UNIT-1

Concept of Minimum Wage

The Minimum Wages Act is an act of Parliament concerning Indian Labor Law that sets the minimum wages
that must be paid to skilled and unskilled laborers.
The concept of Minimum Wages was first Evolved by ILO in 1928 with reference to remuneration of workers
in those industries Where the level of wages was substantially low and the labor was vulnerable to
Exploitation, is not well organized, and had less effective bargaining power.
In India, the Need for the fixation of minimum Wages arose after World War II when a draft bill was
considered by The lndian Labor Conference in 1945.
On the recommendation of the 8th Standing Labor Committee, the Minimum Wages Bill was introduced in
the Central Legislative assembly on 11.4.1946 and came into force on 15.03.1948. It came on the Statute
Book as The Minimum Wages Act, 1948.
For the latter, the Government of India appointed the 'Committee on Fair Wages' to determine the principles
on which fair wages.

> According to the Fair Wage Committee, and Hydro (Engineers) P. Ltd v. Workmen. AIR 1969 SCI82.
The minimum wage was 'to ensure not merely the bare sustenance of life but the preservation ofthe efficiency
of the worker by providing sonme measure of education, medical requirements and amenities.
Further said that the wage should cover five categories of needs considered essential for the worker's well
being, viz. food, clothing, housing, light & fuel and miscellancous.
Salient Features of the Act
Extend to the whole of India
This Act applied to certain employments and it empower both Central and State government to fix
amount of wage for their respective areas.
" Minimum wage means all remuneration should be paid in cash.
Fixing of Minimum wages on the basis of:

(a) a minimum time rate,

(b) a minimum piece rate,

(C) a guaranteed time rate,

(d) overtime rate.

Fixing minimum rates of wages according to the class of :

(a) different scheduled employments;

(b) different classes of work in the same scheduled employment;

 (c) adults, adolescents, children and apprentices; and

(d) different localities (zone-wise)

" Minimum wages revised by appropriate government in every 5 years.

" In contravention of this Act by not paying minimum wage a claim can be made under section 20 of aforesaid
Act.
" Non-payment of Minimum wages is an offence punishable up to sixX months imprisonment or with a fine up to
Rs. 500 or with both.

Objective and scope of Minimum Wages Act, 1948

" To safeguard that the employee has a basic physical necessity, proper health, and comfort.
" To provide for fixation of minimum wages in scheduled employments and Ensure that the labor gets fair
wages.
" To revise the minimum wage amount periodically.
" To reduce the chances of workers getting exploited in the hands of their employers.

The significance of the Minimum Wages Act, 1948 in the context of conditions in India has been explained by
the Supreme Court in
> Unichoyi x State of Kerala
"What the Minimum Wages Act lay to achieve is to prevent exploitation of labour and for that purpose
empowers the appropriate Government to take steps to prescribe minimum rates of wages the scheduled
industries.

In an underdeveloped country like India, which is facing the unemployment crises on a very large scale, it is
not surprising to see that labour is forced to work even on starvation wages for their survival.
The policy of the Act is to prevent the cmployment of such sweated minimum rates, the capacity of the
employer need not to be considered. What is being prescribed is minimum wage rates which a welfare State
assumes every employer must pay before the employs labour."
According to the Preamble of the Minimum Wages Act, 1948,this is an Act to provide for fixing of minimum
rates of wages in certain employments specified in Part I or Part II of the Schedule of the Act.
Edward Mlls co.Ltd, vs State ofAjmer
It was decided that the object of the Minimum wages Act as, "The object of this Act is to prevent exploitation
of the workers and for this purpose, it aims at the fixation of minimum wages which the employer must pay"
Constitutional Validity of the Minimum Wages Act 1948
The Minimum Wages Act, 1948, gives both the Central government and State government jurisdiction in
fixing wages. The act is legally non-binding but statutory. If the Wage amount is paid less than the fixed
minimum wage rate amount to forced labour. Constitute the Wage Board for analysing the capacity of
employers to pay and fix such amount of wage that they at least cover a family's basic need.
But on some grounds, the constitutional validity of this Act was challenged. It was said that as the above Act
violates Article 14 and 19(1)(g) of the Indian Constitution.
The constitutional validity of this Act was challenged in the following cases:
Bijay Cotton Mills Ltd The State of Ajmer
Facts:

There was an industrial dispute between the appellate company and its workmen regarding enhancement of
wages and the dispute was referred by the Govt of Ajmer to an Industrial Tribunal.
The tribunal held that the capacity of the mill prevents the award of higher rates of wages and higher dearness
allowance.

