MODULE- 5 LABOUR LAW - II
The Payment of Wages Act, 19!
(a) Defini Definiti tions ons (b) Payment Payment of wages and deductions deductions from wages O"#ect$%es
The objectives of the Act are three fold:
to &ay the 'ages to the employees
to pay the wages at &(o&e( t$me (i.e. without any delay)
to prevent )na)tho($*e+ +e+)ct$ons
The Payment of a ages ges Act regulates the payment of wages to certain classes of persons employed in industry and its importance cannot be under!estimated. The Act provides for the responsibility for payment of wages" fi#ation of wage period" time and mode of payment of wages" permissible deduction as also casts upon the employer a duty to see$ the approval of the %overnment for the acts and permission for which fines may be imposed by him and also sealing of the fines" 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 ve#atious ve #atious claims. The Act does not apply to persons whose wage is &s. '" ('" w.e.f. ''th *eptember" +'+) or more per month. The Act also provides to the effect that a wor$er cannot contract out of any right conferred upon him under the Act.
Def$n$t$ons ect$on .$/ Em&0oye+ &e(son includes the legal representative of a deceased employed person, ect$on .$a/ Em&0oye( includes the legal representative of a deceased employer, ect$on .$1/ In+)st($a0 o( othe( Esta"0$shment means any !
(a) tramway service or motor transport service engaged in carrying passengers or goods or both by road for hire or reward,
(aa) air transport service other than such service belonging to or e#clusively employed in the military naval or air forces of the -nion or the ivil Aviation Department of the %overnment of /ndia, (b) Doc$ wharf or jetty, (c) inland vessel mechanically propelled, (d) mine 0uarry or oil!field, (e) plantation, (f) wor$shop or other establishment in which articles are produced a dapted or manufactured with a view to their use transport or sale, (g) establishment in which any wor$ relating to the construction development or maintenance of buildings roads bridges or canals or relating to operations connected with navigation irrigation or to the supply of water or relating to the generation transmission and distribution of electricity or any other form of power is being carried on, (h) any other establishment or class of establishments which the entral %overnment or a *tate %overnment may having regard to the nature thereof the need for protection of persons employed therein and other relevant circumstances specify by 1otification in the 2fficial %a3ette. ect$on of Payment of ages Act" '456 defines Wage as:
age means all remuneration (whether by way of salaries" allowance or otherwise)
e#pressed in terms of money or capable of being so e#pressed which would" if the terms of employment" e#press or implied" were fulfilled" be payable to a person employed in respect of his employment or wor$ done in such employment" and Inc0)+es !
any remuneration payable under any award or settlement between the parties or orders of a court
any remuneration in respect of overtime wor$ or holidays or any leave period
any additional remuneration (whether called a "on)s or by any other name)
any sum which by reason of the te(m$nat$on of em&0oyment of the person employed is &aya"0e under any 0a', cont(act o( $nst()ment which provides for the
payment of such sum '$th o( '$tho)t +e+)ct$ons " but does not provide for the time within which the payment is to be made.
any sum to which the person is entitled under any scheme framed under any law for the time being in force( the definition of wages is not limited to remuneration payable under an agreement or contract. The amended definition would apply to all $inds of remunerations" whether arising from a contract" an award" a settlement or under a statute. OP 2e03a( % Am"a+as, AIR 1941 Bom/
+oes not $nc0)+e!
any "on)s" profit!sharing or otherwise which does not form part of the
remuneration payable
value of any ho)se accommo+at$on or of supply of 'ate(, 0$ght, me+$ca0 assistance or other amenity or any service e#cluded from the computation of wages
any cont($")t$on paid by the employer to any pension or provident fund
any t(a%e0$ng allowance
any sum paid to defray s&ec$a0 e&enses entitled on him by the nature of his employment
any g(at)$ty payable
Res&ons$"$0$ty fo( &ayment of 'ages 6ect$on 7
7very employer shall be responsible for the payment to persons employed by him of all wages re0uired to be paid. /n the case of the 8actory" 9anager of that factory shall be liable to pay the wages to employees employed by him. /n the case of industrial or other establishments" persons responsible of supervision shall be liable for the payment of the wage to employees employed by him. •
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/n the case of railways" a person nominated by the railway administration for specified area shall be liable for the payment of the wage to the employees. /n the case of contractor" a person designated by such contractor who is directly under his charge shall be liable for the payment of the wage to the employees. /f he fails to pay wages to employees" person who employed the employees shall be liable for the payment of the wages.
