PAYMENT OF WAGES ACT 1936.

PAYMENT OF WAGES ACT 1936.
An Act to regulate the payment of wages to certain classes of employed persons.
Whereas it is expedient to regulate the payment of wages to certain classes of persons (employed
persons);
It is hereby enacted as follows:
1. EXTENT
(1) This Act may be called the Payment of Wages Act ,1936.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by notification in the
Official Gazette, appoint.
(4) It applies in the first instance to the payment of wages to persons employed in any factory,
to persons employed (otherwise than in a factory) upon any railway by a railway
administration or either directly or through a sub-contractor by a person fulfilling a contract
with a railway administration and to persons employed in an industrial or other
establishment specified in sub-clauses (a) to (g) of clause (ii) of section 2.
(5) The State Government may after giving three months’ notice of its intention of so doing,
by notification in the Official Gazette extend the provisions of this Act or any of them to
the payment of wages to any class of persons employed in any establishment or class of
establishments specified by the Central Government or a State Government under subclause
(h) of clause (ii) of section 2 :
Provided that in relation to any such establishment owned by the Central Government no
such notification shall be issued except with the concurrence of that Government.
(6) Nothing in this Act shall apply to wages payable in respect of a wage-period which over
such wage-period average one thousand six hundred rupees a month or more.
2. BASIC CONCEPTS
(i) “Employed person” includes the legal representative of a deceased employed person;
(a) “Employer” includes the legal representative of a deceased employer;
(b) “Factory” means a factory as defined in clause (m) of section 2 of the Factories Act ,
1948 (63 of 1948) and includes any place to which the provisions of that Act have been
applied under sub-section (1) of section 85 thereof;
(ii) “Industrial or other establishment” means any—
(a) Tramway service or motor transport service engaged in carrying passengers or goods
or both by road for hire or reward;
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(aa)Air transport service other than such service belonging to or exclusively employed in
the military, naval or air forces of the Union or the Civil Aviation Department of the
Government of India;
(b) dock wharf or jetty;
(c) inland vessel, mechanically propelled;
(d) mine, quarry or oil-field;
(e) plantation;
(f) workshop or other establishment in which articles are produced, adapted or
manufactured with a view to their use, transport or sale;
(g) establishment in which any work 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 Central Government or
a State Government may, having regard to the nature thereof, the need for protection
of persons employed therein and other relevant circumstances, specify, by notification
in the Official Gazette.
(iia)“mine” has the meaning assigned to it in clause (j) of sub-section (1) of section 2 of the
Mines Act, 1952 (35 of 1952);
(iii) “plantation” has the meaning assigned to it in clause (f) of section 2 of the Plantations
Labour Act, 1951 (69 of 1951);
(iv) “prescribed” means prescribed by rules made under this Act;
(v) “railway administration” has the meaning assigned to it in clause (6) of section 3 of the
Indian Railways Act, 1890 (9 of 1890); and
(vi) “wages” means all remuneration (whether by way of salary allowances or otherwise)
expressed in terms of money or capable of being so expressed which would, if the terms of
employment, express or implied, were fulfilled, be payable to a person employed in respect
of his employment, or of work done in such employment and includes—
(a) any remuneration payable under any award or settlement between the parties or order
of a court;
(b) any remuneration to which the person employed is entitled in respect of overtime
work or holidays or any leave period;
(c) any additional remuneration payable under the terms of employment (whether called
a bonus or by any other name);
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(d) any sum which by reason of the termination of employment of the person employed
is payable under any law, contract or instrument which provides for the payment of
such sum, whether with or without deductions, but does not provide for the time
within which the payment is to be made;
(e) any sum to which the person employed is entitled under any scheme framed under
any law for the time being in force, but does not include -
(1) any bonus (whether under a scheme of profit sharing or otherwise) which does not form
part of the remuneration payable under the terms of employment or which is not payable
under any award or settlement between the parties or order of a court;
(2) the value of any house-accommodation, or of the supply of light, water, medical attendance
or other amenity or of any service excluded from the computation of wages by a general
or special order of the State Government;
(3) any contribution paid by the employer to any pension or provident fund and the interest
which may have accrued thereon;
(4) any travelling allowance or the value of any travelling concession;
(5) any sum paid to the employed person to defray special expenses entailed on him by the
nature of his employment; or
(6) any gratuity payable on the termination of employment in cases other than those specified
in sub-clause (d).
