P.W Act - FAQ

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FAQ under Payment of Wages Act, 1936 Question Answer What was the Payment of Wages Act, 1936 enacted? The Payment of Wages Act, 1936 was enacted primarily to regulate the payment of wages of certain classes of employed persons and to ensure that wages are paid on time without unauthorized deductions. To whom does the Payment of Wages Act, 1936 apply? Is there a wage ceiling determines applicability of that the Payment of Wages Act, 1936? How frequently is the wage revised? ceiling It applies 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. [Section 1(4)] This Act applies to wages payable to an employed person in respect of a wage period if such wages for that wage period do not exceed 24,000 per month or such other higher sum which, on the basis of figures of the Consumer Expenditure Survey published by the National Sample Survey Organisation, the Central Government may, after every five years, by notification in the Official Gazette, specify [Section 1(6)] What is meant by "appropriate government" under the Payment of Wages Act,1936, and how is it determined? Section 2(i) of the Payment of Wages Act 1936, defines "appropriate Government" means, in relation to railways, air transport services, mines and oilfields, the Central Government and, in relation to all other cases, the State Government. What do the terms "employer", "factory", and "industrial or other establishment" mean under the Payment of Wages Act, 1936? As defined in the Section 2 of the Act, the following terms shall mean:  Section 2(ib): "employer" includes the legal representative of a deceased employer;  Section 2(ic): "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;  Section 2(ii): "industrial or other establishment" means any- (a) tramway service, or motor transport service engaged in carrying passenger or goods or both by road for hire or reward; (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 oilfield; (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 operation connected with navigation, irrigation, development or maintenance of buildings, roads. bridges or mission and distribution of electricity or any other form of power is being carried on (h) any other establishment or class of establishment which [appropriate 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: What does the term "wage" mean under the Payment of Wages Act, 1936? As per Section 2 (vi) of the Act: "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); 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 2 [appropriate Government]; 3. any contribution paid by the employer to any pension provident fund, and the interest which may have accrued thereon; 4. any travelling allowance or the value of any travelling concession; or 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).] Who is responsible for the payment of wages under the Payment of Wages Act, 1936? Section 3(1) of the Payment of Wages Act, 1936 provides that every employer shall be responsible for the payment of all wages required to be paid under this Act to persons employed by him and in case of persons employed,- (a) in factories: the manager of the factory as per section 7 (1) (f) of the Factories Act, 1948); (b) in industrial or other establishments: the person responsible for the supervision and control. (c) upon railways (other than in factories): if employer is railway administration; a person nominated by railway administration; (d) in the case of contractor: a person designated by such contractor (directly under his charge). (e) in any other case:, a person designated by the employer for the purpose; What happens if the contractor or designated In that case, it shall be the responsibility of the person fails to pay the under wages Payment of Wages Act, 1936? employer to make payment of all wages. [Section 3(2)] Is it mandatory to fix a wage period for payment of wages under the Payment of Wages Act, 1936? Yes. As per Section 4(1) of the Act, every person responsible for payment of wages (under section 3 of the Act) shall fix wage periods in respect of which, such wages shall be payable and that wage-period in no case shall exceed one month [Section 4(2)]. What is the time limit for payment of wages based on the establishment size and employment status under the Payment of Wages Act, 1936? As per Section 5 (1) of the Act, the wages of every person employed upon or in: a. Any railway, factory or industrial establishment with less than 1000 persons employed: shall be paid before the expiry of 7th day w.r.t. last day of wage period. b. Any other railway, factory or industrial establishment: shall be paid before the expiry of 10th day w.r.t. last day of wage-period. c. In case of dock, wharf or jetty or in a mine, balance of wages found due on final completion: shall be paid before the expiry of 7th day from the day of such completion 2. Where the employment of any person is terminated by employer or terminated due to closure of establishment (for any reason other than weekly or recognized holiday): wages earned shall be paid before the expiry of 2nd day from day of termination. [Section 5(2)] Are there any exemptions from the time limits for wage payment under the Payment of Wages Act, 1936? Yes. Under Section 5(3), the appropriate government may, by general or special order, exempt, the person responsible for the payment of wages to persons employed upon any railway (other than factory) or to persons employed as daily-rated workers in the PWD dept. of State/Centre from the time limits under defined above. (Though no order shall be made except in consultation with Central Government in r/o daily-rated workers in PWD). What are the permitted deductions that can be made from the wage of a person employed under the provisions of the Payment of Wages Act, 1936? Under Section 7(2) of the Payment of Wages Act, 1936, the following deductions are permitted from an employee's wages: (a) fines: (b) deductions for absence from duty; (c) deductions for damage to or loss of goods or money expressly entrusted to the employed person or 