OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

SUBMITTED BY SHUBHAM JAISWAL (1380), [B.A.L.L.B. (HONS.)]

SUBMITTED TO Dr. S.C. ROY, LECTURER OF LABOUR LAW

The final draft for the fulfilment of project of Labour Law-I

On

“Objectives of Payment of Wages Act, 1936”

APRIL 20, 2017

SESSION 2015-2020

CHANAKYA NATIONAL LAW UNIVERSITY

NYAYA NAGAR, MITHAPUR

PATNA

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

Contents
Acknowledgement ..................................................................................................................... 3

Declaration ................................................................................................................................. 4

Introduction ................................................................................................................................ 5

Aims and Objectives .............................................................................................................. 6

Hypothesis .............................................................................................................................. 6

Research Methodology........................................................................................................... 6

SCOPE AND LIMITATION ................................................................................................. 6

1. Significance and Historical Background of Payment of Wages Act, 1936 ........................... 7

2. Application of the Act ............................................................................................................ 8

3. Establishment ....................................................................................................................... 10

4. Important Aspects of the Payment of Wages Act, 1936 ...................................................... 12

Time of Payment of Wages .................................................................................................. 12

Wage-Period ..................................................................................................................... 12

Unlawful Deductions............................................................................................................ 13

Meaning of Deduction ...................................................................................................... 14

Mode of Payment ................................................................................................................. 15

Responsibility for Payment of Wages .................................................................................. 17

5. Conclusion ........................................................................................................................... 20

Bibliography ............................................................................................................................ 22

Books .................................................................................................................................... 22

Websites ............................................................................................................................... 22

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

ACKNOWLEDGEMENT

Writing a project is one of the most difficult academic challenges I have ever faced. Though
this project has been presented by me but there are many people who remained in veil, who
gave their support and helped me to complete this project.

First of all I am very grateful to my subject teacher Dr. S.C. Roy without the kind support of
whom and help the completion of the project would have been a herculean task for me. He took
out time from his busy schedule to help me to complete this project and suggested me from
where and how to collect data.

I acknowledge my friends who gave their valuable and meticulous advice which was very
useful and could not be ignored in writing the project. I want to convey most sincere thanks to
my faculties for helping me throughout the project.

Thereafter, I would also like to express my gratitude towards our seniors who played a vital
role in the compilation of this research work.

I would also like to express my gratitude towards the library staff of my college which assisted
me in acquiring the sources necessary for the compilation of my project.

Last, but not the least, I would like to thank the Almighty for obvious reasons.

SHUBHAM JAISWAL

Roll No. -1380

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

DECLARATION

I hereby declare that the work reported in the BA LL.B (Hons.) Project Report entitled
“OBJECTIVES OF PAYMENT OF WAGES ACT, 1936” submitted at Chanakya National
Law University, Patna is an authentic record of my work carried out under the supervision of
Dr. S.C. Roy. I have not submitted this work elsewhere for any other degree or diploma. I am
fully responsible for the contents of my Project Report.

SHUBHAM JAISWAL Signature of the student

Roll No. -1380 ……………………….

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

INTRODUCTION

With the growth of industries in India, problems relating to payment of wages to persons
employed in industry took an ugly turn. The industrial units were riot making payment of wages
to their workers at regular intervals and wages were not uniform. The industrial workers were
forced to raise their heads against their exploitation.

In 1926, Government of India wrote to local governments to ascertain the position with regard
to the delays which occurred in the payment of wages to the persons employed in Industry.
Material so collected was placed before the Royal Commission on Labour which was appointed
in 1929. On the report of the Commission, Government of India re-examined the subject and
in February, 1935 the Payment of Wages Bill, 1935, was introduced in the Legislative
Assembly and circulated for the purpose of-eliciting opinions. A motion for the reference of
the Bill to a Select Committee was tabled but the motion could not be passed and the Bill
lapsed. In 1935 the Payment of Wages Bill, based upon the same principles as the earlier Bill
of 1933 but thoroughly revised was introduced in the Legislative Assembly on 15th February,
1935. The Bill was referred to the Select Committee. The Select Committee presented its report
on 2nd September, 1935. Incorporating the recommendations of the Select Committee, the
Payment of Wages Bill, 1935 was again introduced in the Legislative Assembly.

