PAYMENT OF WAGES ACT, 1936

S.1 Short title, extent, application and commencement

       (1) This Act may be called the Payment of Wages Act 1936.
       (2) It extends to the whole of India.
       (3) It shall come into force on such date as the Central Government may by notification in the Official Gazette appoint.
       (4) It applies in the first instance to the payment of wages to persons employed in any factory to 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 to persons employed in an industrial or other establishment specified in sub-clauses (a) to (g) of clause (ii) of section 2.
       (5) The State Government may after giving three months' notice of its intention of so doing by notification

S.2 Definitions

       In this Act, unless the context otherwise requires,—
       (a) “appropriate Government” means,—
       (i) in relation to an establishment—
       (a) belonging to, or under the control of, the Central Government,
       (b) having branches in more than one State,
       (c) of a factory belonging to, or under the control of, the Central Government,
       (d) of a major port, mine, oilfield or railway company, the Central Government,
       (ii) in any other case, the State Government;
       (b) “completed year of service” means continuous service for one year;
       1[(c) “con

Legal Commentary on Section 2 of the Payment of Wages Act, 1936

Introduction

Section 2 of the Payment of Wages Act, 1936, provides the definitions crucial for interpreting the scope and application of the Act. It lays down key terms such as "wages," "industrial establishment," and other relevant expressions, which form the foundation for understanding the rights and obligations of employers and employees under the legislation.

What does Section 2 Say?

Section 2 of the Act primarily defines essential terms:- "Wages" – All remuneration expressed in money, payable for employment or work done.- "Industrial establishment" – Includes factories, workshops, and other establishments engaged in production, manufacturing, or similar activities.- "Other establishments" – A residuary category that covers establishments not explicitly listed but covered under the Act by notification.- Additional terms like "wages period," "appropriate Government," etc., are also clarified.

Essential Ingredients

Clear definitions of "wages" and "industrial establishment" to delineate the scope.
Inclusion of "other establishments" to extend coverage beyond explicitly listed entities.
The concept that "wages" encompass all remuneration payable in monetary terms, including allowances unless explicitly excluded.
The provision that "appropriate Government" determines the applicability based on the establishment type and location.

Scope of Section 2

Sets the basis for the entire Act by defining key terms, thus determining which entities and payments are covered.
Ensures uniform interpretation across jurisdictions by specifying the meaning of "wages" and related terms.
Extends coverage to "other establishments", allowing the government to notify additional entities under the Act.
Clarifies that "wages" include allowances like house rent allowance unless explicitly excluded.
The definitions influence the jurisdiction of authorities and the entitlements of workers.

Punishment for Section

Section 2 itself does not prescribe punishments; it is interpretive. However, violations related to non-compliance with the definitions—such as illegal deductions, delayed payments, or wrongful classification—can attract penalties under various sections of the Act, including fines or imprisonment.

