Provisions for the Wage Payment for the employees in India

Get information on provisions of wage payment for the employees in India. Know the employment rules, wage policy, provisions for timely payment of wages, rules for deduction from wages and more

Wages are the return paid to the employees for their work done for the organization. Constitution of India has framed various laws for setting of provisions for safeguarding employees for any injustice caused to them by employer by depriving them of their wages. Payment of Wages Act, 1936 regulates the payment of wages to certain classes of people employed in industry and its importance cannot be under-estimated. The Act guarantees payment of wages on time and without any deductions except those authorized under the Act. The Act provides the responsibility for payment of wages, fixation of wage period, time and mode of payments of wages, permissible deduction 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 them. This Act does not apply to persons whose wage is Rs. 10000[1] or more per month.

  • Provision for timely payment of wages

Wages needs to be paid-

  1. Before the expiry of the 7th day after the last day of the wage period, where there are less than 1000 workers employed and in rest case on the 10th day;
  2. In current coin or currency notes and by cheques or by crediting the wages in the employee’s bank account after obtaining his written authority;
  3. On a working day;
  4. Before the expiry of the second day, to the person whose employment is terminated.
  • Responsibility for payment of wages

Every employer shall be responsible for the payment of all wages required to be paid under this Act to persons employed by him and incase of persons employed-

  1. In the case of contractor, a person designated by such contractor who is directly under his charge;
  2. A person designated by the employer as a person responsible for complying with the provisions of the Act
  • Deductions from wages

The following mentioned are the main deductions that are allowed under the Act-

  1. Fines;
  2. Deduction for the actual period of absence
  3. Deduction for the damage or loss of goods expressly entrusted to the employed person;
  4. Deduction for house accommodation;
  5. Deduction for the amenities and service supplied by employer with agreement to the employee;
  6. Deduction for recovery of advances and interest, and adjustment of overpayment;
  7. Deductions for recovery of loans from any fund constituted for the welfare of labour as agreed between employer and employee;
  8. Deduction for income tax;
  9. Deduction on orders of a court or other authority;
  10. Deduction for subscription and repayment of advance from any Provident Fund;
  11. Deduction for payments to cooperative societies as agreed between employer and employee;
  12. Deduction of premium for LIC policy on written authorization of the employed person; or any other investment for Post Office Saving Schemes;

However, as mentioned in section 7 of the Act, the total amount of deductions should not exceed 75% of wages of the employee in any wage period if whole or part of the deductions is meant for the payments to cooperative societies. In other cases it should not exceed 50%.

  • Fines

Incase of fines that need to be imposed on the employee it should only be for the acts and omissions that are mentioned in the list of which has been approved by the appropriate Government. Fines should not exceed 3% of the wages in a month. This needs to be recovered within 90 days of the date of act or omission, be imposed after a proper show cause procedure and cannot be imposed on an employee of less than 15 years of age.

Employers have compulsorily to maintain following registers in the prescribed forms-

  1. Register of wages;
  2. Register of fines;
  3. Register of deduction for damages or loss
  4. Register of advances.
  • Penalties
  1. For contravention of Section 5, 7 8, 9, 10, 11, 12 and 13, which mentions timely payment of wages, payment of wages in current coins and currency, fines, deductions for damage/loss or recovery of advances and loans. In such case fine not less than Ra. 1000 which may extent to Rs. 5000. On subsequent conviction fine not less than Rs. 5000 may extend to Rs. 10000.
  2. For failing to maintain registers, willfully refusing or without lawful excuse neglecting to furnish information or refusing to answer or willfully giving a false answer to any question necessary for obtaining any information required to be furnished under this Act. For such offences fine which shall not be less than Rs. 1000 and may be extended to Rs. 5000. For second or subsequent conviction fine not less than Rs. 5000 and may extend to Rs. 10000.
  3. For willfully obstructing an Inspector in discharge of his duties and on refusal to produce of any register or other documents fine not less than Rs. 1000 extendable upto Rs. 5000. On subsequent conviction fine not less than Rs. 5000 and may be extended upto Rs. 10000.
  4. On conviction for any offence and again guilty of contravention of same provision. Failing or neglecting to pay wages to any employee punishment of imprisonment not less than one month which may extend upto six months and fine not less than Rs. 2000 extendable upto Rs. 15000 may be done. Additional fine upto Rs. 100 for each day

- Shailja Tripathi

Source: "Payment of Wages Notification"

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