The employees appealed to Appellate Tribunal.

When this appeal was pending, the Government fixed the minimum wages at Rs. 56 in the textile industry
under the Act.

In the meantime, the Appellate Tribunal sent back the case to the Industrial tribunal for further investigation
Later rejected the basis upon which the minimum rates of wages of Rs. 56 were fixed by the State and fixed
the minimum rates of wages including the dearness allowance at Rs. 35 only.

The Company in its petition stated that the minimum wages fixed by the State is prohibitory and it is not at all
possible for the company to carry on its business on payment of such wages and, therefore, closed its mills.
An interesting feature, in this case, was that all the workers working in the mills approached the Company and
expressed their willingness to work at a lower rate of wages than the rates prescribed under the Act.
Despite the willingness of the workers the company was unable to open the mills by reason of the fact that the
Act makes it a criminal offence for not paying the wages fixed under the Act.

Issue:

It violates the guarantee of freedom of trade and profession under Article 19(1Xg).
Held:

It was held that the restrictions imposed upon the freedom of contract by the fixation of minimum rates of
wages though they interfere with this Article19(1 X(g) to some extent BUT this is not unreasonable.
It is imposed in the interest of the general public and with a vicew to carrying out one of the Directive Principle
of State Policy asimbodied in Article 43 which talks about living wages in the Constitution are protected by
the terms of clause (6) of Article 19.
Another important judgment that favors and supports the constitutionality of the Minimum Wages Act, 1948
IS.

K Unichonoy v State of Kerala

Facts:

The government of Kerala appointed a committee in the exercise of its power conferred by clause (a) (1) of
Section 5 of the Minimum Wages Act to hold an inquiry and advise the government to fix the minimum rate of
wages in respect of employment in the tile industry.

Further, nominated 8 persons to constitute said committee u/s 9 of the Act.

After reviewing the report, The Government of Kerala issued a notification prescribing the minimum rate of
wages.

9 Petitioners who represent 6 tiles factories in filed the petition w/article 32, challenging the validity of the Act
as well as the validity of the notification issued by the government of Kerala.

Issues:

I. The notification which was fixed minimum rate of wages did not take into account the employer's capacity
to pay, so the notification is ultra vires and inoperative.

2. The act is violative of Article 19 (1) (g) of theConstitution.

Held:

The court rejected all the contentions of the petitioner and upheld the validity of the minimum wages act
under Aticle 19 () (g) and observed that the wage structure_prescribed by the notification cannot be
considered as the court for closure of the factories.

The cause for closure of the factory may either be because the factories found it difficult to pay the wage
structure or may be for reasons other than industrial.

The act aims to provide at least the minimum wages and social justice to the workers, Even in the preamble of
the act, it is said to provide for fixing the minimum rate of wages in certain employment.
Therefore, the provisions of the act and notification of the government pertaining to the fixation of the
minimum wages fall within the restriction of fundamental rights in the constitution and are hence
constitutionally valid.
> Chandra Bhavan v. State of Mysore

Facts:

The petitioners challenged the validity of the notification of the Mysore government which was notified to
direct all residential hotels and cating houses tofix a minimum wage for employces belonging to different
categories and also ghallenged the provisions of the minimum wages to act.

But the Mysore High Court rejected all the contention of the petitioner and later the petitioners approach to
the Supreme Court.

Held:

The Supreme Court observed that government can fix different minimum wages depending upon the
cconomic condition, cost ofliving, nature of work, category ofemployment, etc.
Further held that the provision of the act and notification of the government does not violate Article 14 and
19 (1) (g) of the Constitution.

> MIS, BHIKUSAYAMASAKAHATRIYA Y. SANGAMNERAKOLA TALUKA

The owner of the Bidi factory filed writ petition under Article 226 before the Bombay High Court declaring:

- Section 3 (3) (iv) of the act and;

- notification by the government as violative of Art 14 and 19 (1) (g).

But the High Court rejected their petition and then they filed the petition in the Supreme Court which also
upheld the decision of the High Court. And observed that the provision is not violative of Art 14 and 19 (1)
(g).

> Edward Mills Co.Ltd, Beawar v. State of Aimer 1955

Facts:
The petitioners prayed for a declaration that the notification issued by the State govt. of Ajmer fixing the
minimum rates of wages in respect of employment in the textile industry within that state, under the provision
of Minimum Wages Act, 1948 was illegal and ultra-vires.
For that purpose, isSue of writsin the nature of mandamus directing the respondents not to enforce the same
against the petitioners.

ssues:

1. Without a delegation of authority by the president under Art 239 of COI, the chief commissioner of Ajmer
was not competent to function as the "appropriate govt" for purposes of Minimum Wages Act.
Held:

The Court rejected the contention which was raised by the counsel and observed that legislature intended to
apply the act to those industries only where by reason of unorganized labour or want of proper management
for effective regulation of wages or for other causes the wages for labourers in a particular industry was very
low.