Legal Comments

"Definition of wages" - Wages include all remuneration payable in money, including allowances like house rent allowance (HRA), unless specifically excluded by rules or orders. - [Chief General Manager, Telecom Factory VS H. R. Thakur]
"Scope of 'other establishments'" - The term "other establishments" is wide and covers entities not explicitly listed but notified by the government, including workshops, farms, or any organization fulfilling the criteria. - [B. K. JOBANPUTRA VS B. S. KALELKAR]
"Inclusion of allowances" - Allowances such as house rent allowance are considered wages unless the employee refuses government accommodation and rules specify exclusion, emphasizing the broad scope of "wages." -
"Coverage of establishments" - The definition of "industrial establishment" under Section 2 includes factories, workshops, and other entities engaged in production or similar activities, which are subject to the Act. - [Agricultural Produce Market Committee VS Industrial Court]
"Extension to 'other establishments'" - The residuary clause (h) in Section 2(ii) ensures coverage of establishments not explicitly listed, provided notified by the government, broadening the Act’s reach. - [B. K. JOBANPUTRA VS B. S. KALELKAR]
"Wages for contractual or casual workers" - The term "wages" as defined applies to all remunerations payable for work done, including contractual or casual employment, unless specifically excluded. - [P. Doraikkannu VS The Proprietor, Hotel Savoy, Madras-6]
"Legal interpretation of 'wages'" - The courts have consistently interpreted "wages" broadly to include all monetary remuneration, encompassing allowances like dearness allowance, travel allowance, and incentives, unless explicitly excluded. - [Umesh Prasad Choudhary VS State of Bihar]
"Application to different establishments" - The definition ensures that entities like telecommunication factories, co-operative societies, and shops are covered if they qualify as "industrial establishments" under the Act. - [SAHAKARI SANGH VS PRESIDING OFFICER, LABOUR COURT]
"Impact of notifications" - Notifications issued under Section 2(ii) empower the government to extend the scope of "wages" and "establishments," affecting the applicability of the Act. - [KSHETRIYA SRI GANDHI ASHRAM,GOLGHAR, GORAKHPUR VS Dy. LABOUR COMMISSIONER/PRESCRIBED AUTHORITY UNDER PAYMENT OF WAGES ACT]
"Exclusions from wages" - Certain benefits like gratuity paid under settlement, or allowances specifically excluded by government order, are not considered wages under Section 2(vi). - [B. K. JOBANPUTRA VS B. S. KALELKAR]
"Legal significance of definitions" - Precise definitions prevent misinterpretation and ensure clarity in enforcement, especially regarding deductions, delays, and wage calculations. - [State of Rajasthan VS Devkinandan Lata]
"Relation with other laws" - Section 2 of the Act interacts with other statutes like the Minimum Wages Act, Factories Act, and Contract Labour Act, requiring consistent interpretation of "wages." - [Anil Kumar Yadav VS State of U. P. ]
"Legal scope of 'wages'" - Courts have held that "wages" include all monetary benefits payable for employment, and the exclusion of certain allowances depends on specific rules or government orders. - [Tamil Nadu Tea Plantation Corporation Ltd. Represented By Its Divisional Manager, Nelliyalam Tea Division, The Nilgiris VS Ramaiah]
"Role of notifications" - The government’s power to notify additional establishments and specify what constitutes wages ensures adaptability of the law to diverse sectors. - [B. K. JOBANPUTRA VS B. S. KALELKAR]
"Legal implications of misclassification" - Incorrect classification or failure to include certain allowances in wages can lead to legal liabilities, penalties, and claims for unpaid wages. - [The Management of Nagammal Mills Ltd. , Represented by its Chairman VS Kumari Mavatta Noorppalai Thozilalar Munnetra Sangam, Represented by its President]
"Legal effect of definitions" - These definitions serve as the basis for adjudicating disputes related to wage deductions, delays, and employment rights under the Act. - [LAWRENCE (P. T. ) VS KERALA STATE ROAD TRANSPORT CORPORATION]
"Wages in case of deductions" - Deductions from wages are permissible only in accordance with the Act and rules, and wrongful deductions can be challenged legally. - [Ramadas Motor Transport (Private) Limited VS Authority under Payment of Wages Act]
"Interpretation of 'wages'" - The courts have consistently interpreted "wages" broadly to include all monetary remuneration, encompassing allowances like dearness allowance, travel allowance, and incentives, unless explicitly excluded. - [Umesh Prasad Choudhary VS State of Bihar]
"Legal scope of 'wages'" - The definition is pivotal in determining the applicability of the Act’s provisions, including wage payments, deductions, and penalties. - [Tamil Nadu Tea Plantation Corporation Ltd. Represented By Its Divisional Manager, Nelliyalam Tea Division, The Nilgiris VS Ramaiah]

This concise legal commentary and analysis of Section 2 of the Payment of Wages Act, 1936, highlights its fundamental role in defining key terms that shape the rights and obligations of employers and employees, ensuring clarity and uniformity in wage-related matters across various establishments.

S.3 Responsibility for payment of wages

       (1) Every employer shall be responsible for the payment of all wages required to be paid under this Act to persons employed by him and in case of persons employed,—
       (a) in factories, if a person has been named as the manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948);
       (b) in industrial or other establishments, if there is a person responsible to the employer for the supervision and control of the industrial or other establishment;
       (c) upon railways (other than in factories), if the employer is the railway administration and the railway administration has nominated a person in this behalf for the local area concerned;
       (d) in the case of contractor, a person designated by such contractor

S.4 Fixation of wage-periods

(1) Every person responsible for the payment of wages under section 3 shall fix periods (in this Act referred to as wage-period) in respect of which such wages shall be payable.
(2) No wage-period shall exceed one month.

