Wage Policy of India

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Wage Policy ofWage Policy of

IndiaIndia

Payment of Wages Act 1936Payment of Wages Act 1936

Minimum Wages Act 1948Minimum Wages Act 1948

Payment of Bonus Act 1965Payment of Bonus Act 1965

Equal Remuneration Act 1976Equal Remuneration Act 1976


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Payment of Wages ActPayment of Wages Act19361936


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Objective of the Act:Objective of the Act:

Regulating Payment of Wages, ImpositionRegulating Payment of Wages, Imposition

of Fines and Deductions from Wagesof Fines and Deductions from Wages

Eliminating all malpractices by layingEliminating all malpractices by laying

down wages periods and time and modedown wages periods and time and mode

of payment of wagesof payment of wages


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Applicability of the ActApplicability of the Act

The Act applies to the whole of India.The Act applies to the whole of India.

The Act applied to the payment of wages toThe Act applied to the payment of wages to

> Persons employed in any factory> Persons employed in any factory

> Persons employed in any Railway> Persons employed in any Railway

establishments by a Railway administrationestablishments by a Railway administration

or by a person fulfilling a contract withor by a person fulfilling a contract with

Railway AdministrationRailway Administration The Act apply to persons who are drawingThe Act apply to persons who are drawing

average 1600/- or more per month.average 1600/- or more per month.


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Wages Section 2 (vi)Wages Section 2 (vi)

Wages means all remuneration whetherWages means all remuneration whetherby way of salary, allowance or otherwiseby way of salary, allowance or otherwiseexpressed in terms of money or capableexpressed in terms of money or capable

of being so expressed which would if theof being so expressed which would if theterms of employment express or impliedterms of employment express or impliedwere fulfilled, be payable to the personwere fulfilled, be payable to the personemployed in respect of his employmentemployed in respect of his employment

or work done in such employmentor work done in such employment


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Conditions for PaymentConditions for Payment

of Wagesof Wages

Responsibility for Payment of Wages Section 3Resp

onsibility for Payment of Wages Section 3

Persons responsible for the payment of allPersons responsible for the payment of allwageswages

(i) Manager of the Factory(i) Manager of the Factory(ii) Persons responsible to the employer for(ii) Persons responsible to the employer for

supervision and control of the industrial or othersupervision and control of the industrial or other

establishmentsestablishments

(iii) Persons nominated by the railway(iii) Persons nominated by the railwayadministration for the local area concernedadministration for the local area concerned


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of Wagesof Wages

Fixation of Wage Period Section 4Fixation of Wage Period Section 4

Persons responsible for the paymentPersons responsible for the payment

of allof all wageswages has to fix the wagehas to fix the wageperiod.period.

Wage Period shall not exceed oneWage Period shall not exceed onemonthmonth


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of Wagesof Wages

Time for Payment of Wages Section 5Time for Payment of Wages Section 5

If the numberIf the number of employees in anof employees in anestablishmentsestablishments is less than 1000, Wagesis less than 1000, Wages

have to be paid beforehave to be paid before the expiry of sevenththe expiry of seventhday of every monthday of every month

If the number exceeds 1000, the wagesIf the number exceeds 1000, the wageshave tohave to be paid before the expiry of tenth daybe paid before the expiry of tenth dayof everyof every monthmonth

Incase of termination of service of an employeeIncase of termination of service of an employeewages earned by him have to be paid beforewages earned by him have to be paid before

thethe expiry of second working day on whichexpiry of second working day on whichhe hashe has been terminatedbeen terminated


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of Wagesof Wages

Mode of Payment Section 6Mode of Payment Section 6

All the wages have to be paid to theAll the wages have to be paid to the

workers inworkers in current coins or currencycurrent coins or currencynotes or in both. Itnotes or in both. It cannot be in kindcannot be in kind

The employer can, after obtaining theThe employer can, after obtaining thewrittenwritten authorisationauthorisation of the employedof the employedperson, pay himperson, pay him wages either bywages either by chequechequeor by crediting the wagesor by crediting the wages in his bankin his bankaccount.account.