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 or any other authority (in the business of subsidizing house accommodation) as specified by [appropriate Government] by notification in the Official Gazette; (e) deductions for such amenities and services supplied by the employer as may be authorized by the appropriate Government in this behalf [by general or special order] (f) deductions for recovery of advances, the interest due in respect thereof, or for adjustment of over-payments of wages; (ff) deductions for recovery of loans made from any fund constituted for the welfare of labour in accordance with the rules approved by [appropriate Government], and the interest due in respect thereof; (fff) deductions for recovery of loans granted for house building or other purposes approved by appropriate 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, 1925 (19 of 1925), applies or any recognized provident fund as defined [in clause (38) of section 2 of the Income-tax Act, 1961 (43 of 1961)], or any provident fund approved in this behalf by [appropriate Government], during the continuance of such approval; *** (ii) deductions made with the written authorization of - (i)the employed person; or (ii)the president or secretary of the registered trade union of which the employed person is a member on such conditions as may be prescribed, for contribution to the National Defence Fund or to any Defence Savings Scheme approved by [appropriate Government] (j) deductions for payments to co-operative societies approved by [appropriate Government] or to a scheme of insurance maintained by the Indian Post Office; (k) deductions, made with the written authorization of the person employed for payment of any premium on his life insurance policy to the LIC, or for the purchase of securities of the Government of India or of any [appropriate Government] or for being deposited in any Post Office Savings Bank in furtherance of any savings scheme of any such Government. (kk) deductions made, with the written authorization 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, for the welfare of the employed persons or the members of their families, or both, and approved by [appropriate Government], during the continuance of such approval; (kkk) deductions made, with the written authorization of the employed person, for payment of the fees payable by him for the membership of any trade union registered under the Trade Unions Act. 1926 (/) 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, demurrage, wharfage and carnage 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 authorization 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. Are disciplinary actions like suspension or withholding of promotion treated as wage deductions under the Payment of Wages Act, 1936? No. 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 [appropriate Government] by notification in the Official Gazette.] [Section 7(1)] What is the maximum limit the on deductions an employer total can make from an employee's wages under the Payment of Wages Act, 1936? As per Section 7(3): 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)75% of wages in cases where such deductions are wholly or partly made for payments to co- operative societies under clause (j) of sub-section (2), and (ii) 50% of wages in any other case, Provided that where the total deductions authorized exceeds above limits, the excess may be recovered in such manner as may be prescribed. Can employer an recover amounts due under other laws even if they exceed the deduction limits under the Payment of Wages Act. 1936? Yes. As per Section 7(4): nothing contained in section 7 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 Railways Act, 1989] What are the provisions related to imposition of fines under the Payment of Wages Act, 1936? Under Section 8 of the Payment of Wages Act, 1936: following provisions have been defined for fines:- 1. Fine can be imposed by employer only in respect of acts and omissions specified by notice with the previous approval of appropriate government 2. Notice specifying such acts and omissions shall be exhibited clearly on the premises of employment. 3. No fine shall be imposed until the employee has been given the opportunity of showing cause. 4. Fine in any wage period shall not exceed 3% of wages payable in that wage period. 5. No fine shall be imposed on any employed person who is under the age of fifteen years. 6. A fine cannot be recovered in installments or after 90 days from the date 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; and all such realisations shall be applied only for welfare of 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 4[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 prescribed authority. Who is the authority to hear and decide claims for deductions from the wages, or delay in payment of wages under the Payment of Wages Act, 1936? Who appoints this authority, and what is the time limit for filing acomplaint? Under Section 15 of the Act, the Appropriate Government may, by notification in the official Gazette, appoint any one or more: (a) any Commissioner for Workmen's Compensation; or (b) any officer of the Central Government exercising functions as,- (i) Regional Labour Commissioner; or (ii) Assistant Labour Commissioner with at least two years experience; or (c) any officer of the State Government not below the rank of Assistant Labour Commissioner with at least two years experience; or (d) a presiding officer of any Labour Court or Industrial Tribunal, constituted under the Industrial Disputes Act, 1947 (14 of 1947) or under any corresponding law relating to the investigation and settlement of industrial disputes in force in the State; or (e) any other officer with experience as a Judge of a Civil Court or a Judicial Magistrate, as the authority to hear and decide for any specified area all claims arising out of deductions from the wages, or delay in payment of the wages, of persons employed or paid in that area, including all matters incidental to such claims. 