S.5 Time of payment of wages

       (1) The wages of every person employed upon or in—
       (a) any railway, factory or 1[industrial or other establishment] upon or in which less than one thousand persons are employed, shall be paid before the expiry of the seventh day,
       (b) any other railway, factory or 1[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 payable:
       2[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.]
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S.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:
       1[Provided that 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.]

       State Amendments

       Andhra Pradesh.—In section 6, after the existing proviso add further proviso namely:—
               “Provided further that the State Government may, by notification in the Andhra Pradesh Gazette, specify the industrial establishments, the employers of which shall pay to the persons employed therein, the wages either by cheque or by crediting the wages in their bank account”—

S.7 Deductions which may be made from wages

       (1) Notwithstanding the provisions of 1[the Railways Act, 1989 (24 of 1989)] the wages of an employed person shall be paid to him without deductions of any kind except those authorised by or under this Act.
       2[Explanation I].—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.
       3[Explanation II.—Any loss of wages resulting from the imposition, for good and sufficient cause, upon a person employed of any of the following penalties, namely:—
       (i) the withholding of increment or promotion (including the stoppage of increment at an efficiency bar);
       (ii) the reduction to a lower post or time scale or to a lower stage in a time scale; or

S.8 Fines

       (1) 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 1[the appropriate Government] or of the prescribed authority, may have specified by notice under sub-section (2).
       (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.
       (3) 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 fines.
       (4) The total amount of fine which may be imp

S.9 Deductions for absence from duty

       (1) Deductions may be made under clause (b) of sub-section (2) of section 7 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.
       (2) 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 a large 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 work:
       Provided that, subject to any rules made in this behalf by 1[the appropriate Government], if ten or more employed persons acting in concert absent themselves without due notice (that is to sa

S.10 Deductions for damage or loss

       1[(1) 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 person.
       (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 deductions.]
       (2) All such deductions 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.
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S.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 a deduction under the said clause (e), shall be subject to such conditions as 1[***] 2[the appropriate Government] may impose.
       State Amendments
       Section 11A
       Pondicherry.—After section 11, insert the following section, namely:—
        “11A. The employer shall, if so required by a requisition in writing, by the Electricity Department of the Government of Pondicherry or

S.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:—
       (a) 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;
       1[(aa) recovery of an advance of money given after employment began shall be subject to such conditions as 2[the appropriate Government] may impose;]
       (b) recovery of advances of wages not already earned shall be subject to any rules made by 2[the appropriate Government] regulating the extent to which such advances may be given and the instalments by which they may be recovered.

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S.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 2[the appropriate Government] regulating the extent to which such loans may be granted and the rate of interest payable thereon.]

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        1. Ins. by Act 53 of 1964, sec. 9 (w.e.f. 1-2-1965).
        2. Subs. by Act 41 of 2005, sec. 3, for “the State Government” (w.e.f. 9-11-2005).
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S.13 Deductions for payments to co-operative societies and insurance schemes

       Deductions under clause (j) 1[and clause (k)] of sub-section (2) of section 7 shall be subject to such conditions as 2[the appropriate Government] may impose.
       State Amendment
       Karnataka.—In section 13,
       (1) for the headline the following heading shall be substituted, namely—
        “13. Other deductions.”
       (2) for the words, letters and brackets, “under clause (j) and clause (k)” the words, letters and brackets, “under clause (j), clause (k) and clause (q)” shall be substituted.
       [Vide Karnataka Act 2 of 1977 as amended by Karnataka Act 2 of 1982 sec. 3 (w.e.f. 28-1-1982)].

S.13(a) Maintenance of registers and records

       (1) 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 prescribed.
       (2) 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 therein.]
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        1. Ins. by Act 53 of 1964, sec. 10 (w.e.f. 1-2-1965).
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S.14 Inspectors

       (1) An Inspector of Factories appointed under 1[sub-section (1) of section 8 of the Factories Act, 1948 (63 of 1948)], shall be an Inspector for the purposes of this Act in respect of all factories within the local limits assigned to him.
       (2) 2[The appropriate Government] may appoint Inspectors for the purposes of this Act in respect of all persons employed upon a railway (otherwise than in a factory) to whom this Act applies.
       (3) 2[The appropriate Government] may, by notification in the Official Gazette, appoint such other persons as it thinks fit to be Inspectors for the purposes of this Act, and may define the local limits within which and the class of factories and 3[industrial or other establishments] in respect of which they shall exercise their functions.
       4[(4) An Inspector may,—
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S.14(a) Facilities to be afforded to Inspectors

       Every employer shall afford an Inspector all reasonable facilities for making any entry, inspection, supervision, examination or inquiry under this Act.]

