Business Low Wages Notes
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—
- any remuneration payable under any award or settlement between the parties or order of a court;
- any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period; _
- any additional remuneration payable under the terms of employment (whether called a bonus or by any other name);
- 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;
- 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—
- 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;
- 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 the State Government;
- any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon;
- any travelling allowance or the value of any travelling concession;
- any sum paid to the employed person to defray special expenses entailed pn him by the nature of his employment; or
- any gratuity payable on the termination of employment in cases other than those specified in sub-clause (d).
Section 3 : Responsibility for payment of wages
Every employer shall be responsible for the payment to persons employed by him of all ‘wages required to be paid under this Act.
The following persons shall also be responsible for the payment of wages;
- in factories, if a person has been named as the manager of the factory of the Factories Act,
- in industrial or other, establishments, if there is a person responsible to the employer for the supervision and control of the industrial or other establishments; and
- upon railways (otherwise than in factories), if the empioyer is the railway administration and the railway administration has nominated a person in this behalf for the local area concerned.
Section 4 : Fixation of wage-periods
It is required under that:
- Every person responsible for the payment of wages under section 3 shall fix periods in respect of which such wages shall be
- No wage-period shall exceed one month. Payment of wages can be made on daily, weekly, fortnightly or monthly
Section 5 : Time of payment of wages
Specifies that the wages of every person employed upon or in:
- any railway, factory or industrial or other establishment upon or in which less if^n one thousand persons are employed, shall be paid before the expiry of the seventh day,
- ony other railway, factory or industrial or other establishment, shall be paid before the expiry of the tenth day, after the last day of the wage-period in respect of which the wages are
Provided that in the case of persons employed on a dock, wharf or jetty or in a mine, the balance of wages found due on completion of the final tonnage account of the ship or wagons loaded or unloaded, as the case may be, shall be paid before the expiry of the seventh day from the day of such completion.
Section 5(2) where the employment of any person is terminated by or on behalf of the employer, the wages, earned by him shall be paid before the expiry of the second working day from the day on which his employment is terminated. Where the employment of any person in an establishment is terminated due to the closure of the establishment for any reason other than a weekly or other recognised holiday, the wages earned by him shall be paid before the expiry of the second day from the day on which his employment is so” terminated.
Section 5(3) The State Government may, by general or special order, exempt, to such extent and subject to such conditions as may be specified in the order, the person responsible for the payment of wages to persons employed upon any railway (otherwise than in a factory) or to persons employed as daily-rated workers in the Public Works Department of the Central Government or the State Government from the operation of this section in respect of wages of any such persons or class of such persons .But in the case of persons employed as daily-rated workers as above stated, no such order shall be made except in consultation with the Central Government.
Section 5(4) All payments of wages shall be made on a vjorking day.
Section 6 : Wages to be paid in current coin or currency notes
All wages shall be paid in current coin or currency notes or in both.
The employer may, after obtaining the written authorisation of the employed person, pay him the wages either by cheque or by crediting the wages in his bank account.
Section 7 : Deductions which may be made from wages
Business Low Notes :-
The wages of an employed person shall be paid to him without deductions of any kind except those authorised by or under this Act. Every payment made by the employed person to the employer or his agent shall, for the purposes of this Act, be deemed to be a deduction from wages.
Any loss of wages resulting from the imposition, for good and sufficient cause, upon a person employed of any of the following penalties, namely:-
- the withholding of increment or promotion (including the stoppage of increment at an efficiency bar);
- the reduction to a lower post or time scale or to a lower stage in a time scale; or
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 the State Government by notification in the Official Gazette.
Section 7(2) Deductions from the wages of an employed person shall be made only in accordance with the provisions of this Act and any other deduction is unauthorized. The Authorised deductions may be of the following kinds only, namely:
- deductions for absence from duty;
- deductions for damage to or loss of goods expressly entrusted to the employed person for custody, or for loss of money for which he is required to account, where such damage or loss is directly attributable to his neglect or default;
- deductions for house-accommodation supplied by the employer or by government or any housing board set up under any law for the time being in force (whether the government or the board is the employer or not) or any other authority engaged in the business of subsidising house-accommodation which may be specified in this behalf by the State Government by notification in the Official
- deductions for such amenities and services supplied by the employer as the State Government or any officer specified by it in this behalf may, by general or special order, authorise. The word “services” here does not include the supply of tools and raw materials required for the purposes of employment;
- deductions for recovery of advances of whatever nature (including advances for travelling allowance or conveyance allowance), and 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 the,State Government, and the interest due in respect thereof;
(fff)deductions for recovery of loans granted for house-building or other purposes approved by the State Government and the interest due in respect thereof;
- deductions of income-tax payable by the employed person;
- deductions required to be made by order of a court or other authority competent to make such order;
- deductions for subscriptions to, and for repayment of advances from any provident fund to which the Provident Funds Act ,1925, applies or any recognised provident
fund as defined in section 58A of the Indian Income Tax Act, 1922, or any provident fund approved in this behalf by the State Government, during the continuance of sucff approval;
- deductions for payments to co-operative societies approved by the State Government or any officer specified by it in this behalf or to a scheme of insurance maintained by the Indian Post Office,
- deductions, made with the written authorisation of the person employed for payment of any premium on his life insurance policy to the Life Insurance Corporation Act of India established under the Life Insurance Corporation Act, 1956, or for the purchase of securities of the Government of India or of any State Government or for being deposited in any Post Office Savings Bank in furtherance of any savings scheme of any such
(kk) deductions, made with the written authorisation 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 the State Government or any officer specified by it in this behalf, during the continuance of such approval;
(kkk) deductions, made with the written authorisation of the employed person, for payment of the fees payable by him for the membership of any trade union registered unde/ the Trade Union Act, 1926.