Kinds/ Classification of Wages under the Act

Classification of Wages:

The Supreme Court has classified " Wages" into three categories. They are:

1. The Living Wage (highest standard of wage)

2. The Fair Wage (between living and minimum wage)

3. The Minimum Wage. (it is the lowest standard of wage)

The Act does not define the expression "minimum wage" but it defines the word" wages" in Section 2(h)
according to which:

"wages" means all remuneration capable of being expressed in terms of money:

 if the terms of the contract of employment express or implied were fulfilled and be payable to a person
employed in respect of his employment or of work done in such employment and include house rent
allowance but does not include.

value of any house accommodation, supply of light water medical attendance;

Any other service excluded by general or special order of the appropriate government;

Any contribution paid by the employer to any person be it provident fund or scheme of social
insurance:

Any traveling allowance:

º Any sum paid to the person employed to defray special expenses;

º Any gratuity payable on discharge.
Fair wage

"Fair wage is the wage which is above the minimum wage but below the living wage.

The lower limit of the fair wage is obviously the minimum wage: the upper limit is to be set by the capacity of
the industry to pay. "

Fair wage must be paid according to the financial positions of the employer and efficiency of the worker and
his fair needs of his family, shall also be taken into consideration.

To Deternmine fair wage, the following factors are taken into Consideration -

I)The Productivity ofLabour

2) The Prevailing rates of wages in the same industry for similar occupation in the same neighboring locality
3) the Level of national income and its distribution; and

4) The place of Industry in the economy of the Country

Living Wage

A living wage is one which enables the earner to provide for himself and his family not only the bare
essentials of food, clothing, and shelter but a measure of comfort including education for his children,
protection against ill-health, requirements of essential social needs, and a measure of insurance against the
more important misfortunes including old age."

Thus, the attainment of living wage is the ultimate objective of every civilized society.
The term Living Wages has been defined in -The Fair Wage Committee Report and Article 43 of the
Constitution of India.
Distinction between the Minimunm Wage, Fair Wage, and Living Wage
The Supreme Court, in the case of Kamani Metals and Alloys v. Their Workmen distinguished between the
minimum wage, fair wage and living wage.

'Broadly speaking the first principle is that there is a minimum wage which, in any event, must be paid,
irespective of profits, the financial condition of the establishment or the availability of workmen on lower
wages., This minimum wage is independent of the kind of industry and applies to all alike big or small. It sets
the lowest limit below which wages cannot be allowed to sink in all humanity.

The second principle is that wages must be fair, that is to say, sufficiently high to provide a standard family
with food, shelter, clothing, medical care and education of children appropriate to the workman but not at a
rate exceeding his wage carning capacity in the class of establishment to which he belongs. A fair wage is thus
related to the carning capacity and the workload.

It must, however, be realised that 'fair wage' is not 'living wage' by which is meant a wage which is sufficient
to provide not only the essentials above-mentioned but a fair measure of economical comfort with an ability to
provide for old age and evil days. Fair wage lies between the minimum wage, which must be paid in any
event, and the living wage, which is the goal of every civilized society.'

Minimum Wage Fair Wage Living Wage

The Term "Minimum wage"
Fair Wage is more than minimum Living Wage is the highest
means "The minimum payment, an wage but less than the living wage. standard of wage.
employer has to give to an employee
for a particular work, ic, the lowest
limit, below which wages cannot be
allowed to sink"
Section 3 of the Minimum wages Act A fair wage is fixed, taking into Living Wage enables the
provides for different minimum rates consideration, the present economic carner to provide for
of minimum wages for different position and further prospects of the himself.
localities Industry.