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        1. Ins. by Act 53 of 1964, sec. 12 (w.e.f. 1-2-1965).
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S.15 Claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims

       1[(1) The appropriate Government may, by notification in the Official Gazette, appoint—
       (a) any Commissioner for Workmen’s Compensation; or
       (b) any officer of the Central Government exercising functions as,—
       (i) Regional Labour Commissioner; or
       (ii) Assistant Labour Commissioner with at least two years’ experience; or
       (c) any officer of the State Government not below the rank of Assistant Labour Commissioner with at least two years’ experience; or
       (d) a presiding officer of any Labour Court or Industrial Tribunal, constituted under the Industrial Disputes Act, 1947 (14 of 1947), or under any corresponding law relating to the investigation and settlement

S.16 Single application in respect of claims from unpaid group

       (1) Employed persons are said to belong to the same unpaid group if they are borne on the same establishment and if 1[deductions, have been made from their wages in contravention of this Act for the same cause and during the same wage-period or periods or if] their wages for the same wage-period or periods have remained unpaid after the day fixed by section 5.
       (2) A single application may be presented under section 15 on behalf or in respect of any number of employed persons belonging to the same unpaid group, and in such case 2[every person on whose behalf such application is presented may be awarded maximum compensation to the extent specified in sub-section (3) of section 15].
       (3) The authority may deal with any number of separate pending applications, presented under section 15 in respect of persons belonging to the same unpaid group

S.17 Appeal

       (1) 1[An appeal against an order dismissing either wholly or in part an application made under sub-section (2) of section 15, or against a direction made under sub-section (3) or sub-section (4) of that section] may be preferred, within thirty days of the date on which 2[the order or direction] was made, in a Presidency-town 3[***] before the Court of Small Causes and elsewhere before the District Court—
       (a) by the employer or other person responsible for the payment of wages under section 3, if the total sum directed to be paid by way of wages and compensation exceeds three hundred rupees 4[or such direction has the effect of imposing on the employer or the other person a financial liability exceeding one thousand rupees], or
       5[(b) by an employed person or any legal practitioner or any official of a registered trade union authoris

S.17(a) Conditional attachment of property of employer or other person responsible for payment of wages

(1) Where at any time after an application has been made under sub-section (2) of section 15 the authority, or where at any time after an appeal has been filed under section 17 by an employed person or 2[any legal practitioner or any official of a registered trade union authorised in writing to act on his behalf or any Inspector under this Act or any other person permitted by the authority to make an application under sub-section (2) of section 15] the Court referred to in that section, is satisfied that the employer or other person responsible for the payment of wages under section 3 is likely to evade payment of any amount that may be directed to be paid under section 15 or section 17, the authority or the Court, as the case may be, except in cases where the authority or Court is of opinion that the ends of justice would be defeated by the delay, after giving the employer or other person an opportunity of being heard, may d

S.18 Powers of authorities appointed under section 15

       Every authority appointed under sub-section (1) of section 15 shall have all the powers of a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908), for the purpose of taking evidence and of enforcing the attendance of witnesses and compelling the production of documents, and every such authority shall be deemed to be a Civil Court for all the purposes of section 195 and of 1[Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974)].

       State Amendments
         Tamil Nadu.—After section 18, insert the following section, namely:—
        “18A. Transfer of cases.—(1) The State Government may, either on their own motion or on an application made in this behalf, order the transfer of any matter arising out of any proceedings pending before an

S.19 Power to recover from employer in certain cases

[Rep. by the Payment of Wages (Amendment) Act, 1964 (53 of 1964), sec. 17 (w.e.f. 1-2-1965).]