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ith the consultation of the central government" state government having power and can change the person responsible for the payment of the wages in &ailways" or person responsible to daily! rated wor$ers in the Public or$s Department of the entral %overnment or the *tate %overnment. 8$at$on of 'age-&e($o+s 6ect$on 7
7very person responsible for the payment of wag es under section 5 shall fi# periods in respect of which such wages shall be payable. 1o wage!period shall e#ceed one month. That means wage can be paid on daily" wee$ly" fortnightly (for every ' days) and monthly only. ;ut wages cannot be paid for 0uarterly" half yearly or once in a year. T$me of Payment of Wages 6ect$on 57 /n railway factory or industrial or other establishment" if there are 0ess than 1::: employees" wages of employees should be paid "efo(e the e&$(y of the 4th +ay after the last day of the wage period. /n other railway factory or industrial or other establishment" if there are mo(e than 1::: employees" wages of employees should be paid "efo(e the e&$(y of the 1:th +ay after the last day of the wage period •
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8or employees of port area" mines" wharf or jetty" wages of employees should be paid "efo(e the e#piry of the 4th +ay after the last day of the wage period.
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/f the employee is te(m$nate+ o( (emo%e+ f rom the employment by the employer the wage of that employee should be paid '$th$n +ays f(om the day on which he was removed or terminated.
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7#cept the payment of wage of the terminated employee" all the wages of the employees should be paid by their employer on the 'o(3$ng +ay only.
! Wages to "e Pa$+ $n ;)((ent ;o$n o( ;)((ency
All the wages of the employees must be paid in form of currently using currency notes or coins or in both forms. ( *.&.T. orporation v /ndustrial ourt A/& '4<' mp =)
4 De+)ct$ons Wh$ch May Be Ma+e 8(om Wages
At the time of payment of the wage to employees" employer should ma$e deductions according to this Act only. 7mployer should not ma$e deductions as he li$e. 7very amount paid by the employed person to his employer or his agent is called as deductions. The following are not ca00e+ as the +e+)ct$on *toppage of the increment of employee. *toppage of the promotion of the employee. • •
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*toppage of the incentive due to lac$ of performance by employee.
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Demotion of the employee
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*uspension of the employee
The above said actions ta$en by the employer should have good and sufficient cause. De+)ct$ons 6ec 4 ./7
Deduction made by the employer should be made in accordance with this Act only. The following are said to be the deductions and which are acceptable according to this Act. 8ines" Deductions for a"sence from duty" • •
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Deductions for +amage to or loss of goods made by the employee due to his negligence" Deductions for ho)se!accommo+at$on supplied by the employer or by government or any housing board" Deductions for such amen$t$es and se(%$ces supplied by the employer as the *tate %overnment or any officer" Deductions for (eco%e(y of a+%ances connected with the e#cess payments or advance payments of wages"
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Deductions for (eco%e(y of 0oans made from welfare labour fund"
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Deductions for recovery of 0oans granted for ho)se-")$0+$ng or other purposes"
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Deductions of $ncome-ta payable by the employed person"
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Deductions by order of a co)(t,
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Deduction for payment of &(o%$+ent f)n+"
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Deductions for payments to co-o&e(at$%e soc$et$es approved by the *tate %overnment"
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Deductions for payments to a scheme of $ns)(ance maintained by the In+$an Post Off$ce Deductions made if any payment of any &(em$)m on his 0$fe $ns)(ance policy to the >ife /nsurance orporation with the acceptance of employee" Deduction made if any cont($")t$on made as fund to t(a+e )n$on with the acceptance of employee" Deductions" for payment of insurance premium on 8$+e0$ty >)a(antee Bon+s with the acceptance of employee" Deductions for (eco%e(y of 0osses sustained by a (a$0'ay administration on account of acceptance by the employee of fa3e c)((ency, Deductions for recovery of losses sustained by a railway administration on account of fa$0)(e by the employee in co00ect$ons of fa(es and charges" Deduction made if any cont($")t$on to the P($me M$n$ste(?s
L$m$t fo( +e+)ct$ons 6ec 4 ./7
The total amount of deductions from wages of employees should not ecee+ 5:@, but on0y in case of payments to co-o&e(at$%e soc$et$es " deduction from wages of employee can be made up to 45@ /n Mans)3h >o&$nath a+ha% % WM Ba&at . 19/ 1LL 1 Bom ." it was held that *ection < of the Payment of ages Act" '456 permits deductions with the consent of the employees.