Components/ Constituents of To Determine fair wage, the following To determine living wage,
Minimum Wages - factors are taken into Consideration - the earner to provide for
himself and his family not
(i) a basic rate of wages and a specialI) The Productivity of Labour only the bare essentials of
allowance a rate to be adjusted at food, clothing, and shelter
such intervals and in such manner as 2) The Prevailing rates of wages in the but a measure of comfort
the appropriate government may direct same industry for similar occupation including
to accord as nearly as practicable with in the same neighboring locality
the variation in the cost of living index I)education for his children.
number applicable to such workers 3) the Level of national income and its
(hereinafter referred to as the "cost of distribution; and
living allowance"); or 2)protection against ill
 4) The place of Industry in the health. requirements of
(ii) a basic rate of wages with or economny of the Countr essential social needs
without the cost of living allowance
and the cash value of the concessions 3) a mneasure of insurance
in respect of suppliers of essential against the more important
commodities at concession rates
where so authorized; or
misfortunes including old
age.
(iii) an all-inclusive rate allowing for
the basic rate the cost of living
allowance and the cash value of the
concessions if any.
(Section 4 of Minimum Wages Act)

The Minimum Wage must, therefore, The Concept of fair wages involves a Attainment ofliving wage is
provide not merely for the bare rate sufficiently high to enable the the ultimate objective of
substance of life but also for the worker to provide a standard family every civilized society.
preservation of the efficiency of a with food, shelter, clothing, medical
worker. For this purpose. the care.
minimum wage must also provide for
the same measure of education,
medical requirement, and amenities.

Fixation or Revision of Minimum Rates of Wage

Fixation and revision of minimum wages could be studied under the following three heads.
1. Fixation of minimum wages, how it is done and to whom it is Applicable (Section3).

2. Contents of minimum wages (Section 4).

3. Procedure for fixing and revising minimum wages (Section 5).

Sections 3,4 and 5 are said to be the operative sections under the Minimum Wages Act.

The responsibility for fixing the minimum rates of wages that the appropriate Government. Section3
provides that the appropriate Government
Section 3 (1)(a) fix the minimum ratesof wages payable to employees in an employment specified in Part I
and Part Il of the Schedule, and in employment added to either part by notification under Section 27.
In the case of employment specified in Part I, the minimum rates of wages must be fixed for the entire State,
no parts of the State bcing omitted
In case of the employments specified in Part II of the Schedule, the minimum rates of wages may not be fixed
for the entire State. Parts of the State may be left out altogether.
However, Appropriate Government" may not fix minimum rates of wages in respect of any scheduled
employment in which less than 1000 employees in the whole State are engaged but when it comes the
knowledge it shall fix the minimum wage rate.
Section (1)(b) shall conduct areview within the span of 5 years and revise the same, if necessary.
Section 3(2) talks about the manner of fixation by the Appropriate Government may fix the minimum rate of
wages for:

(a) Minimum Time Rate:

It is time factor on which the minimum wage can be fixed.
(b) Minimum Piece Rate:
It allows the minimum wage to be fixed based on the pieces of items manufactured by the workers.
(c) Guaranteed Time Rate:
It is guaranteed that the given time workers have to produce the piece. It is combination of time rate and
piece rate.

(d) Overtime Rate.

It is a calculation of hours worked by the worker that exceed standard working hours.
Section 3(3) talks about the different minimum rate of wages may be fixed for
different scheduled employments;
different classes of work in the same scheduled employments;
adults, adolescents, children and apprentices:
different localities;
by the hour;
by the day:
by the month.
In Kamani Metals and Alloys v. Their Workmen, it was held that minimum wages must be paid irrespective
of profit, financial conditions of the enterprise or availability of workmen on lower wages.
In JP Industries v. Workmen, it was held that the capacity to pay is not a relevant consideration when the
rate of minimum wages as distinguished from fair wage is fixed by Industrial Tribunal.
In Chandra Bhawan v. State of Mysore, fixing of different rates of minimum wages for different industries
or different localitics by diving state into a various zone will be conformity of the Act. The minimum wage is
applicable to all industries be it big or small. It sets the lower limit below which wages cannot be allowed to
sink in all humanity.
Section 4-Composition for Minimum rate of wages
Section 4 talks about the composition of minimum wage which may consist of basic rate of wage and special
allowance
basic rate of wages + special allowance (which varies cost of living)
basic rate of wages + cash value of concessional supply of material like clothes, food etc.
 All-inclusive rates which include basic rate of wages + cost of living allowance + cash value of
concessional supply of materials.

Section 5- Procedure for fixation and revision of minimum rate

fixing minimum rates of wages in respect of any scheduled employment for the first time or in revising
minimum rates of wages, the appropriate Government can follow either of the two methods described below:
Committee Method
Notification Method

Committee Method Notification Method

It is defined under section 5 (1\a) of the It is defined under section 5 (1(b) of the
Minimum wages Act, 1948. Minimum wages Act, 1948.
Appropriate government constitute committees Appropriate Government shall by notification, in
or sub-committees for the purpose to hold the Oficial Gazette publish its proposals for the
inquiries and advise it in respect of such fixation information of persons likely to be affected
or revision, or. thereby Specify a date not less than 2 months
from the date of notification, on which the
proposals will be taken into consideration.