3. RESPONSIBILITY FOR PAYMENT OF WAGES
Every employer shall be responsible for the payment to persons employed by him of all wages
required to be paid under this Act :
Provided that in the case of persons employed (otherwise than by a contractor)—
(a) in factories if a person has been named as the manager of the factory under clause (f) of
sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948) ;
(b) in industrial or other establishments if there is a person responsible to the employer for
the supervision and control of the industrial or other establishments;
(c) upon railways (otherwise than in factories) if the employer is the railway administration
and the railway administration has nominated a person in this behalf for the local area
concerned.
The person so named the person so responsible to the employer or the person so nominated as
the case may be shall also be responsible for such payment.
4. FIXATION OF WAGE-PERIODS
(1) Every person responsible for the payment of wages under section 3 shall fix periods (in
this Act referred to as wage-periods) in respect of which such wages shall be payable;
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(2) No wage-period shall exceed one month.
5. TIME OF PAYMENT OF WAGES
(1) The wages of every person employed upon or in—
(a) any railway, factory or industrial or other establishment upon or in which less than
one thousand persons are employed, shall be paid before the expiry of the seventh
day,
(b) any other railway, factory or industrial or other establishment shall be paid before the
expiry of the tenth day, after the last day of the wage-period in respect of which the
wages are payable:
Provided that in the case of persons employed on a dock, wharf or jetty or in a mine,
the balance of wages found due on completion of the final tonnage account of the ship
or wagons loaded or unloaded, as the case may be, shall be paid before the expiry of
the seventh day from the day of such completion.
(2) Where the employment of any person is terminated by or on behalf of the employer, the
wages earned by him shall be paid before the expiry of the second working day from the
day on which his employment is terminated :
Provided that where the employment of any person in an establishment is terminated due
to the closure of the establishment for any reason other than a weekly or other recognised
holiday, the wages earned by him shall be paid before the expiry of the second day from
the day on which his employment is so terminated.
(3) The State Government may, by general or special order, exempt to such extent and subject
to such conditions as may be specified in the order the person responsible for the payment
of wages to persons employed upon any railway (otherwise than in a factory) or to persons
employed as daily-rated workers in the Public Works Department of the Central
Government or the State Government from the operation of this section in respect of wages
of any such persons or class of such persons :
Provided that in the case of persons employed as daily-rated workers as aforesaid no such
order shall be except in consultation with the Central Government.
(4) Save as otherwise provided in sub-section (2) all payments of wages shall be made on a
working day.
6. WAGES TO BE PAID IN CURRENT COIN OR CURRENCY NOTES
All wages shall be in current coin or currency notes or in both :
Provided that the employer may after obtaining the written authorisation of the employed
person pay him the wages either by cheque or by crediting the wages in his bank account.
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7. DEDUCTIONS WHICH MAY BE MADE FROM WAGES
(1) Notwithstanding the provisions of sub-section (2) of section 47 of the Indian Railways
Act, 1890 (9 of 1890) the wages of an employed person shall be paid to him without
deductions of any kind except those authorised by or under this Act.
Explanation I : Every payment made by the employed person to the employer or his agent
shall for the purposes of this Act be deemed to be a deduction from wages.
Explanation II : Any loss of wages resulting from the imposition, for good and sufficient cause
upon a person employed of any of the following penalties namely :
(i) the withholding of increment or promotion (including the stoppage of increment at
an efficiency bar);
(ii) the reduction to a lower post or time scale or to a lower stage in a time scale; or
(iii) suspension;
shall not be deemed to be a deduction from wages in any case where the rules framed by the
employer for the imposition of any such penalty are in conformity with the requirements, if
any, which may be specified in this behalf by the State Government by notification in the
Official Gazette.
