Obligations of Employer Under Payment of Wages Act

Last updated : December 17th, 2019 05:09 pm

Obligations of Employer Under Payment of Wages Act

The Payment of Wages Act, 1936 was enacted with an aim to regulate the payment of wages. The act is intended to be a remedy against unauthorised deductions made by the employer and unjustified delay in payment of wages. Payment of wages act is regulating the payment of wages to persons employed in any factory or railway administration or by a person fulfilling a specific contract with railway administration or to any industrial establishment. According to this act, an employer has a statutory obligation to make the payment of wages within the prescribed period. In this article, we will look at the Obligations of the Employer under the Payment of Wages Act, 1936 in detail.

Know more about Employment Laws Relating to Wages

Payment of Wages

As per the provision of Section 3 of the Payment of Wages Act, every employer shall be responsible for the payments of wages to all persons employed under him/her. You can refer the table below to understand who will be responsible as an employer in different establishments.   

• If there is no manager or if he has resigned then it will be the employer’s responsibility for payment of wages
• In the absence of the Supervisor, the directors of Private Limited Company are the employers, and that is responsible for the payment of wages to the employees
• In the absence of a manager, the occupier is responsible for the payment of wages

Obligation to Nominate Person for Payment of wages

According to section 20 of Payment of wages act, the employer has to nominate the person responsible for the payment of wages. If the employer is not designated any person for payment of wages to employees, such an employer will be punishable with a fine of two thousand rupees.

Obligation to Fix Wages Periods

The person responsible for payment of wages will have to fix periods in respect of payments of wages. However, the wage period should not exceed one month. As per the provision of payment of wages act the period in which a worker receives his or her wage, should not exceed one month.

Obligation to Pay wages within Stipulated Time

• In case of fewer than one thousand persons are employed in a railway, factory, industry or another establishment, the wages should be paid before the expiry of the seventh day of wages periods.
• In case of more than a thousand persons are employed in a railway, factory, industry or another establishment, the wages should be paid before the expiry of the tenth day of wages periods.
• In case of a person employed on a dock, wharf or jetty or in a mine, the balance of wages found due to on completion of the final tonnage amount of the wagons (loaded/unloaded) or ships, such amount should be paid before the expiry of the seventh day from the date of completion
• If the employer terminates the employment of any person, the wages earned by him/her should be paid before the second working day from the day on which his/her employment is terminated.
• The wages of a person employed in a railway or persons employed as daily rated workers in the Public Work Department (PWD) of the Central Government or the State Government should be paid on consultation with the Central Government.
• For above mentioned all cases, all payment of wages should be made on a working day.

Obligation to Pay wages in Current Coin or Currency Note

According to the provision of Payment & wages act, all wages to employees should be paid in current coin or current notes. The employer after obtaining the written authorisation of the employed person, pay him/her wage either by cheque or by crediting the amount in the bank account.

Deduction under Payment of Wages Act

Any payment made by the employees to his employer shall be deemed a deduction under this payment and wages act.

No –Permitted Deductions

Any loss resulting from the imposition of the below-mentioned penalties will not be a deduction underpayment and wages act:

• Suspension
• The refusal to provide a promotion or increment
• The reduction to the lower post or a lower stage in the scale

Authorised Deductions

The authorised deduction under section 7 of the provision of Payment of wages act is explained in detail below:

• Imposing fines on the employees
• Deduction of wages for absence from duty
• Deduction wages for payments to cooperative societies and insurance schemes
• Deduction wages for damage or loss
• Deduction of wages for house accommodation and services rendered
• Deduction of wages for recovery of loans
• Deduction for recovery of advances

Unlawful deductions

Deductions other than those authorised under section 7 of the Payment of Wages Act are unlawful deductions.  Any deduction from the wages of the employee made on the ground other than those mentioned under section 7  is termed as an unlawful deduction.

Deductions from wages are not permitted as per the grounds and procedures are given under the Payment of Wages Act, 1936.

Rules for Imposing Fines

Any employer can impose fine on the employee, which is an authorised deduction. The obligations of the employers before imposing any fines on the employee are explained below:

• The employer can impose fines that are given in the list of acts and omissions made by them, which must identify acts and omissions from within the list already approved by the state government or the appropriate authorised authority for the entire industry.
• Notice regarding the employer’s list of acts and omissions owing to which fine can be imposed on the employees should be displayed in the conspicuous part of the work premises.
• According to this act, no fines should be imposed on the employee until he/she has been provided with an opportunity of showing cause against the fine
• The total amount of fines imposed should not exceed three per cent of the employee’s wages.
• No fine should be imposed on any employee below the age of 15 years.
• The fine imposed on any employee will not be recovered from him through instalments.
• The fine will not be recovered from the employee after the expiry of nighty days from the date on which it was imposed.
• All fines need to be recorded in the register maintained by the persons responsible for fixation of wages.
• Fines should be credited to the common funds and to be utilised for the benefit of the employees.

Rules for Deduction of Wages for Absence 

Any employers can deduct wages for absence from duty, which is an authorised deduction. The obligations of the employer deducting wages from employees are explained below:

• The employer can deduct some wages for the absence in the same proportions as the employee absence bears to the total time he/she was obliged to do the work.
• If ten or more workers, acting in concert, absent themselves without giving notice to the employer or without any reasonable cause, then the employer cannot make deductions more than an amount exceeding wages of 8 days.
• If the employee absence is for the period between employee’s dismissal and reinstatement, then such absence cannot be deducted by the employer

Deduction of Wages for Damage or Loss of Goods

Any employer can deduct wages for damage or loss under the Payment of Wages Act.

• The employer should not deduct the wage exceeding the amount of loss or damage of goods occurred due to neglect or default of the employee
• It should be ensured that the employee had the custody of the goods which were damaged
• The employer needs to give an opportunity to the employee for showing cause before deducting any wages for damage.

The Obligation to Afford Facilities to Inspector

Every employer will afford an Inspector all reasonable facilities for making supervision, any entry, inspection, examination or enquiry under Payment of wages act.

Display of Abstract of the Payment of Wages Act

The person responsible for the payment of an amount in establishments has to display a notice containing the abstracts of Payment of Wages Act and the rules made regarding the payment. The note should be in English and the language of the majority of employees in the establishment.

Payment of Wages in case of Death of an Employee

• If the wages of an employee could not pay because of his death, such wages should be paid to the person nominated by the employee as per the provision of the Payment of Wages Act.
• If there is no nomination has been made by the employee or for any reason such wages could not be paid to the nominee, such amount need to be deposited with the prescribed authority who is dealing the amounts in an establishments

Obligation to Maintain Registers and Records   

As per the provision of the Payment and wages Act, every employer should maintain a register and records. The register should contain following particulars.

• Details of employees
• The work performed by the employee
• The wages paid to employees
• The deduction made from their wages
• The receipts were given by them
• Other particulars of employment

Every registers and record maintained under this act will be presented for three years after the date of the last entries made.

Note: The liability to the maintain a register of wages under rule 5, 4, 9 of the payment wages (mines) rules, 1956 is the owner. For violation of these rules, the management cannot be prosecuted.

According to Assam Payment of Wages Rules, establishments are not obligated to maintain wage register and records. The establishments are not liable for an offence under section 20(3) or 20(4) of the payment of wages act.