Labour Laws Exam Notes Part 4of5

Topics covered:
The Payment of Wages Act, 1936
The Minimum Wages Act, 1948

The Currency of India: The Indian Rupee

The Payment of Wages Act, 1936 

Definitions: 

1. "Employer" means any person who employs, or who has employed, or who is liable to employ or to have employed any other person and includes any body of persons whether incorporated or not.
2. "Employee" means any person who is employed for hire or reward in any kind of work, manual or otherwise, in a factory or establishment to which the Act applies.
3. "Wages" means all remuneration, capable of being expressed in terms of money, which would be payable to an employee if the terms of the contract of employment, express or implied, were fulfilled.
4. "Deduction" means any direct or indirect deduction from the wages of an employee.
5. "Factory or Establishment" means any premises, including precincts thereof, wherein any industry, trade, business, manufacture or occupation is carried on, and includes any office premises of the employer.

Object and scope: 

• The Payment of Wages Act, 1936, is a Central legislation which aims to regulate the payment of wages to certain classes of persons employed in factories, mines, plantations, railways, air transport services and shops. 
• The Act ensures that the employer pays wages to the employee without any delay and without any deductions. 
• It also provides for the maximum deductions which can be made from the wages of an employee. 
• The Act also lays down the manner and time of payment of wages and prohibits any deduction from the wages except as provided in the Act. 
• The Act applies to all persons employed in certain industries and enterprises.

Procedure regarding payment of wages: 

• The employer must pay the wages of an employee within the period specified in the Act. 
• The wages should be paid within seven days of the last day of the wages period. 
• The employer should also ensure that the wages are paid in legal tender, or in the form of a cheque or a demand draft. 
• The employer should also provide the employee with a wage slip, showing the amount of wages, deductions and the net amount of wages paid. 
• The employer should also keep records of the wages paid to the employees and the deductions made therefrom. 
• The employer should also give the employee an opportunity to raise any grievances regarding the payment of wages. 
• Any dispute regarding the payment of wages should be referred to the appropriate authority.

Deduction from wages: 

• The Act permits certain deductions from the wages of an employee. 
• These deductions include the ones for recovery of advances, fines, taxes and other statutory deductions. 
• The deduction should not exceed 75% of the wages due to the employee and should not exceed an amount of Rs. 25/- (Rupees Twenty Five) in any case. 
• The employer should also obtain the written consent of the employee before making any deductions from his/her wages. 
• The employer should also maintain the records of all deductions made from the wages of the employees.

Mode of payment of wages: 

• The Act provides for the payment of wages to the employees either in legal tender or in the form of cheque or demand draft. 
• The employer should also provide the employee with a wage slip, showing the amount of wages, deductions and the net amount of wages paid. 
• The employer should also keep records of the wages paid to the employees and the deductions made therefrom. 
• The employer should also provide the employee with an opportunity to raise any grievances regarding the payment of wages.

What are deductions on wages?

• Deductions on wages are deductions from an employee’s wages that are required by law or agreed to by the employee. 
• These deductions may be for taxes, social security, health insurance, or other deductions required by law. 
• They may also be for deductions agreed to by the employee, such as health care and other benefits, union dues, and other voluntary deductions.

The Minimum Wages Act, 1948

Definitions: 

1. “Employee” means any person employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled employment.
2. “Wages” means all remuneration capable of being expressed in terms of money, 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.
3. “Minimum wages” means the minimum rate of wages fixed or revised under the provisions of this Act.

Object and scope: 

• The Minimum Wages Act, 1948, is a Central legislation which aims to regulate the minimum wages for certain classes of persons employed in scheduled employments. 
• The Act provides for the fixation of minimum rates of wages in certain employments, and the payment of wages to certain classes of persons at such rates. 
• The Act applies to all persons employed in the employments specified in the Schedule of the Act.

Items to be included in the minimum wages: 

• The Act provides for the fixation of minimum rates of wages for certain employments. 
• The minimum wages should include the basic wages and other allowances and benefits such as dearness allowance, house rent allowance, overtime allowance, bonus, and other statutory benefits. 
• The minimum wages should also include any other item of remuneration prescribed by the Government.

Fixation and revision of minimum wages: 

• The Government may, by notification, fix the minimum rates of wages for the employments specified in the Schedule of the Act. 
• The Government may also appoint a Committee or an Authority to advise it on the fixation of minimum wages. 
• The appropriate Government may also revise the minimum rates of wages, if necessary. 
• The employer should also display the rates of minimum wages and the period of payment at the entrance of the factory or establishment. 
• The employer should also maintain records of the wages paid to the employees. 
• The employer should also take into account the cost of living index while determining the minimum wages. 
• The employer should also ensure that the wages are paid to the employees within the time period specified in the Act.

Norms to be followed in the payments of minimum wages: 

• The employer should pay the minimum wages to the employees at regular intervals, within the period specified in the Act. 
• The employer should also provide the employee with a wage slip, showing the amount of wages, deductions and the net amount of wages paid. 
• The employer should also keep records of the wages paid to the employees and the deductions made therefrom. 
• The employer should also give the employee an opportunity to raise any grievances regarding the payment of wages. 
• The employer should also display the rates of minimum wages and the period of payment at the entrance of the factory or establishment. 
• Any dispute regarding the payment of wages should be referred to the appropriate authority.