(2) Deductions from the wages of an employed person shall be made only in accordance with
the provisions of this Act and may be of the following kinds only namely :
(a) Fines;
(b) Deductions for absence from duty;
(c) Deductions for damage to or loss of goods expressly entrusted to the employed person
for custody or for loss of money for which he is required to account where such damage
or loss is directly attributable to his neglect or default;
(d) Deductions for house-accommodation supplied by the employer or by Government
or any housing board set up under any law for the time being in force (whether the
Government or the Board is the employer or not) or any other Authority engaged in
the business of subsidising house-accommodation which may be specified in this behalf
by the State Government by notification in the Official Gazette;
(e) Deductions for such amenities, services supplied by the employer as the State
Government or any officer specified by it in this behalf may by general or special
order authorise.
Explanation : The word “services” in this clause does not include the supply of tools and raw
materials required for the purposes of employment;
(f) Deductions for recovery of advances of whatever nature (including advances for
travelling allowance or conveyance allowance) and the interest due in respect thereof
or for adjustment of over-payments of wages;
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(ff) Deductions for recovery of loans made from any fund constituted for the welfare of
labour in accordance with the rules approved by the State Government and the interest
due in respect thereof;
(fff)Deductions for recovery of loans granted for house-building or other purposes
approved by the State Government and the interest due in respect thereof;
(g) Deductions of income-tax payable by the employed person;
(h) Deductions required to be made by order of a court or other authority competent to
make such order;
(i) Deductions for subscriptions to and for repayment of advances from any provident
fund to which the Provident Funds Act 1952 (19 of 1952) applies or any recognised
provident funds as defined in section 58A of the Indian Income Tax Act, 1922 (11 of
1922) or any provident fund approved in this behalf by the State Government during
the continuance of such approval;
(j) Deductions for payments to co-operative societies approved by the State Government
or any officer specified by it in this behalf or to a scheme of insurance maintained by
the Indian Post Office and
(k) Deductions made with the written authorisation of the person employed for payment
of any premium on his life insurance policy to the Life Insurance Corporation Act of
India established under the Life Insurance Corporation 1956 (31 of 1956) or for the
purchase of securities of the Government of India or of any State Government or for
being deposited in any Post Office Saving Bank in furtherance of any savings scheme
of any such government.
(kk)Deductions made with the written authorisation of the employed person for the
payment of his contribution to any fund constituted by the employer or a trade union
registered under the Trade Union Act,1926 (16 of 1926) for the welfare of the employed
persons or the members of their families or both and approved by the State Government
or any officer specified by it in this behalf during the continuance of such approval;
(kkk) Deductions made with the written authorisation of the employed person for payment
of the fees payable by him for the membership of any trade union registered under
the Trade Union Act, 1926 (16 of 1926);
(l) Deductions for payment of insurance premia on Fidelity Guarantee Bonds;
(m) Deductions for recovery of losses sustained by a railway administration on account of
acceptance by the employed person of counterfeit or base coins or mutilated or forged
currency notes;
(n) Deductions for recovery of losses sustained by a railway administration on account of
the failure of the employed person to invoice to bill to collect or to account for the
appropriate charges due to that administration whether in respect of fares freight
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demurrage wharfage and cranage or in respect of sale of food in catering establishments
or in respect of sale of commodities in grain shops or otherwise;
(o) Deductions for recovery of losses sustained by a railway administration on account of
any rebates or refunds incorrectly granted by the employed person where such loss is
directly attributable to his neglect or default;
(p) Deductions made with the written authorisation of the employed person for
contribution to the Prime Minister’s National Relief Fund or to such other Fund as the
Central Government may by notification in the Official Gazette specify;
(q) Deductions for contributions to any insurance scheme framed by the Central
Government for the benefit of its employees.