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Deduction from Wages Deduction from Wages

Section 7Section 7 FinesFines

Deduction for Absence of DutyDeduction for Absence of Duty

Deduction for Damage or LossDeduction for Damage or Loss

Deduction for House AccommodationDeduction for House Accommodation

Deduction for Amenities and ServicesDeduction for Amenities and Services Deduction for Recovery of Advances or forDeduction for Recovery of Advances or forAdjustments of Payments MadeAdjustments of Payments Made

Deduction for Recovery of LoansDeduction for Recovery of Loans

Deduction for Recovery of Loans Granted for HouseDeduction for Recovery of Loans Granted for HouseBuildingBuilding

Deduction of Income TaxDeduction of Income Tax

Deduction by order of CourtDeduction by order of Court

Deduction for subscription to any Provident FundDeduction for subscription to any Provident Fund

Deduction for Payment for Insurance SchemesDeduction for Payment for Insurance Schemes


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Minimum Wages ActMinimum Wages Act19481948


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Objective of the ActObjective of the Act To Promote the welfare of workers by fixingTo Promote the welfare of workers by fixing

minimum rates of wages whereminimum rates of wages where labourlabour is notis not

organised and sweated labour is more prevalentorganised and sweated labour is more prevalent

To Prevent exploitation of workers by ensuringTo Prevent exploitation of workers by ensuringthat they are paid the minimum wages whichthat they are paid the minimum wages which

would provide for subsistence and preserve theirwould provide for subsistence and preserve their

efficiencyefficiency


The ActThe Act appliesapplies to whole of Indiato whole of India


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All remuneration capable of being expressed inAll remuneration capable of being expressed interms of money, which would , if terms of contractterms of money, which would , if terms of contractof employment , express or implied were fulfilled,of employment , express or implied were fulfilled,be payable to a person employed in respect of hisbe payable to a person employed in respect of his

employment or of work done in suchemployment or of work done in suchemployment.employment.

Classification of WagesClassification of Wages

> Living Wage> Living Wage

> Fair Wage> Fair Wage

> Minimum Wage> Minimum Wage

Wages Section 2 (h)Wages Section 2 (h)


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Depending upon the nature of employment the appropriate government is responsible forDepending upon the nature of employment the appropriate government is responsible forfixing Minimum wages.fixing Minimum wages.

Appropriate Government may fix :Appropriate Government may fix :

> Minimum rate of wages for Time work ( Minimum Time Rate )> Minimum rate of wages for Time work ( Minimum Time Rate )

> Minimum rate of wages of Piece work ( Minimum Piece Rate )> Minimum rate of wages of Piece work ( Minimum Piece Rate )

Appropriate Government may fix different minimum rates of wages forAppropriate Government may fix different minimum rates of wages for(i) Different classes of work(i) Different classes of work

(ii) Adults, adolescents children and apprentices(ii) Adults, adolescents children and apprentices

(iii) Different localities(iii) Different localities

Fixing of Minimum Wages Fixing of Minimum Wages

Section 3Section 3


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Fixing of Minimum rate of wage by any one orFixing of Minimum rate of wage by any one ormore wage periodmore wage period

> By the hour> By the hour

> By the Day> By the Day

> By the Month> By the Month

> By such other large wage period as may be> By such other large wage period as may beprescribedprescribed

If any wage period have been fixed under SectionIf any wage period have been fixed under Section4 of Payment of Wages Act 1936, minimum wages4 of Payment of Wages Act 1936, minimum wages

shall be fixed in accordance therewithshall be fixed in accordance therewith

Fixing of Minimum Wages Fixing of Minimum Wages

Section 3Section 3


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Appropriate Government may fix or revise rates ofAppropriate Government may fix or revise rates ofwages based on the followingwages based on the following

1. Appoint as many committees and sub1. Appoint as many committees and sub

committees as itcommittees as it considers necessary to holdconsiders necessary to holdenquiries and advise it inenquiries and advise it in respect of such fixation orrespect of such fixation orrevisionrevision

