Payment of Wages Act
Payment of Wages Act 1936
Introduction:In a country where even living wages are not paid to workers, the need to protect the wages earned by them can hardly be over emphasized. Before the Payment of Wages Act, 1936 was passed, evils of withholding wages, delays in paying wages and making unreasonable deductions out of wages were quite prevalent.Learning objectives: Understand the definition of wages. Determine the objectives and application of the Act. Explore the rules of the Wages Act. Know the provisions of deductions from wages. Study the maintenance of registers and records. Know the method and procedure of enforcement of the Wages Act. Determine the claims arising out of the deductions from the wages.
APPLICABILITY OF THE ACTPersons employed in:-Any factory (a saw mill, ginning factory, godowns, yards etc as defined in Factories Act, 1948).
Tramway service or motor transport service engaged in carrying passengers or good or both by road for hire or reward.
Air transport service Dock, Wharf or Jetty, Inland vessel, mechanically propelled
Mine, quarry or oil-field plantation
Workshop or other establishment etc.
WAGEWage includes any remuneration:-Payable under any award or settlement between the parties or order of a Court;Over time work or holiday or any leave period;Any additional remuneration under the terms of employment.
Wage does not includes any bonus, pension fund or provident fund, travelling allowance and any gratuity.
According to Sec2(vi) wages means all remuneration expressed in terms of money or capable of being payable to a person for a work done in such employment.Rules for Payment of Wages (Section 3 to 6)Responsibility for payment of wages (Sec. 3).Every employer shall be responsible for the payment to persons employed by him of all wages required be paid under the Payment of Wages Act (Sec. 3). Fixation of wage-periods (Sec. 4)Every person responsible for the payment of wages under Sec. 3 shall fix periods, known as wage-periods, in respect of which such wages shall be payable {Sec. 4 (1)].
A wage-period shall not exceed one month [Sec. 4 (2)].
Time of payment of wages (Sec.5)The rules relating to time of payment of wages are as follows:The wages of every person employed is paid. When less than 1000 persons are employed shall be paid before the expiry of the 7th day of the following month. When more than 1000 workers, before the expiry of the 10th day of the following month. {Section 5(1)}.
2. Wage in case of termination of employment: sec 5(2)(i)Where the employment of any person is terminated by, ora. On behalf of the employer,b. Due to the closure of the establishment for any reason other than weekly (or) recognized holiday,
The wage earned by him shall be paid before the expiry of the 2nd day. (from the day on which his employment is so terminated)
3. Exemption: Sec 5(3)State government by general or Special order passed to exempt the person responsible for the payment of wages from the operation of the above provision.
4. Wages to be paid on a working day - All payment of wages shall be made on a working day [Sec. 5 (4)].
Medium of payment of wages (Sec. 6).All wages shall be paid in current coin or currency notes or both (Sec. 6). Payment of wages in kind is not permitted. Deductions from Wages (Sec. 7 to 13)Deductions which may be made from wages (Sec. 7) Sec. 7 provides that the wages of an employed person shall be paid to him without deductions of any kind except those authorized by or under the Payment of Wages Act, 1936 [Sec. 7 (1)].Kinds of deductions:Deductions for fines [Sec.7 (2) (a) and 8]Deductions for absence from duty [Sec. 7 (2) (b) and 9]Deductions for damage or loss [Sec. 7 (2) (c), (m), (n) and (o) and 10]
The Payment of Bonus Act 1965Learning objectives:Understand the objects of Payment of Bonus Act 1965. Explore the application of the Bonus Act. Know the definitions of the Bonus Act. Study the eligibility and disqualifications for bonus Meaning:The term 'Bonus' is not defined under the Payment of Bonus Act,1965 nor there exists any definition of bonus under any other enactment.
Dictionary Meaning of the word 'Bonus' is something to the good; especially extra dividend to the shareholders of the company; distribution of profits to the insurance policyholders; gratuity to workmen beyond their wages.
Its an annual payment obligatory on the employers to employees on the basis of production (or) productivity (or) profit.
Object to the ActTo impose a statutory liability upon an employer of every establishment covered by the Act to pay bonus to employees in an establishment.To prescribe formula for calculating bonus.To prescribe minimum and maximum percentage of bonus.To provide redressal mechanism.
Application of the ActThe Act extends to the whole of India [Sec. 1(2)]. It applies to: a) every factory [as defined in Sec. 2(m) of the Factories Act, 1948]; b) every other establishment in which 20 or more persons are employed on any day during any accounting year [Sec. 1(3)]. EXEMPTIONSSmall factories and establishments having less than twenty or ten persons.Establishments excluded by sec.32, e.g., LIC, Hospitals.Establishments where employees have entered into an agreement with the employer.Establishments specifically exempted by the appropriate government like sick units.Definitions: Accounting year [Sec. 2(1)].Allocable surplus [Sec.2 (4)]-(60 per cent of the available surplus. )The allocable surplus is the workers share in the available surplus as defined in Sec.2 (6). Available surplus (Sec. 2(6)].
Payment of minimum bonus 8.33 % of gross salary.Payment of maximum Bonus 20% of gross salary.
ELIGIBILITY FOR BONUS [Sec 8]Every employee receiving salary or wages up to RS.10,000 p.m. He has worked for at least 30 working days in that year.DISQUALIFICATION FOR BONUS [Sec 9] In case of :Fraud,Violent behavior while on the premises of the establishment,Theft, sabotage of any property of establishment.INDUSTRIAL DISPUTE ACT 1947Learning objectives: Understand the definitions in Industrial Disputes Act. Determine the objectives of the Act. Procedure for Settlement of Industrial Disputes and Authorities under the Act. Know the Conciliation Machinery.
Object of the Act:1) to secure industrial peace:a) by preventing and settling industrial disputes between the employers and workmen.b) by securing and preserving amity and good relations between the employers and workmen through an Internal Works Committee, andc) by promoting good relations through an external machinery of conciliation, Courts of Inquiry, Labour Courts, Industrial Tribunals and National Tribunals.2) to ameliorate the condition of workmen in industry:a) by redressal of grievances of workmen through a statutory machinery, andb) by providing job security What is an Industrial Dispute?An Industrial dispute means any dispute or difference between: i) employers and employees, ii) employers and workmen or iii) workmen and workmen, which is connected with (a) the employment or non-employment (b) the terms of employment or (c) the conditions of labour of any person. IndustryAs per section 2 (J) of industrial disputes act 1947, Industry mean any systematic activity carried on by cooperation between an employ and his work man for the production supply or distribution of goods and services with a view of satisfy human wants or needs.
Procedure for the Settlement of Industrial Disputes and Authorities under the Act: (Chapter II, Secs. 3 to 9)The industrial disputes Act intends, by making various provisions, the prevention and settlement of industrial disputes. The Act, in its Preamble, has also emphasized this point by saying that the Act is for the investigation and settlement of industrial disputes.
The Act provides elaborate and effective machinery for bringing about industrial peace by setting up various authorities for the investigation and settlement of industrial disputes. These authorities are:Works Committees (Sec. 3).Conciliation Officers (Sec. 4).Boards of Conciliation (Sec. 5). Courts of Inquiry (Sec. 6). Labour Courts (Sec. 7). Industrial Tribunals (Sec. 7-A). National Tribunal (Sec. 7-B)
The Act provides for the following modes of settlement of disputes under the Act:1. Voluntary settlement and conciliation.2. Adjudication and3. Arbitration.
27Works CommitteeConciliation officerIndustrial UndertakingCG/State Govt.Board Labour court Tribunal Arbitral Tribunal AWARDINDUSTRIAL DISPUTE RESOLUTION MECHANISM
