing a fine on an employed person he must be given an opportunity of showing cause against the fine, The amount of fine must not exceed 3 percent of the wages, A fine cannot be imposed on an employed person who is under the age of 15 years, A fine cannot be recovered by installments or after 90 days from the day of the act or omission for which it is imposed, The moneys realized from fines must be applied to purposes beneficial to employed persons.

Subsection 8(3), 10(1-A) & Rule 15} deals with Any person desiring to impose a fine on an employed person or to make a deduction for damage or loss shall explain personally or in writing to the said person the act or omission, or damage or loss in respect of which the fine or deduction is proposed to be imposed, and the amount of fine or deduction, which it is proposed to impose, and shall hear his explanation in the presence of at least one other person, or obtain it in writing.

Amendment Payment of Wages Act, 1923

The Payment of Wages (Amendment) Bill, 2016 was introduced in Lok Sabha on December 15, 2016 by the Minister of Labour and Employment, Mr. Bandaru Dattatreya.  The Bill amends the Payment of Wages Act, 1936.

Method of payment of wages: Under the 1936 Act, all wages must be paid either in coin or currency notes, or both.  However, the employer may pay his employee’s wages either by cheque or by crediting it into his bank account, after obtaining his written authorization.

The Bill amends the 1936 Act to permit the employer to pay an employee’s wages:

(i) In coin or currency notes

(ii) By cheque

(iii) By crediting them into his bank account.

The Bill removes the requirement of obtaining written authorization for payment of wages by cheque or through a bank account.

However, the relevant central or state government may specify certain industrial or other establishments where the employer should pay his employees only by:

(i) Cheque

(ii) Crediting the wages in his bank account.