Payment of Wages Act, 1936: Deductions & Timely Payments

Unscrupulous employers historically exploited workers by delaying wage payments or making arbitrary fines and deductions. This Act provides strict regulatory limits.

1. Timely Payment Rules

• Wage Period: Employers must fix wage periods, which cannot exceed one month (daily, weekly, fortnightly, or monthly).
• Time of Payment:
  • In establishments employing less than 1,000 persons, wages must be paid before the expiry of the 7th day of the following month.
  • In other establishments, wages must be paid before the 10th day.
• Termination: If employment is terminated by the employer, wages earned must be paid before the expiry of the 2nd working day after termination.

2. Section 7: Authorized Deductions

Wages must be paid to the employee without deductions of any kind except those authorized under the Act. Authorized Deductions include:

1. Fines: Imposed only for acts specified on a pre-approved notice board. Total fines in a wage period cannot exceed 3% of the wages payable.
2. Deductions for absence from duty (pro-rata basis).
3. Deductions for damage to or loss of goods expressly entrusted to the employee.
4. Deductions for housing accommodation provided by the employer.
5. Deductions for recovery of advances or overpayment of wages.
6. Deductions for income tax, provident fund, and insurance schemes.