Payment of Wages Act is an Act to protect the rights of an employee to receive the wages for the period he worked for without any unnecessary deduction.
In this article, we will discuss the compliances that required to be maintained under the Payment of Wages Act.
How Payment of Wages Act was enacted in India?
In a country where even living wages are not paid to workers, the need to protect the wages earned by them can hardly be over-emphasised.
Before payment of wages Act, 1936 was passed, evils of withholding wages, delays in paying the wages and making unreasonable deduction from wages was quite prevalent.
The P.O.W Act, 1936 was passed to regulate the payment of wages to certain classed of person employed in industry, factory and establishment.
The Act ensure timely payment of wages in a particular form at a regular intervals without any unauthorized deduction.
The law addressed itself to abuses of delay payment of wages and indiscriminate imposition of fines in industries.
Definition of Wages under Payment of Wages Act
Wages for the purpose of the Act is defined as remuneration payable to a person for the work he has done for a particular period of time. The wages must me expressed in terms of money.
The definition of wages include the following:
- Any remuneration payable under any award or settlement between parties or order of a court.
- Remuneration payable in respect of overtime, holidays and any leave period as per law.
- Additional remuneration if any under the term of employment whether the same is called as Bonus.
- Any sum payable on termination of employment under any law, contract or instrument which provide for the payment of such sum but does not provide for the time within which the payment is to be done.
- Any sum to which the employee is entitled under any law for the for the time being in force.
The definition of wages exclude the following:
- Any Bonus which does not form part of the remuneration payable under the terms of employment.
- The value of the house accommodation or of the supply of light, water or any other amenities of any other service excluded from the computation of wages by an order of the state Govt.
Any contribution paid by the employer towards PF, ESIC etc.
Any Travelling allowance or value of any travelling concession.
Any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment.
Any Gratuity payable on the termination of employment in cases other than specific sub clause(d) of the Payment of Wages Act.
Continue Reading: Compliance to be Maintained under Bonus Act in India
Responsibility for Payment of Wages
Section 3 of the said Act dealt with the fixation of the responsibility of payment of wages in the establishment, Factories etc.
Basically the Proprietor, Manager and the person who is assign for the purpose responsible for payment of wages on timely manner.
Fixation of wages Period
Person who is responsible to pay the wages to the employee also eligible to fix the wages period according to section 3 of the Act.
Section 4 of the Act says that the wages period could be weekly, fortnightly and monthly but it cannot go beyond a month that is 30 days.
Time of Payment of Wages
According to section 5 of the Act, the time schedule required to be adhered by the employer.
Every month maximum by 7th day wages should be paid for the last wages period if employee count is less than 1000 in the establishment.
If employee count is more than 1000 than wages required to be paid before 10th of every month for the last wages period.
The wages due to a worker terminated from employment shall be paid before the expiry of the second working day from the day of his termination.
It is also provided that wages always required to be paid during the working day according to the provision of the act.
Section 3, 4 and 5 are directed towards suspension of abuse of providing a long wages period and making undue delay in paying the wages earned by the employee.
Deduction from Wages
Section 7 to 12 of the Act implies to end the exploitation of making deductions arbitrarily from the wages of the workers.
The are some deduction which employer is allowed to deduct from the salary under the Payment of Wages act.
- Fines;
- Deduction for absence from the duty;
- Deduction for the damage to or loss of goods of employed person;
- Deduction for house accommodation supplies by the employer;
- Deduction for the amenities and service supplied by employer;
- Deduction for recovery of advances and interest, and adjustment of overpayment;
- Deductions for recovery of loans from any fund constituted for the welfare of labour;
- Deduction for income tax payable by the employed person;
- Deduction on orders of a court or other authority;
- Deduction for subscription and repayment of advance from any Provident Fund;
- Deduction for payments to cooperative societies;
- Deduction of premium for LIC policy on written authorization of the employed person; or any other investment for Post Office Saving Schemes.
The quantum of deduction shall not exceed 75% of the wages payable in any wages period against the co-operative societies approved by state Govt.
In all other cases, the total amount of deductions should not exceed 50 % of the wages of the employee in any wage period.
Claims and Appeals under the P.O.W Act
Any claim arising out of deductions from wages or delay in payment of wages of employees and including all matters incidental to such to such claims may be presented to the appropriate authority constituted for the purpose.
Any claim shall be presented within 12 months from the date on which the deduction was made or from the date on which the payment was due to be made.
A single application may be presented on behalf of any number of persons belonging to the same group with same complain. And the whole group will be eligible to receive the unpaid wages if any in satisfactory evaluation of the evidence presented by the applicant from the group.
An appeal under the Act may be preferred against an order of dismissal of application or against a direction made within 30 days from the date of the order or direction.
An appeal under the provision of the Act shall not lie unless the appellant has depsited the amount payable under the direction appealed against.
Registers to be Maintained under the payment of Wages Act
Every Employer shall required to maintain registers and records of the employee engaged by them., work performed by them and wages paid to them, deduction made from their wages etc.
The register should be maintained and present at the establishment and required to be preserved for a period of three years after the date of last entry made therein.
Following Registers to be Maintained under the Act:
- Form I- Register of Fines.
- Form II- Register of Deduction of Loss or Damage caused to the Employer by Employee for his Negligence.
- Form II-A- Register of Wages.
- Form III- Register of Advance Made to the Employee.
- Form III-A- Register of Loans or Advances.
Return to be submitted under Payment of Wages Act
For every academic year, the employer required to submit Annual Return in Form IV under the provision of the Act at respective department within 31st January for the last year ending on 31st December.
Display of Abstract under Payment of wages Act
The employer or paymaster required to display the Abstract under the act in the notice of the Factory or establishment which shall be clearly visible and available at the entrance of the establishment.
You may go though the the respective state rules for better understanding of the Act. or you may visit the official website of Labour and Employment department of India for more related information.
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