2. By notification in the official gazette, publish its2. By notification in the official gazette, publish itsproposalproposal for the information of persons likely to befor the information of persons likely to be

affectedaffected thereby and specify a date not less thanthereby and specify a date not less thantwo monthstwo months from the date of notification on whichfrom the date of notification on whichthe proposals willthe proposals will be taken into considerationbe taken into consideration

Procedure for Fixing and Revising MinimumProcedure for Fixing and Revising Minimum

Wages Section 5Wages Section 5


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Payment of Bonus ActPayment of Bonus Act19651965


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To impose statutory liability uponTo impose statutory liability uponemployers of the establishments coveredemployers of the establishments coveredby the Act to pay bonus to employees inby the Act to pay bonus to employees in

the establishmentsthe establishments To provide for payment of minimum andTo provide for payment of minimum and

maximum bonusmaximum bonus

To Provide machinery for the enforcementTo Provide machinery for the enforcement

of the liability for payment of bonus with aof the liability for payment of bonus with aview toview to minimisingminimising the dispute on thisthe dispute on thisaccountaccount

Objective of the ActObjective of the Act


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Act extends to the whole of India and isAct extends to the whole of India and isapplicable to every factory and to everyapplicable to every factory and to every

other establishments wherein 20 or moreother establishments wherein 20 or moreworkmen are employed on any day duringworkmen are employed on any day duringan accounting year.an accounting year.

Employees EntitledEmployees Entitled

Employees receiving a salary or wages up toEmployees receiving a salary or wages up to3500/- and engaged in any skilled, unskilled,3500/- and engaged in any skilled, unskilled,managerial, supervisory, manual work & ifmanagerial, supervisory, manual work & if

he/she has worked for 30 dayshe/she has worked for 30 days

Administrative AuthorityAdministrative Authority

Administered by both Central and StateAdministered by both Central and StateGovernments through the InspectorsGovernments through the Inspectors

appointed by them.appointed by them.


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Minimum BonusMinimum Bonus

A minimum bonus which is required to payA minimum bonus which is required to payeven if there is a loss or there is no Allocableeven if there is a loss or there is no Allocable

Surplus (60% of Available Surplus) is:Surplus (60% of Available Surplus) is:

>> 8.33% of the Salary or wages during>> 8.33% of the Salary or wages duringthethe accounting yearaccounting year

>> Rs 100/- in case of employees above>> Rs 100/- in case of employees above15 years15 years and Rs 60/- in case ofand Rs 60/- in case ofemployees who wereemployees who were below 15 years, atbelow 15 years, atthe beginning of thethe beginning of the accountingaccounting

year, whichever is higher, whetheryear, whichever is higher, whether orornot employer has any Allocable Surplusnot employer has any Allocable Surplus

>> According to Section 10 employer is>> According to Section 10 employer isbound tobound to pay the minimum bonus evenpay the minimum bonus even

if he suffers losesif he suffers loses

M i BMa imum Bonus


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Maximum BonusMaximum Bonus

If the Allocable Surplus exceeds the amount ofIf the Allocable Surplus exceeds the amount ofminimum bonus payable to employees theminimum bonus payable to employees theemployer shall pay a maximum of 20% of Salary/employer shall pay a maximum of 20% of Salary/

Wages as Bonus.Wages as Bonus.Bonus on Arrears of WagesBonus on Arrears of Wages

Employees will be entitled for bonus and the sameEmployees will be entitled for bonus and the same

will be calculated based on the arrears of wageswill be calculated based on the arrears of wages

which has been paidwhich has been paidMode and Time Limit for Payment of BonusMode and Time Limit for Payment of Bonus

Bonus must be paid in cash and within a period of 8Bonus must be paid in cash and within a period of 8months from the close of accounting year or onemonths from the close of accounting year or one

month from enforcement of award. The period maymonth from enforcement of award. The period maygo from 8 months to 2yrs in case there is ango from 8 months to 2yrs in case there is an

Industrial Dispute regarding Payment of BonusIndustrial Dispute regarding Payment of Bonus

S t O d S t OffS t O d S t Off


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Set On and Set OffSet On and Set Off

In case Allocable Surplus exceeds amountIn case Allocable Surplus exceeds amountof maximum bonus the remaining mayof maximum bonus the remaining may

carried forward for being set on in thecarried forward for being set on in thesucceeding four Accounting years.succeeding four Accounting years.