(I) deductions, for payment of insurance premia on Fidelity Guarantee Bonds;
- 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;
- 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 or in respect of sale of food in catering establishments or in respect of sale of commodities in grain shops or otherwise;
- 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;
- deductions, made with the written authorisation 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;
- deductions for contributions to any insurance scheme framed by the Central Government for the benefit of its
The list of deductions given by section 7(2) is exhaustive. If an employer makes any deduction, the burden to prove that the deduction does fall under the several clauses of Section 7(2), lies upon the employer.
Section 7(3) Notwithstanding anything contained in this Act, 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-
- in cases where such deductions are wholly or partly made for payments to co-operative societies under section 7(2)(j), seventy-five per cent of such wages, and
- in any other case, fifty percent of such
Provided that where the total deductions authorised under sub-section (2) exceed seventy five per cent or, as the case may be, fifty per cent of the wages, the excess may be recovered in such manner as may be prescribed.
Section 7(4) Nothing contained”^ this section 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 Indian Railways Act, 1890.
Section 8 : Fines
- No fine shall be imposed on any employed person save in respect of such acts and omissions on his part as the employer, with the previous approval of the State Government or of the prescribed authority, may have specified by notice under sub- section (2).
- A notice specifying such acts and omissions shall be exhibited in the prescribed manner on the premises in which the employment is carried on or in the case of persons employed upon a railway (otherwise than in a factory), at the prescribed place or places.
- No fine shall be imposed on any employed person until he has been given an opportunity of showing cause against the fine, or otherwise than in accordance with such procedure as may be prescribed for the imposition of
- The total amount of fine which may be imposed in any one wage-period on any employed person shall not exceed an amount equal to three per cent of the wages payable to him in respect of that wage-period.
- No fine shall be imposed on any employed person who is under the age of fifteen
- No fine imposed on any employed person shall be recovered from him by instalments or after the expiry of sixty days from the day on which it was
- Every fine shall be deemed to have been imposed on the day of the act or omission in respect of which it was
- All fines and all realisations thereof shall be recorded in a register to be kept by the person responsible for the payment of wages under section 3 in such form as may be prescribed; and all such realisations shall be applied only to such purposes beneficial to the persons employed in the factory or establishment as are approved by the prescribed authority.
When the persons employed upon or in any railway, factory or industrial or other establishment are part 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 the prescribed authority.
Section 9 : Deductions for absence from duty
- Deductions may be made under section 7(2)(b) only on account of the absence of an employed person from the place or places where, by the terms of his employment, he is required to work, such absence being for the whole or any part of the period during which he is so required to work.
- The amount of such deduction shall in no case bear to the wages payable to the employed person in respect of the wage-period for which the deduction is made in a larger proportion than the period for which he was absent bears to the total period, within such wage-period, during which by the terms of his employment, he was required to Provided that, subject to any rules made in this behalf by the State Government, if ten or more employed persons acting in concert absent themselves without due notice (that is to say without giving the notice which is required under the terms of their contracts of employment) and without reasonable cause, such deduction from any such person may include such amount not exceeding his wages for eight days as may by any such terms be due to the employer in lieu of due notice.
For the purposes of this section, an employed person shall be deemed to be absent from the place where he is required to work if, although present in such place, he refuses, in pursuance of a stay-in strike or for any other cause which is not reasonable in the circumstances, to carry out his work.
Section 10 : Deductions for damage or loss
- A deduction under clause (c) or clause (o).of sub-section (2) of section 7 shall not exceed the amount of the damage or loss caused to the employer by the neglect or default of the employed
(1A) A deduction shall not be made under clause (c) or clause (m) or clause (n) or clause
(o) of sub-section (2) of section 7 until the employed person has been given an opportunity of showing cause against the deduction or otherwise than in accordance with such procedure as may be prescribed for the making of such deduction.
- All such deduction and all realisations thereof shall be recorded in a register to be kept by the person responsible for the payment of wages under section 3 in such form as may be
Section 11 : Deductions for services rendered
A deduction under clause (d) or clause (e) of sub-section (2) of section 7 shall not be made from the wages of an employed person, unless the house-accommodation amenity or service has been accepted by, him, as a term of employment or otherwise, and such deduction shall not exceed an amount equivalent to the value of the house-accommodation amenity or service supplied and, in the case of deduction under the said clause (e), shall be subject to such conditions as the State Government may impose.
Section 12 : Deductions for recovery of advances
Deductions under clause (f) of sub-section (2) of section 7 shall be subject to the following conditions, namely:
- recovery of an advance of money given before employment began shall be made from the first payment of wages in respect of a complete wage-period, but no recovery shall be made of such advances given for travelling-expenses;
(aa) recovery of an advance of money given after employment began shall be subject to such conditions as the State Government may impose;
- recovery of advances of wages not already earned shall be suoject to any rules made by the State Government regulating the extent to which such advances may be given and the instalments by which they may be
Section 12-A : Deductions for recovery of loans
Deductions for recovery of loans granted under clause (fff) of sub-section (2) of section 7 shall be subject to any rules made by the State Government regulating the extent to which such loans may be granted and the rate of interest payable thereon.
Section 13 : Deductions for payments to co-operative societies and insurance schemes
Deductions under clause (j) [and clause (K)j of sub-section (2) of section 7 shall be subject to such conditions as the State Government may impose.
Section 13-A : Maintenance of registers and records
- Every employer shall maintain such registers and records giving such particulars of persons employed by him, the work performed by them, the wages paid to them, the deductions made from their wages, the receipts given by them and such other particulars and in such form as may be
- Every register and record required to be maintained under this section shall, for the purposes of this Act, be preserved for a period of three years after the date of the last entry made