After considering the advice of the committee. The representations received will be considered
the appropriate Government shall. by by the appropriate Government.
notification in the Official Gazette fix or revise It will also consult the Advisory Board
the minimum rates of wages. constituted under Section 7 of the Act.

Thereafter fix or revise the minimum rates of

wages by notification in the Official Gazette.

The wage rates shall come into force from such The wage rates shall come into force from such
date as may be specified in the notification. date as may be specified in the notification.
If no date is specified, wage rates shall come However, if no date is specified, the notification
into force on the expiry of 3 months from the shall come into force on expiry of 3months from
date of issue the notification. the date of its issue of notification.

CASE
Edward mills v. State of Ajmer
It was held that Committee appointed under Section 5 is only an advisory body and that Government is not
bound to accept its recommendations.

Section 7-Advisory Board

The appropriate Government shall appoint an Advisory Board:
For the purpose of coordinating the workof committees and sub-committees appointed under section 5
and

advising the appropriate Government, generally in the matter of fixing and revising minimum rates of
wages,

Section 8-Central Advisory Board

Makes it obligatory upon the Central Government appoint a Central Advisory Board for the following
purposes
advising the Central and State Governments in the matters of the fixation and revision of minimum
rates of wages and their matters under this Act and for coordinating the work of the Advisory Boards,
Board shall consist of persons representing
Employers and Employees (equal number of employers & employees)
Independent persons(not exceeding 1/3 of totalmembers)
One of such independent persons shall be appointed as the Chairman of the Committee by the
appropriate Government.

Section 9- Composition of Committees

Provides that such committees, sub-committees, and the Advisory Board shall consist of persons to be
nominated by the Appropriate Government
Employers and Employees (equal number of employers & employees)
Independent persons (not exceeding l/3 of total members)
One of such independent persons shall be appointed as the Chairman of the Committee by the
appropriate Government.
Section 11-Wages in kind
Minimum wages payable under this Act are to be paid in cash. However, the payment of minimum wages can
be made wholly or partly in kind, by notifying in the official Gazette, where it customary to pay wages
either wholly or partly in kind.
Section 13: Fixing hours for a normal working day, etc.
In regard to any scheduled employment, minimum rates of wages in respect of which have been fixed under
this Act, the appropriate Govemment may
Fix the number of hours which shall constitute a normal working day, inclusive of intervals
Provide for a day rest in period of seven days
Provide for payment for work of a day of rest

Intermittent Employment: Section 13(3)

Employment of an employee is essentially intermittent when it is declared to be so by the appropriate
Government on the ground that the irregular employment on programs, projects, problems, or phases thereof,
requiring intermittent services, without a regularly scheduled tour of duty. If at any time it is determined that
the employee's work is no longer intermittent in nature, the person's employment must be changed
immediately.
An employment that is not continuous but may consist of intervals of weekly work and intervals.

Section 14: Overtime

Where an employee., whose minimum rate of wages is fixed under this Act by the hour, by the day or by such
a longer wage-period as may be prescribed, works on any day in excess of the number of hours constituting a
normal working day, the employer shall pay him for every hour or for part of an hour so worked in excess at
the overtime rate.

Section 20: Claims/ Authority

Section 20 deals with the provisions relating to the appointment of authorities to decide claims arising out of this
Act. Under this section, appropriate Government has the power to appoint by way of notification in the official
Gazette, the authority to hear and decide claims for any specified area. This section can be divided into two
parts. First part relates to the persons who can be appointed as the authority to decide claims arising out of the
Act. The second part of it deals with the claims which shall be decided by the authority appointed for the
purpose

The appropriate Government may, by notification in the Official Gazette, appoint:

" any Commissioner for workmen's Compensation or
any officer of the Central Government exercising functions as a Labour Commissioner for any region,
or

any officer of the State Government not below the rank of Labour Commissioner.

any other officer with experience as ajudge of aCivil Court or asa stipendiary Magistrate
Under sub-section (2), lays down the list of persons who can make an application to the authority for a
direction.
Under sub-section (3), When an 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.
Under sub-section (4), If the Authority hearing any application is satisfied that it was either malicious
or vexatious, it may direct that a penalty not exceeding fifty rupees be paid to the employer by the
person presenting the application.
 Under sub-section (7), Every Authority appointed under sub-section (1) shall have all the powers of a
Civil Court under the Code of Civil Procedure, 1908 for the purpose of taking evidence and of
enforcing the attendance of witnesses and compelling the production of documents, and every such
Authority shall be deemed to be a Civil Court for all the purposes of section 195 and Chapter XXXV
of the Code of Criminal Procedure, 1898.

