Payment Of Wages Act 1936 (Cma Inter Law Notes)

 

                                                          Payment of wages, Act, 1936 

Scope & applicability of the ACT:-

The act extend to whole of India i.e. it is also applicable to Jammu & Kashmir. It is applicable on J&K by central Labour Law [Extended to Jammu & Kashmir], 1970. This act come into force W.E.F 28th March, 1937 The act is applicable on

a. Factories

 b. Industrial or other establishment 

c. Railway administration (whether directly or through sub-contractor 

d. State Govt. also have power to extend this act on any establishment after giving three months notice. e. In case Notified establishment is owned by central Govt. than applicability to this act, central Govt. consent is necessary. 

Sec. 2) (ii), Industrial or other establishment:-

a. Tramway services or motor transport service. 

b. Air transport service

 c. Inland, Wessel, mechanically propelled. 

d. Mine or oil filed. 

e. Plantation. 

f. Workshop where article are manufactured for transport or sell. 

g. Establishment where building, roach or bridge construction work is carriedon. 

 This act applies on those employees whose wages are Not exceeding Rs24,000P.M.

  Object of the act:- 

 To element all malpractices related to the time and mode of payment. 

 To ensure a speedy and effective remedy against unauthorized dedication or unjustified delay caused in payment. 

Sec. 2) (IV) Wages:- 

Wages means remuneration express in terms of money –payable to the employed person when terms of employment are fulfilled and includes:- 

 Remuneration payable under settlement or award (Decision of Labour Court) or order of the court.

  Payment of overtime or holiday or Leave period. 

 Additional remuneration payable under the terms of employment.( incentive] 

 Sum payable on termination of employment 

But does not includes- .

 Bonus

 Gratuity 

Travelling allowance.

Contribution paid by the employer towards pension or provident fund.

 Value of House accommodation or supply of Light, Water or other amenities.

Sec. 3), Responsibility for payment of wages:- 

Every employer shall be responsible for the payment of all wages required to be paid under this Act to the employees and in case person employed -

  In Factory – Manager

  In Industrial or other establishment – Person responsible for supervision or control 

 Upon Railway administration – Nominated person for Local area

  Work of contractor – Designated person [appointed person] by contractor

 Sec. 4) Responsible person shall fix wage period which may be daily, weekly or fortnightly but this period shall not exceed 1 month in any case. 

Sec. 5) Time for payment:- 

 Where Less than 1000 worker are employed – wages must be paid before expiry of 7 th day of the wage period. 

 In any other case i.e. where 1000 or more than 100 worker are employed- wages must be paid before expiry of 10th day of the wage period. 

 In case Dock yards & mines- payment must be made before expiry of 7th day of completion of accounts of ships or wagons.

  Where service is terminated of an employee: - Payment must be made before expiry of 2 nd working day of termination. 

Note:- If second day, is Sunday or public holding that it must be paid before the expiry of second working day. - All the payment of wages should be made on working day. 

Sec. 5(3):- 

App. Govt. may exempt by General or special order to railway administration from the provision of this act. A.G. Establishment for daily Rated worker, but for this exemption Central Govt. approval is necessary. 

Sec. 6), Mode of payment:- 

Wages will be paid in current coins or current Notes or both. If employer and employee agreed than wages can be deposited in bank A/c of employee but written consent of employee is necessary. 

Sec. 7), Deduction:- 

Every payment by employee to employer shall be deemed to be a deduction from wages. But following penalties shall not be deemed as deduction from wages:-

  With hold increment or promotion. 

 Demotion. 

 Suspension. 

Sec. 7(2), Following kinds of deduction can be made from the wages of worker according to the provision of the Act:- 

 Fine 

 Absence from duty

  Damage to goods

  House accommodation and amenities provided by the employer. [Actual value of such house notified byA.G.] 

 Recovery of advance.

  Recovery of Loan & Interest. 

 Subscription to Provident fund.

 Income tax 

 Payment to corporative society approved by state Govt. 

 Deduction with written approval of employees for payment in Life insurance policy or purchase

 of security.

Sec. 7(3), Limit of deduction:-

  When deduction is made for payment of co-operative Societies – 75% of wages.

  In any other payment – 50% of wages. 