(3) Notwithstanding anything contained in this Act, the total amount of deductions which
may be made under sub-section (2) in any wage-period from the wages of any employed
person shall not exceed—
(i) in cases where such deductions are wholly or partly made for payments to co-operative
societies under clause (j) of sub-section (2) seventy-five per cent of such wages and
(ii) in any other case fifty per cent of such wages :
Provided that where the total deductions authorised under sub-section (2) exceed
seventy five per cent or as the case may be, fifty per cent of the wages the excess may
be recovered in such manner as may be prescribed.
(4) Nothing contained in this section shall be construed as precluding the employer from
recovering from the wages of the employed person or otherwise any amount payable by
such person under any law for the time being in force other than the Indian Railways Act,
1890 (9 of 1890).
8. FINES
(1) No fine shall be imposed on any employed person save in respect of such acts and omissions
on his part as the employer with the previous approval of the State Government or of the
prescribed authority may have specified by notice under sub-section (2).
(2) A notice specifying such acts and omissions shall be exhibited in the prescribed manner
on the premises in which the employment carried on or in the case of persons employed
upon a railway (otherwise than in a factory) at the prescribed place or places.
(3) No fine shall be imposed on any employed person until he has been given an opportunity
of showing cause against the fine or otherwise than in accordance with such procedure as
may be prescribed for the imposition of fines.
(4) The total amount of fine which may be imposed in any one wage-period on any employed
person shall not exceed an amount equal to three per cent of the wages payable to him in
respect of that wage-period.
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(5) No fine shall be imposed on any employed person who is under the age of fifteen years.
(6) No fine imposed on any employed person shall be recovered from him by installments or
after the expiry of sixty days from the day on which it was imposed.
(7) Every fine shall be deemed to have been imposed on the day of the act or omission in
respect of which it was imposed.
(8) All fines and all realisations thereof shall be recorded in a register to be kept by the person
responsible for the payment of wages under section 3, in such form as may be prescribed;
and all such realisations shall be applied only to such purposes beneficial to the persons
employed in the factory or establishment as are approved by the prescribed authority.
Explanation : When the persons employed upon or in any railway, factory or industrial or
other establishment are part only of a staff employed under the same management all
such realisations may be credited to a common fund maintained for the staff as a whole provided
that the fund shall be applied only to such purposes as are approved by the prescribed authority.
9. DEDUCTIONS FOR ABSENCE FROM DUTY
(1) Deductions may be made under clause (b) of sub-section (2) of section 7 only on account
of the absence of an employed person from the place or places where by the terms of his
employment , he is required to work such absence being for the whole or any part of the
period during which he is so required to work.
(2) The amount of such deduction shall in no case bear to the wages payable to the employed
person in respect of the wage-period for which the deduction is made in a larger proportion
than the period for which he was absent bears to the total period within such wage-period
during which by the terms of his employments he was required to work :
Provided that subject to any rules made in this behalf by the State Government if ten or
more employed persons acting in concert absent themselves without due notice (that is to
say without giving the notice which is required under the terms of their contracts of
employment) and without reasonable cause such deduction from any such person may
include such amount not exceeding his wages for eight days as may by any such terms be
due to the employer in lieu of due notice.
Explanation : For the purposes of this section an employed person shall be deemed to be absent
from the place where he is required to work if although present in such place he refuses in
pursuance of a stay-in strike or for any other cause which is not reasonable in the circumstances
to carry out his work.
10. DEDUCTIONS FOR DAMAGE OR LOSS
(1) A deduction under clause (c) or clause (o) of sub-section (2) of section 7 shall not exceed
the amount of the damage or loss caused to the employer by the neglect or default of the
employed person.
(1A)A deduction shall not be made under clause (c) or clause (m) or clause (n) or clause (o) of
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sub-section (2) of section 7 until the employed person has been given an opportunity of
showing cause against the deduction or otherwise than in accordance with such procedure
as may be prescribed for the making of such deductions.
(2) All such deductions and all realisations thereof shall be recorded in a register to be kept
by the person responsible for the payment of wages under section 3 in such form as may
be prescribed.