Section 22- Penalty of certain offences

Section 22 deals with Fines or penalties. Any employer who
(a) pays any employee less than the minimum rates of wages fixed for that employee's class of work, or
less than the amount due to him under the provisions of this Act, or
(b) contravenes any rule or order made under section 13, shall be punishable with 'Imprisonment for aterm
which may extend to six months, or with fine which may extendto five hundred rupees, or both.

Time Rate System

Time Rate System is otherwise called as Time Work, Day Work, Day Wages and Day Rate. It is the oldest
method of remuneration. The time rate system is that system of wage payment in which the workers are paid
on the basis of time spent by them for the production of output.
Under this system, the workers and employees are paid wages on the basis of the time they have worked
rather than the volume of output they have produced. The wage rate is fixed on hourly, daily weekly, or
monthly on the basis of the nature of work. The time is the prevalent rate of the industry or area. The rate may
either be a fixed one or there may be a progressive scale of pay that starts at minimum and rises up to a
maximum, in various stages by way of increments.

PIECE-RATE SYSTEM:
This is that system of wage payment in which the workers are paid on the basis of the units of output
produced. This system does not consider the time spent by the workers. Piece rate system is the method of
remunerating the workers according to the number of unit produced or job completed. IL is also known as
payment by result or output. Piece rate system pays wages at a fixed piece rate for cach unit of output
produced.

Time Rate System PIECE-RATE SYSTEM:

Time rate system is a method of wage payment to Piece rate system is a method of wage payment to
workers based on time spent by them for the workers based on the quantity of output they have
production of output. produced.
Time rate system pays the workers according to the Piece rate system pays the workers according to the
time spent in the factory. units of output produced.
Time rate system emphasis on better quality of Piece rate system gives emphasis on larger quantity
output. of output.
Time rate system does not discriminate the workers Piece rate system discriminates the workers and
and pays the same wages to efficient and inefficient pays more wages to efficient and skilled workers.
workers.
There is lack of incentive for efficient workers. It motivates the workers to produce more and earn
more.

Under this system, generally the employment is Under this system, generally the employment is
stable. unstable.

UNIT-2 [Payment of Wages Act]

The Act is considered to be an important social security step towards the welfare of the working class in order
to remedy mischiefs played by the employers.
Before the codification of Payment of Wages Act there were several unfair labour practices pertaining to the
payment of wages.
The employers did not make payment of wages in definite form. That is sometimes they made
payment of wages in cash and sometimes in kind.
The wages were paid after much delay which resulted into poverty and growing indebtedness.
Another practice followed in some mills was the deduction of two days pay for one day's absence.
The payment of wages was considerably uncertain in regard to time and amount.
The Royal Commission on Labour was appointed in 1929 to enquire into and report on the conditions of
labour in industrial establishments and plantations in India.
The investigation revealed that there were several malpractices in the wage distribution. Unjustifiable
deductions were being made from wages.
Therefore, the Payment of Wages Act 1936 was passed to regulate payment of wages to certain classes of
persons employed in certain industry.

Salient feature of the Act

" This Act has been enacted with the intention of ensuring timely payment of wages to the workers and for
payment of wages without unauthorized deductions.
" The Act applies to the payment of wages to persons employed in any factory, upon any railway by a
railway administration or, persons employed in an industrial or other establishments
" The salary in factories/establishments employing les than 1000 workers is required to be paid by 7th of
every month and in other cases by 10th day of every month.
The Act requires that a worker, who either has not been paid wages in time or unauthorized deductions
have been made from his/her wages, can file a Claim either directly or through a Trade Union or through an
 Inspector under this Act, before with the Authority appointed under the Payment of Wages Act. The power
for hearing and deciding Claims under this Act has been vested at present with the Presiding Officer of a
Labour Court.

Objectand Scope of the Act

The Payment of Wages Act was enacted for the purpose of safeguardingthe wages of the employees under
certain conditions laid down in the Act.

An act is intended to regulate the Payment of wages to certain classes of persons employed in industries and
object to provide foraspeedy and effective remedy to the employees in respect of their claims arising out of
illegal deductions made in paying the wages to them.
The Act aims at payment of wages:
Without delays, and
Without unauthorised deductions.