S.20 Penalty for offences under the Act

       (1) Whoever being responsible for the payment of wages to an employed person contravenes any of the provisions of any of the following sections, namely, 1[section 5 except sub-section (4) thereof, section 7, section 8 except sub-section (8) thereof, section 9, section 10 except sub-section (2) thereof, and sections 11 to 13], both inclusive, shall be punishable 2[with fine which shall not be less than one thousand five hundred rupees but which may extend to seven thousand five hundred rupees].
       7, section 8 except sub-section (8) thereof, section 9, section 10 except sub-section (2) thereof, and sections 11 to 13], both inclusive, shall be punishable 2[with fine which shall not be less than one thousand five hundred rupees but which may extend to seven thousand five hundred rupees]."
       (2) Whoever contravenes the provisions of section 4, 3

S.21 Procedure in trial of offences

       (1) No Court shall take cognizance of a complaint against any person for an offence under sub-section (1) of section 20 unless an application in respect of the facts constituting the offence has been presented under section 15 and has been granted wholly or in part and the authority empowered under the latter section or the Appellate Court granting such application has sanctioned the making of the complaint.
       (2) Before sanctioning the making of a complaint against any person for an offence under sub-section (1) of section 20, the authority empowered under section 15 or the Appellate Court, as the case may be, shall give such person an opportunity of showing cause against the granting of such sanction, and the sanction shall not be granted if such person satisfies the authority or Court that his default was due to—
       (a) a bona fide erro

S.22 Bar of suits

       No Court shall entertain any suit for the recovery of wages or of any deduction from wages insofar as the sum so claimed—
       (a) forms the subject of an application under section 15 which has been presented by the plaintiff and which is pending before the authority appointed under that section or of an appeal under section 17; or
       (b) has formed the subject of a direction under section 15 in favour of the plaintiff; or
       (c) has been adjudged, in any proceeding under section 15, not to be owed to the plaintiff; or
       (d) could have been recovered by an application under section 15.

S.22(a) Protection of action taken in good faith

       No suit, prosecution or other legal proceeding shall lie against the Government or any officer of the Government for anything which is in good faith done or intended to be done under this Act.]

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        1. Ins. by Act 53 of 1964, sec. 20 (w.e.f. 1-2-1965).
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S.23 Contracting out

Any contract or agreement, whether made before or after the commencement of this Act, whereby an employed person relinquishes any right conferred by this Act shall be null and void in so far as it purports to deprive him of such right.

S.24 Delegation of powers

       The appropriate Government may, by notification in the Official Gazette, direct that any power exercisable by it under this Act shall, in relation to such matters and subject to such conditions, if any, as may be specified in the direction, be also exercisable—
       (a) where the appropriate Government is the Central Government, by such officer or authority subordinate to the Central Government or by the State Government or by such officer or authority subordinate to the State Government, as may be specified in the notification;
       (b) where the appropriate Government is a State Government, by such officer or authority subordinate to the State Government as may be specified in the notification.]

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S.25 Display by notice of abstracts of the Act

       The person responsible for the payment of wages to persons 1[employed in a factory or an industrial or other establishment] shall cause to be 2[displayed in such factory or industrial or other establishment] a notice containing such abstracts of this Act and of the rules made thereunder in English and in the language of the majority of the persons employed 3[in the factory, or industrial or other establishment], as may be prescribed.

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        1. Subs. by Act 38 of 1982, sec. 12, for “employed in a factory” (w.e.f. 15-10-1982).
        2. Subs. by Act 38 of 1982, sec. 12, for “displayed in such factory” (w.e.f. 15-10-1982).
        3. Subs. by Act 38 of 1982, sec. 12, f

S.25(a) Payment of undisbursed wages in cases of death of employed person

       (1) Subject to the other provisions of the Act, all amounts payable to an employed person as wages shall, if such amounts could not or cannot be paid on account of his death before payment or on account of his whereabouts not being known,—
       (a) be paid to the person nominated by him in this behalf in accordance with the rules made under this Act; or
       (b) where no such nomination has been made or where for any reasons such amounts cannot be paid to the person so nominated, be deposited with the prescribed authority who shall deal with the amounts so deposited in such manner as may be prescribed.
       (2) Where, in accordance with the provisions of sub-section (1), all amounts payable to an employed person as wages—
       (a) are paid by the employer to the

S.26 Rule-making power

       (1) 1[2[The appropriate Government] may make rules to regulate the procedure to be followed by the authorities and Courts referred to in sections 15 and 17.
       (2) 1[2[The appropriate Government] may, 3[***] by notification in the Official Gazette, make rules for the purpose of carrying into effect the provisions of this Act.
       (3) In particular and without prejudice to the generality of the foregoing power, rules made under sub-section (2) may—
       (a) require the maintenance of such records, registers, returns and notices as are necessary for the enforcement of the Act 4[prescribe the form thereof and the particulars to be entered in such registers or records];
       4[prescribe the form thereof and the particulars to be entered in such registers or records];" <