The Payment of Wages Act regulates the payment of wages to workers in factories and other establishments. It aims to ensure wages are paid regularly and without unauthorized deductions. The Act applies to workers earning up to Rs. 6,500 per month and requires wages to be paid within 7 days of the wage period, which is usually monthly. Only certain deductions are permitted, such as taxes or loans. Employers must maintain proper records and display notices about the Act. Non-compliance is punishable by fines or imprisonment.

1. Government Regulations and
Compensation
Payment of Wages act, 1936
Rajiv Kumar

2. Objectives:
• (i) regulating payment of wages,
imposition of fines and deductions from
wages
• eliminating all malpractices by laying down
wage periods and time and mode of
payment of wages.
The Act, therefore, ensures payment of
wages in a particular form at regular
intervals without unauthorized deductions.

3. Scope and Coverage:
• The Act applies to payment of wages to persons
employed in any factory, any railways establishments.
• It also applies to any ‘industrial or other establishment’
specified in section 2(ii). [section 1(4)].
• ‘Factory means factory as defined in section 2(m) of
Factories Act.
• Industrial or other establishment specified in section 2(ii)
are – Tramway or motor transport services, Air transport
services, Dock wharf or jetty, Inland vessels, Mines,
quarry or oil-field, Plantation, Workshop in which articles
are produces, adopted or manufactured.
The Act can be extended to other establishment by State/
Central Government.

4. Employees Entitlements:
• Originally the Act applies to employees
drawing wages upto Rs 1600 [section
1(6)].
• The limit is being increased to Rs 6500 by
amending the Act in 2005.
• Every employer is responsible for payment
to persons employed by him on wages.
[section 3].

5. Administrative Authority:
• The Act is administered by the State
Governments in their respective States.
• However, in case of railways, mines, oil-fields
and central air transport service, it is
administered by the central Government.
• The Central and State Governments are
empowered to appoint the inspectors and
payment of wages authority, and make rules for
enforcement of the provisions of the Act. [section
24 and 26].

6. How Wage should be paid:
• Wage can be paid on daily, weekly, fortnightly or monthly basis, but
wage period cannot be more than a month. [section 4].
• Wages should paid on a working day.
• Wages are payable on or before 7th day after the ‘wage period’.
• In case of factories employing more than 1000 workers, wages can
be paid on or before 10th day after ‘wage period’ is over. [section
5(1)].
• Normally ‘wage period’ is a ‘month’. Thus, normally, wages should
be paid by the 7th of the following moth and by 10th if number of
employees are 1000 or more.
• Wages should be paid in coins and currency notes. However, with
authorization from employee, it can be paid by cheque or by
crediting in his bank account. [section 6].

7. Permissible Deductions:
• Deduction on account of absence of duty, fines,
house accommodation if provided, recovery of
advance, loans given, income tax, provident
fund, ESI contribution, LIC premium, amenities
provided, deduction by other of Court etc. is
permitted.
• Maximum deduction can be 50%. However,
maximum deduction upto 75% is permissible if
deduction is partly made for payment to
cooperative society. [section 7].

8. Contracting out is void:
• Any contract or agreement whereby an
employee relinquishes his right under the
Act, shall be null and void in so far as it
purports to deprive him of such right.
[section 23].

9. Return, Registers and Records:
• The employer is required to submit an
annual return of wages in Form No. IV in
respect of every year, by the 15th
February of succeeding year [section
13A].

10. Display of Notice:
• The employer/ manager should ensure
that a notice containing the abstracts of
the Act and the rules made thereunder, is
displayed at a prominent place in the
factory/ establishment.
• The notice shall be in the prescribed form,
in English and the local language of the
majority of the persons employed. [section
7].

11. Offences and penalties [section
20]:
Offences
1. a. Delay in, or non-payment of
wages within the prescribed
time.
b. Making any unauthorized
deduction or imposition of fines
in contravention of the Act
2. a. Failure to fix the wage period
or working day in a current
coins or notes.
• b. Failure to maintain registers
of fines and deductions or
display the prescribed notices.
Penalties
Fine up to Rs. 1000/- (minimum
fine Rs. 200)
- As above
• Fine upto Rs. 500.
• As above

12. 3. a. Failure to maintain the
prescribed returns and
records, failure to furnish the
required information or
furnishing of false information.
• b. Obstructing the Inspector or
refusal to produce before him
the records/ documents, for
inspection
4. On repletion of the same
offence.
5. Failure to pay the wages by the
date fixed by the authority.
• Fine upto Rs. 1000 (Minimum
fine Rs. 200)
• As above
Imprisonment upto 6 months and
fine upto Rs. 3000 (minimum
one month and Rs. 500
respectively).
Additional fine of Rs. 100 per day
of default.

13. Thanks
Questions ?