> Krishna Prasad Gupta v. Controller,

Supreme court observed that The payment of wages act 1936 aims to improve workmen's plight resulting
from non-payment, or delayed payment or for that matter, short payment of their wages.
Application of the Act
The Act provides for its application:
In the first instance to the payment of wages (Section I(4))
Person employed in Factory:
Person employed in railways;
Person employed in an industrial establishment
By the notification of the government. (Section 1(5))
Empowers the appropriate government to extend the application by the notification.
Payment of wages Act, 1936 does not apply to employees drawing Rs. 6500 or more a month.

Definitions

Appropriate Government: Clause (1)

"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

Factory: Clause
"factory" means a factory as defined in clause (m) of section 2 of the Factories Act, 1948
Wages: Section 2 (vi)
According to Section2 (vi) of the Pyament of Wages Act, 1936,
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 ternms of employment (whether calleda 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.

Wages does not include

(1)any bonus;
(2) the value of any house accommodation, or of the supply of light, water, medical attendance or other
amenity:
(3) any pension or provident fund;
(4) any travelling allowance;
(5) any sum paid to the cmployed person to defray special expenses entailed on him:
(6) any gratuity.
Analvsis of Definition of Wages
The definition of wages under Section 2(vi) of the Payment of Wage Act, 1935, comprises of three parts:
The first part says 'wages' means all remuneration which would be payable to the employed person if the
terms of employment, express or implicd.
The second part says that expression wages shall include any bonus or other remuneration of the nature
aforesaid which would be payable with the terms of the contract.
The third part says wages' include the sum payable to such person by the reason of the termination of his
employment. It includes not only a sum payable, to an employee under a contract but also a sum payable to
him under the provision of law.

Section -3, Responsibility for payment of wages.

Responsibilities for payment of ages are mentioncd in Section 3of the Payment of Wages Act, 1936. Every
employer is liable for the payment of all wages to every one of the workers that he utilizes or employs for his
work.

Section 3 of the Payment of Wages Act makes provisions in imperative terms for responsibility for payment
of wages.
It provides that every employer shall be responsible for the payment to persons employed by him of all wages
required to be paid by him under the Act.
In case of persons employed:
(a) in factories- the manager of the factory:
(b) in industrial or any other establishment- supervisor of the industry:
(c) railways- the person nominated by the railway administration;
(d) contractor- designated person by such contractor:
(e) any other case- a person is designated by the employer.
Clause (2) provides that it shall be the responsibility of the employer to make payment of all wages required to
be made under this Act, in case the contractor or the person designated by the employer fails make such
payment.

|Sec 5 (3))- With the consultation of the central government, state government having power and can change
the person responsible for the payment of the wages in Railways, or person responsible to daily-rated workers
in the Public Works Department of the Central Government or the State Government.

Section 4: Fixation of wage period

Every person responsible for the payment of wages under Section 3 shall fix periods in respect of which such
wages shall be payable. No wage period shallexceed Imonth.
That means wage can be paid daily, weekly, fortnightly (for every 15 days), and monthly only. The wage
period for payment of wages to employees by the employer should not exceed 30days i.e. one month
according to this act.
But wages cannot be paid for quarterly. half-yearly, or once in a year.
Illustration: X is an employee in ABC factory, his wage period is of 40 days i.e. he receives his wages every
40 days. According to the law, Xs employer shall be liable for fixing a wage period exceeding a period of one
month.

Section 5: Time of payment of wages

The wages of every person employed upon or in
(a) any railway, factory or industrial or establishment, in which less than 1000 person are employed, shall be
paid before the expiry of the 7" day after the last day of the wage period:
Illustration- ABC, an employee works in XYZ factory consisting of 800 workers. He gets his wages on 20th
of every month. In the month of January 2018, his wages get delayed. According to the law, ABC should get
his pay before the expiry of 27th January which is the 7th day after the last day of the wage period that is 20th
january. It should not be delayed later than 27th january.
(b) In other railway factory or industrial or establishment, if there are more than 1000 employees, the wages of
employees should be paid before the expiry of the 10th day after the last day of the wage period.
Provided that for employees of port area, mines, wharf or jetty, wages of employees should be paid before the
expiry of the 7h day after the last day of the wage period.

Section 5 (2), Where the employment of any person is terminated by the employer, the wages of that
employee shall be paid before the expiry of the 2days from the day he was removed or terminated.
illustration: if the employee was terminated or removed from the employment by the employer on 10th of
this month, his wage should be paid within 2 days from the day on which he was removed or terminated, i.e.
his/her wage should be paid by 12th date of this month and this date should not exceed.
Exemption for daily-rated workers ( Section 5(3)
The appropriate Government may, by general or special order, exempt, to such extent that, the person
responsible for the payment of wages to persons employed upon any railway or to persons employed as daily
rated workers in the Public Works Department of the appropriate Government from the operation of this
section in respect of the 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 made
except in consultation with the Central Government.
Section 5 (4), wages shall be made on a working day.