Sec. 8 Fine:- 

 Fine will be imposed with respect to any act or omission with previous approval of state govt. or prescribed authority.

  A notice specifying in such acts or omission will be exhibited in the premises of employment. 

 Opportunity of hearing is given to employee before imposition of fine.

  Total Amt. of fine must not exceed an amt. of 3% of total wages.

  No fine will be imposed on an employee who has not completed 15 yrs. of age. 

 After imposition of fine it‟ becomes time barred after 90 days ,counted from the date of wrong.  Fine will not be paid in installment. 

 Fines and realization are recorded in a registration. 

Sec. 9, Absence of duty:- 

When an employee is absent from the place where he require to work according to his term of employment without Notice or sufficient cause than, employer may deduct his wages according to the period of absent. In some cases employer is entitled for deduct whole day wages as the person is absent for some period from his duty, inspite after given Notice by employer as held in the case:- United commercial bank V/s Gujarat bank worker union. 

Sec. 10, Damages to goods:- 

When an employer suffer Loss due to employee than he may deduct his wages upto the Amt. of Loss, but he has to give opportunity hearing to the employee against the deduction. 

Sec. 10(2), Responsible person under sec. (3) is Responsible to Records the deduction and realization in a register. 

Sec. 13 A, Maintenance of register and records:-

A responsible person has to maintain register in which:- 

 Particulars of employees 

 Works perform by them. 

 Wages paid to them

  Deduction made from their payment 

 Receipt given by them. Will be recorded in prescribed manner in register which are to be preserved for three years from the date of Last entry. 

Sec. 15 Claims:- 

 Where a dispute arises due to deduction from wages or delay in payment or malicious claim. Then case is Refer to Appropriate Authority [ any commissioner for workmen’s compensation or Note below the Rank of Assistant Labour Commissioner with at least 2 years experience or having experience Judge of civil court or Judicial Magistrate] appointed by Appropriate Govt. through Gazette Notification. 

 The claim must be presented within twelve months of cause of Action

When application gives to authority , it gives opportunity of hearing to both employee & employer. If authority finds that employer is guilty than it may direct to him to pay deducted Amount or delayed wages as the case may be.

  In case of Direction to pay deducted Amount compensation will be-up to 10 times of deducted amount[when unauthorized deduction]

  If payment is delay than compensation will be Rs. 1500 to 3000. [When delay in payment]

  If payment is made in case of delay befor disposal of application by authority than compensation will be

upto Rs. 2000. [Before decision if employer paid Amt. than maximum Amt. of compensation is Rs.2000)

  Application must be disposed by the authority with in 3 month. 

 If authority is satisfy that wages are delay due to –

  Bonafied mistake Any emergency (Natural Calamity) Failure of employee to apply or accept payment. Than compensation will not be chargeable from employer. 

 If application for claim by worker is found guilty/malicious/vexation than employee/worker can be held Liable for penalty, up to Rs. 375 payable to the employer.

 Sec. 17(A):-

If employer is unable to pay wages than his property is attached by the authority for payment of wages. 

 Sec. 20) Penalties:- 

Sec. 20(i):- On contravention of Sec. 5, Sec. 7, Sec. 8 Sec. 9, Sec. 10 the Responsible person shall be punishable with fine Not Less than Rs. 200 which may extend to Rs. 1000. 

Sec. 20(2):- on Contravention the Sec. 4, Sec. 6, Sec. 10(2) or Sec. 25 [Display the Notice] shall be punishable- upto Rs. 3,750

 Sec. 20(3):-

Who fails to maintain register or records or willfully neglects to furnish information or return or furnish false information or refuse or giving false answer to any question relating to the provision of the act. Than for each such offence shall be punishable with fine which shall Not be Less than Rs. 1500 but which may extend upto Rs. 7,500.

 Sec. 20(4):- When a person:- 

1) Obstruct and inspector in discharge of his duty or 

2) Refuse for provide facility for inspection or Refuse to give register on demand by inspect. than such person shall be punishable –

 Fine Not Less than Rs. 1500 can be extended up to Rs. 7500. On subsequent contravention of the same offence, the person shall be punishable

Imprisonment Not Less than 1 month which may extend upto 6 month. 

AND 

With fine minimum Rs. 3750 which may extend upto Rs. 22,000