If there is no Allocable Surplus or AllocableIf there is no Allocable Surplus or AllocableSurplus fall short of the minimum bonusSurplus fall short of the minimum bonus

payable, then such deficiency be met outpayable, then such deficiency be met outof the amount brought forward for beingof the amount brought forward for beingset on from the previous accounting year.set on from the previous accounting year.

Deductions permissible from BonusDeductions permissible from Bonus

Bonus in case of of New EstablishmentsBonus in case of of New Establishments


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Equal Remuneration ActEqual Remuneration Act19761976


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The Equal Remuneration Act in India wasThe Equal Remuneration Act in India was

enacted to prevent discrimination betweenenacted to prevent discrimination betweenworkers on grounds of gender.workers on grounds of gender.

The purpose of the act is to make sure thatThe purpose of the act is to make sure thatemployers do not discriminate on the basisemployers do not discriminate on the basisof gender, in matters of wage fixing,of gender, in matters of wage fixing,transfers, training and promotion.transfers, training and promotion.

Applicability of ActApplicability of Act

The Act extends to the whole of IndiaThe Act extends to the whole of India The Act is extended to all Establishments,The Act is extended to all Establishments,

Employments, Public or Private, includingEmployments, Public or Private, includingdomestic servicedomestic service

Objective of the ActObjective of the Act

aymen o ages a qua a esaymen o ages a qua a es


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The Equal Remuneration Act seeks toThe Equal Remuneration Act seeks toaddress the issue of payment of unequaladdress the issue of payment of unequal

wages to men and women.wages to men and women.

It makes it compulsory for employers toIt makes it compulsory for employers to

pay women wages equal to those paid topay women wages equal to those paid tomen for performance of the same work.men for performance of the same work.

According to Section 4(1) No employer shall payAccording to Section 4(1) No employer shall payto any worker, employed by him in anto any worker, employed by him in an

establishment or employment, remuneration,establishment or employment, remuneration,whether payable in cash or in kind, at rates lesswhether payable in cash or in kind, at rates lessfavourable than those at which remuneration isfavourable than those at which remuneration ispaid by him to the workers of the opposite sex inpaid by him to the workers of the opposite sex insuch establishment or employment for performingsuch establishment or employment for performingthe same work or work of a similar nature.the same work or work of a similar nature.

aymen o ages a qua a esaymen o ages a qua a esto Men & Women Workers Sectioto Men & Women Workers Section

44

o scr m na on o e ma eo scr m na on o e ma e


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Equal Remuneration Act specifically forbidsEqual Remuneration Act specifically forbidsemployers from discriminating against womenemployers from discriminating against womenduring recruitmentduring recruitment

No employer shall, while making recruitment forNo employer shall, while making recruitment for

the same work or work of a similar nature, or inthe same work or work of a similar nature, or inany condition of service subsequent toany condition of service subsequent to

recruitment such as promotions, training orrecruitment such as promotions, training ortransfer, make any discrimination against womentransfer, make any discrimination against women

The provision of this section shall not affect anyThe provision of this section shall not affect anypriority or reservations for Scheduled Castes orpriority or reservations for Scheduled Castes orScheduled Tribes, Ex-Servicemen,Scheduled Tribes, Ex-Servicemen,Retrenched employees or any other class orRetrenched employees or any other class orcategory of persons in the matter of Recruitmentcategory of persons in the matter of Recruitmentto a post in establishment or employmentto a post in establishment or employment

o scr m na on o e ma eo scr m na on o e ma ewhile Recruiting Men and Womenwhile Recruiting Men and Women

Workers Section 5Workers Section 5

Documents

Wage Policy of India