SIGNIFICANCE AND

Historical BACKGROUND

“In an economy where even minimum wages are not paid to the workers, the need to protect the

wages earned by them has greatest significance”. The Act is considered to be an important social

step towards security the welfare of the working class in order to remedy mischief played by the

employers. Before the codification of Payment of Wages Act, there were several unfair labor

practices pertaining to the payment of wages. The employers did not make payment of wages in

cash and sometimes in kind. The wages were paid after much delay which resulted into poverty

and growing indebtedness. Not only the employers made so many deductions out of wages

earned by the employees and ultimately they paid only a very meager part of it.

At those times impositions of fines was a fairly general practice in perennial factories and

railways. There used to be other deductions from the wages paid to the workers such as for

medical, attendance, education, reading rooms, interest on advance of their own wages, charities

and religious purposes selected by employer, etc. A common practice in the cotton mills was the

handing over to the weaver of cloth from his own loom spoilt in the course of manufacture and

the deduction from his wages of the wholesale selling price. Another practice followed in some

mills was the deduction from his wages of the whole selling price. Another practice followed in

some mills was the deduction of two days’ pay for one day’s absence. The payment of wages

was considerably uncertain in regard to time and amount. Through these unfair labor practices

the capitalists tried their level best to exploit the labor class as much as they could.

Against this unfairness, the workers united and for the first time in 1925, a private Bill, entitled

“Weekly Payment Bill”, was introduced in Legislative assembly. The Bill sought to remedy

some of the unfair Labor practices. However, it could not be passed and was withdrawn on

assurance of the Government that it would codify a law for regular payment of wages and would

check unlawful deductions and other malpractices adopted by the employers.

The payment of wages Act is based upon the same principles as the original but has been revised

throughout in the light of criticism received when the original Bill was circulated. Ultimately

after completing a circuitous journey, The Payment of Wages Act was passed in 1936 which

came into force on 28th March 1937. A series of amendments have been made in order to keep

pace with the changing circumstances and necessities of labor class. The Act has been drastically

amended in 2005 with a view to extending its protection to large number of persons and making

the provisions of the Act more effective and beneficial. The existing wage limit for coverage of

employees has been increased from Rs. 1600 to Rs. 6500 by the Amendment Act, 41 0f 2005

with effect from 9.11.2005. Again it has been enhanced from Rs. 6500 to Rs. 10000 per month

vide S.O. 1380 (E) dated 8.8.2007.

The Amendment Act 41 of 2005 has adopted the process of insertion and substitution. The

definition of “appropriate Government” has been inserted in Section 2 (i) of the Act. The

expression “appropriate Government” has been substituted for expressions “Central

Government” used earlier.

Objects of the Act and its application

The Act is intended to regulate the payment of wages to certain classes of persons employed in

industries and the object is to provide for a speedy and effective remedy to the employees in

respect of their claims arising out of illegal deductions or unjustified delay made in paying the

wages to them. The act furnishes a summary remedy for wages earned in an office and not paid,

but it does not provide a remedy for investigation of quarrels which concern the office.1

The general purposes of the Act are to provide that the employed persons shall be paid their

wages in a particular form and at regular intervals and without any unauthorized deductions.2

The object of this Act is three-fold:

It provides that the employed persons shall be paid their wages in a particular form;

1 A.C. Arumugham v. Manager Jawahar Mills Ltd., A.I.R. 1956 Mad 79 2 Arvind Mills Ltd., v. K.R. Gadgil, AIR 1941 Bom. 26

The payments will be made at regular intervals;

It prohibits unlawful and unauthorized deductions from the wages.

APPLICATION OF THE ACT AND STATUS QUO.-

The Payment of Wages Act under its section 1(4) provides that it applies in the first instance to

the payment of wages to persons employed in any factory, persons employed otherwise than in a

factory upon any Railway by a railway administration or, either directly or through a sub-

contractor, by a person fulfilling a contract with a railway administration; and persons in an

industrial or other establishment specified in sub-clauses (a) to (g) of clause (ii) of Section 2. The

power is, however, vested in the appropriate Government now instead Government of State to

make provisions of the Act or any of them applicable after giving three months’ notice of its

intention of so doing by Notification in the Official Gazette to the payment of wages to any class

of persons employed in any establishment or class of establishments specified by the appropriate

Government under sub-clause (h) of clause (ii) of Section 2.

This Act applies to wages payable to an employed person in respect of a wage period if such

wages for that wage period do not exceed six thousand five hundred rupees per month or such

other higher sum which on, the basis of figures of the consumer Expenditure Survey published

by the National Sample Survey Organization, the Central Government may, after every five

years, by notification in the Official Gazette, specify. Now Rs. 10,000 (ten thousand) per month

has been fixed increasing the earlier wage limit of Rs. 6500 keeping in view prices of the

consumer commodities increasing day by day.