Section 6: Wages to be paid in current coin or currency notes

The employer or the person responsible for making the payment of wages must pay in currency coins or
currency notes in both. Further, he cannot pay in kind.

Provided that the employer can pay the wages via a cheque or a direct deposit to the bank account of the
employee after taking a written authorization from him.
llustration- X, an employee gets paid Rs.3000 every month by his employer A. In January, X is given 300 kg
of sugarcane instead of his wages of Rs. 1500. This form of wages is prohibited by the Act.

Section 7. DEDUCTIONS WHICH MAY BE MADE FROM WAGES.

At the time of payment of the wage to employees, employer should make deductions according to this act
only. Employer should not make deductions as he like. Every amount paid by the employee to his employer is
called as deductions.

For example, Deduction of Rs. 300 from the wages of an employee for buying the supply of raw materials for
the factory is an unlawful deduction, since it is the duty of the employer to provide the materials required by
the employees to carry on their work.
The following are not called as the deduction:
Stoppage of the increment of employe.
Stoppage of the promotion of the employee.
Stoppage of the incentive lack of performance by employee.
Demotion of the employee
" Suspension of the employee
The following are said to be the deductions and which are acceptable according to this act.
Fines,
Deductions for damage to or loss of goods made by the employee due to his negligence,
Deductions of income-tax payable by the employed person,
Deductions by order of a court,
Deduction for payment of provident fund,
Deductions for absence from duty,

Section 8-Obligations of the employer before imposing any fines

Fine should be imposed by the employer on employee with the approval of the state government or prescribed
authority. The employer should follow the rules before imposing of fine on the employee as follows

Notice board of fines on employee should be displayed in the work premises and it should contain
activities that should not be made by employee:
Fine should not be imposed on the employee until he gives the explanation and cause for the act;
Total amount of fine should not exceed 3% of his wage;
Fine should not be imposed on any employee who is under the age of 15 years.
Fine should be imposed for one time only on the wage of the employee for the act or omission he
made.
Fines should not be recovered in the way of installments from the employee.
Fine should be recovered within 60 days from the date on which fine were imposed.
Fine should be imposed on day act or omission made by the employee.
All fines collected from the employee should be credited to common fund and utilize for the
benefit of the employees.
The Payment of Wages Act, 1936 provides for the appointment of:
Authority (Section 15)
" Appellate Authority (Section 17)
Authority: Section 15

To hear and decide all claims arising out of deductions from the wages, or delay in payment of the wages, of
persons employed or paid, including all matters, incidental to such claims, there will be a oficer mentioned
below appointed by the appropriate government.
(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,
(e) any other officer with experience as a Judge of a Civil Court or a Judicial Magistrate,
Maliclous /Vexatious Claim: Section 1S(4)
If the authority hearing an application under this section is satisfied that the application was either malicious
or vexatious, the authority may direct that a penalty not exceeding three hundred seventy five rupees be paid
to the employer or other person responsible for the payment of wages by the person presenting the application

Procedure before the Authority

Application by the employed person
Application to be made within twelve months.

Appellate Authority: Section 17

The provision of appeal is mentioned in section 17 of this act. In the accompanying circumstances the parties
who at any point disappointed can appeal to the district court:

On the off chance that the application was rejected by the above authorities
Employer forced with remuneration surpassing or exceeding 300/- rupees by the authorities.
On the off chance that the sum surpassing 25/ rupees retained by the employer to the single
unpaid worker. 50/- if there should be an occurrence of numerous unpaid workers.

Section 20. Penalty for offeneces under the Act.

Purposes behind punishment:

Delay in payment of wages
Unreasonable deductions

Overabundance reasoning for nonappearance of obligation

Overabundance reasoning for harm or misfortune to business
Overabundance reasoning for house-settlement courtesy or administration
Whoever is responsible for the payment of wages to an employed person contravenes any of the provisions of
sections 7-13 of theact shall be punishable [with fine which shall not be less than 1500 rupees but which may
extend to 7500]
Whoever contravenes the provisions of section 4, shall be punishable [with a fine which may extend to 3750
rupees.

Whoever is required to nominate or designate a person under section 3 fails to do so, such person shall be
punishable with fine which may extend Rs 3000/-.