11. DEDUCTIONS FOR SERVICES RENDERED
A deduction under clause (d) or clause (e) of sub-section (2) of section 7 shall not be made from
the wages of an employed person, unless the house-accommodation amenity or service has
been accepted by him as a term of employment or otherwise and such deduction shall not
exceed an amount equivalent to the value of the house-accommodation amenity or service
supplied and in the case of deduction under the said clause (e) shall be subject to such conditions
as the State Government may impose.
12. DEDUCTIONS FOR RECOVERY OF ADVANCES
Deductions under clause (f) of sub-section (2) of section 7 shall be subject to the following
conditions namely :
(a) recovery of an advance of money given before employment began shall be made from the
first payment of wages in respect of a complete wage-period, but no recovery shall be
made of such advances given for traveling-expenses;
(aa) recovery of an advance of money given after employment began shall be subject to such
conditions as the State Government may impose;
(b) recovery of advances of wages not already earned shall be subject to any rules made by
the State Government regulating the extent to which such advances may be given and the
installments by which they may be recovered.
12A. DEDUCTIONS FOR RECOVERY OF LOANS
Deductions for recovery of loans granted under clause (fff) of sub-section (2) of section 7 shall
be subject to any rules made by the State Government regulating the extent to which such
loans may be granted and the rate of interest payable thereon.
13. DEDUCTIONS FOR PAYMENTS TO CO-OPERATIVE SOCIETIES AND INSURANCE
SCHEMES
Deductions under clause (j) and clause (k) of sub-section (2) of section 7 shall be subject to such
conditions as the State Government may impose.
13A. MAINTENANCE OF REGISTERS AND RECORDS
(1) Every employer shall maintain such registers and records giving such particulars of persons
employed by him the work performed by them the wages paid to them the deductions
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made from their wages the receipts given by them and such other particulars and in such
form as may be prescribed.
(2) Every register and record required to be maintained under this section shall for the purposes
of this Act be preserved for a period of three years after the date of the last entry made
therein.
14. INSPECTORS
(1) An Inspector of Factories appointed under sub-section (1) of section 8 of the Factories Act,
1948 (63 of 1948) shall be an Inspector for the purposes of this Act in respect of all factories
within the local limits assigned to him.
(2) The State Government may appoint Inspectors for the purposes of this Act in respect of all
persons employed upon a railway (otherwise than in a factory) to whom this Act applies.
(3) The State Government may, by notification in the Official Gazette, appoint such other
persons as it thinks fit to be Inspectors for the purposes of this Act and may define the
local limits within which and the class of factories and industrial or other establishments
in respect of which they shall exercise their functions.
(4) An Inspector may,
(a) make such examination and inquiry as he thinks fit in order to ascertain whether the
provisions of this Act or rules made there under are being observed;
(b) with such assistance, if any, as he thinks fit enter inspect and search any premises of
any railway factory or industrial or other establishment at any reasonable time for the
purpose of carrying out the objects of this Act;
(c) supervise the payment of wages to persons employed upon any railway or in any
factory or industrial or other establishment;
(d) require by a written order the production at such place, as may be prescribed, of any
register maintained in pursuance of this Act and taken on the spot or otherwise
statements of any persons which he may consider necessary for carrying out the
purposes of this Act;
(e) seize or take copies of such registers or documents or portions thereof as he may
consider relevant in respect of an offence under this Act which he has reason to believe
has been committed by an employer;
(f) exercise such other powers as may be prescribed :
Provided that no person shall be compelled under this sub-section to answer any
question or make any statement tending to incriminate himself.
(4A) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall, so far as may be,
apply to any search or seizure under this sub-section as they apply to any search or seizure
made under the authority of a warrant issued under section 94 of the said Code.
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(5) Every Inspector shall be deemed to be a public servant within the meaning of the Indian
Penal Code (45 of 1860).
14A. FACILITIES TO BE AFFORDED TO INSPECTORS
Every employer shall afford an Inspector all reasonable facilities for making any entry inspection
supervision examination or inquiry under this Act.