12 months Every such application shall be presented within from the date on which the deduction from the wages was made or from the date on which the payment of wages was due to be made, as the case may be: Further the application may be admitted after the said period of 12 months when the applicant satisfies the Authority that he had sufficient cause for not making the application within such period What powers does the Authority have to decide and claims? Under Section 15(3) When any application under sub-section (2) is entertained, the Authority shall hear the applicant and the employer, or give them an opportunity of being heard, and after such further inquiry, if any, as it may consider necessary, may, without prejudice to any other penalty to which the employer may be liable under this Act, direct- (i)the refund to the employed person of the amount deducted, or the payment of the delayed wages, together with the payment of such compensation as the authority may think fit, not exceeding ten times the amount deducted in the former case and not exceeding 3000/- but not less than 1500/- in the latter, and even if the amount deducted or delayed wages are paid before the disposal of the application, direct the payment of such compensation, as the authority may think fit, not exceeding 2000/ (ii)As far as practicable claim shall be disposed within a period of 3 months from the date of registration. [if both parties agree and for any bona fide reason, the period of 3 months may be extended to dispose of the application in a just manner. No direction for the payment of compensation shall be made in the case of delayed wages if the authority is satisfied that the delay was due to- (a) a bona fide error or bona fide dispute as to the amount payable to the employed person; or (b) the occurrence of an emergency, or the existence of exceptional circumstances, the person responsible for the payment of the wages was unable, in spite of exercising reasonable diligence; or (c) the failure of the employed person to apply for or accept payment. If the authority hearing an application under this section is satisfied- (a) that the application was either malicious or vexatious the authority may direct that a penalty not exceeding 375/- bе paid to the employer (b) that in any case in which compensation is directed to be paid under sub-section (3), the applicant ought not to have been compelled to seek redress under this section, the authority may direct that a penalty not exceeding 375/- be paid to appropriate Government by the employer or other person responsible for the payment of wages. What are the penalties violating the provisions of the Payment o Wages Act, 1936? Under Section 20: Whoever being responsible for the payment of wages to an employed person contravenes any of the provisions of any of the following section, namely, [section5 except sub-section (4) thereof, section 7, section 8 except sub-section(8) thereof, section 9, section 10 except sub-section (2) thereof, and sections11 to 13], both inclusive, shall be punishable 3[with fine which shall not be less than one thousand five hundred rupees but which may extend to seven thousand five hundred rupees]. (2) Whoever contravenes the provisions of section 4,4[sub section(4) of section 5, section 6, sub-section (8) of section 8. sub-section (2) of section 10] or section 25 shall be punishable 5[with fine which may extend to three thousand seven hundred fifty rupees]. 6[(2A) Whoever being required to nominate or designate a person under section 3 fails to do so, such person shall be punishable with fine which may extend to three thousand rupees.] 7[(3)Whoever being required under this Act to maintain any records or registers or to furnish any information or return (a) fails to maintain such register or record; or (c) wilfully furnishes or causes to be furnished any information or return which he knows to be false; or (c)refuses to answer or wilfully gives a false answer to any question necessary for obtaining any information required to be furnished under this Act, shall for each such offence, be punishable 5[with fine which shall not be less than one thousand five hundred rupees but which may extend to seven thousand five hundred rupees]. (4) Whoever- (a) wilfully obstructs an Inspector in the discharge of his duties under this Act; or (b) refuses or wilfully neglects to afford an Inspector any reasonable facility for making any entry, inspection, examination, supervision, or inquiry authorised by or under this Act in relation to any railway, factory of 1[industrial or other establishment]; or (c) wilfully refuses to produce on the demand of an Inspector any register or other document kept in pursuance of this Act; or (d) prevents or attempts to prevent or does anything which he has any reason to believe is likely to prevent any person from appearing before or being examined by an Inspector acting in pursuance of his duties under this Act, shall be punishable 2[with fine which shall not be less than one thousand five hundred rupees but which may extend to seven thousand five hundred rupees]. (5) If any person who has been convicted of any offence punishable under this Act is again guilty of an offence involving contravention of the same provision, he shall be punishable on a subsequent conviction with imprisonment for a term 3[with fine which shall not be less than three thousand seven hundred fifty rupees but which may extend to twenty-two thousand five hundred]: Provided that for the purpose of sub-section, no cognizance shall be taken of any conviction made more than two years before the date on which the commission of the offence which is being punished came to the knowledge of the Inspector. (6) If any person fails or wilfully neglects to pay the wages of any employed person by the date fixed by the authority, in this behalf, he shall, without prejudice to any other action that may be taken against him, be punishable with an additional fine which may extend to 4[seven hundred fifty rupees] for each day for which such failure or neglect continues.] (b) wilfully refuses or without lawful excuse neglects to furnish such information or return; or