8$nes 6ec 7
8ine should be imposed by the employer on employee with the approval of the state government or prescribed authority. 7mployer should follow the rules mentioned below for and before imposing of fine on the employee. •
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1otice board of fines on employee should be displayed in the wor$ premises and it should contain activities that should not be made by employee. 8ine should not be imposed on the employee until he gives the e#planation and cause for the act or omission he made. Total amount of fine should not e#ceed 5? of his wage.
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8ine should not be imposed on any employee who is under the age of ' years.
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8ine should be imposed for one time only on the wage of the employee for the act or omission he made.
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8ines should not be recovered in the way of installments from the employee.
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8ine should be recovered within 6 days from the date on which fine were imposed.
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8ine should be imposed on day act or omission made by the employee.
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All fines collected from the employee should be credited to common fund and utili3e for the benefit of the employees.
De+)ct$ons fo( A"sence f(om D)ty 6ec 97 Deductions can be made by the employer for the absence of duty by the employee for one day or for any period. The amount deducted for absence from the duty should not e#ceed a sum which bears the same relationship to the wage payable in respect of the wage!period as this period of absence does to such wage!period. (7#ample: if the salary of an employee is 6@! per month and he was absent for duty for one month. Deduction from the salary for absence of duty should not e#ceed 6@!) •
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7mployee present for the wor$ place and refuses to wor$ without proper reason shall be deemed to be absent from duty. /f ' or more persons together absent for the duty without any notice and without reasonable cause" employer can ma$e day of wages as deduction from their wage.
/n P(a3ash ;han+(a oha($ % In+$an O%e(seas Ban3 an+ Anothe( . 19!/ LL 9! Ra#
De+)ct$ons fo( Damage o( Loss 6ec 1:7
7mployer should give an opportunity to the employee to e#plain the reason and cause for the damage or loss happened and deductions made by employer from the employee wage should not e#ceed the value or amount of damage or loss made by the employee. 6ec 1: ./7 All such deduction and all reali3ations thereof shall be recorded in a register to be $ept by the person responsible for the payment of wages under section 5 in such form as may be prescribed.
De+)ct$ons fo( e(%$ces Ren+e(e+ 6ec 117
ouse!accommodation amenity or service provided by the employer should be accepted by the employee" than only the employer can ma$e deduction from the wage of the employee.
Deduction should not e#ceed an amount e0uivalent to the value of the house!accommodation amenity or service supplied.
De+)ct$ons fo( Reco%e(y of A+%ances 6ec 17
/n case of advance paid to the employees by the employer before employment began" such advance should be recovered by the employer from the first payment of the wages @salary to the employee. ;ut employer should not recover the advance given for the travelling e#pense for the employee.
De+)ct$ons fo( Reco%e(y of Loans 6ec 1A7
Deductions for recovery of loans granted for house!building or other purposes shall be subject to any rules made by the *tate %overnment regulating the e#tent to which such loans may be granted and the rate of interest payable thereon.
De+)ct$ons fo( Payments to ;o-O&e(at$%e oc$et$es an+ Ins)(ance chemes 6ec 17
Deductions for payments to co!operative societies or deductions for p ayments to scheme of insurance maintained by the /ndian Post 2ffice or with employee acceptance deductions made for payment of any premium on his life insurance policy to the >ife /nsurance orporation shall be subject to such conditions as the *tate %overnment may impose.