In 1926 the Government of India addressed local governments with a view to ascertain the
position with regard to the delays which occurred in the payment of wages to persons employed
in industry, and the practice of imposing fines on them. The investigations revealed the
existence of abuses in both directions and the material collected was placed before the Royal
Commission on Labour which was appointed in 1929. The Commission collected further
evidence on the subject and the results of their examination with their recommendations will
be found on pages 216-221 and 236-241 of their Report. The Government of India re-examined
the subject in the light of the Commission’s Report and in February, 1933 a Bill embodying
the conclusions then reached was introduced and circulated for the purpose of eliciting opinion.
A motion for the reference of the Bill to a Select Committee was tabled during the Delhi session
of 1933-34, but was not reached, and the Bill lapsed. The present Bill is based upon the same
principles as the original but has been revised throughout in the light of the criticisms received
when die original Bill was circulated.

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

The Payment of Wages Act, 1936 was enacted with a view to ensuring that wages payable to
employed persons covered by the Act were disbursed by the employers within the prescribed
time limit and that no deductions other than those authorized by law were made by them. The
last amendment was made in 1982 and several provisions of the Act have become obsolete
over the years.

AIMS AND OBJECTIVES

The researcher aims to look into:

1. The perspective behind enactment of this Act.

2. How the workers benefit from this Act.

HYPOTHESIS

The researcher is of the view that the enactment of Payment of Wages Act, 1936 provides
security of wage payment to the workers.

RESEARCH METHODOLOGY

The researcher shall conform to the use of doctrinal method of research only.

SCOPE AND LIMITATION

Though, there are many sources to the given topic. The researcher came across a range of
difficulties that have limited the research in many ways than one:

1. The period of research could only span for two weeks.

2. The researcher could only look through the available books in Chanakya National Law

University Library.

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

1. SIGNIFICANCE AND HISTORICAL BACKGROUND OF PAYMENT OF

WAGES ACT, 1936

“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 security step towards the welfare of the working class in order to remedy mischiefs
played by the employers. Before y ore the codification of Payment of Wages Act, there several
unfair labour practices pertaining to the payment of wages. The employers were did not make
payment of wages in definite form, that is sometimes they made 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 this the employers made so many deductions out of wages
earned by the employees and ultimately they paid only a very meagre part of it.

At that time wages were paid on varying periods though the monthly system was most
prevalent. 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 the 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 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 labour practices
the capitalists tried their level best to exploit the labour class as much as they could.

The workers united and made several demands for regular payment of wages in definite form
and without unlawful deductions. For the first time in 1925 a private bill entitled “Weekly
Payment Bill” was introduced in the Legislative Assembly. The bill sought, to remedy some
of the unfair labour 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.

In 1926, the Government of India addressed the local Governments with a view to ascertain
the position with regard of the delays which occurred in the payment Of the wages to persons
employed in industry, and the practice of imposing fines On them. The investigations and
enquiries revealed the existence of abuses in both directions and the material collected was

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

placed before the Royal Commission on labour which was set up in 1929 to look into the matter.
Its report revealed that the imposition of fines and making unlawful deductions from the wages
of the poor workers was the order of the day in the Railways and factories. The Commission
recommended that the legislation regarding the deductions from the wages and the fines was
necessary and desirable. Important recommendations of the commission1 were with regard to
fines, deductions for damages or loss, deductions in wage of the employees.

2. APPLICATION OF THE ACT

It extends to the whole of India and it shall come into force on such date as the Central
Government may by notification in the Official Gazette, appoint. 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 of State Government to make
provisions of the Act or any of them applicable after giving three month' 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.

Provided that in relation to any such establishment owned by the Central Government, no such
notification shall be issued except with the concurrence of that Government. The analysis of
the Section 1(5) would show that the power vested in the appropriate Government can be
exercised after fulfilment of three conditions:

First, issue of three months' notice of its intention to apply the provisions of Act,

Secondly it has to publish a notification in the Official Gazette for the purpose and

Thirdly, in relation to any such establishment owned by the Central Government no such
notification shall be issued except with concurrence of that Government. [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

1
G.M. Kothari, loc, cit, pp. 346-47.

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

which, on the basis of figures of the Consumer Expenditure Survey published by the National
Sample Survey Organisation, the Central Government may, after every five years, by
notification in the Official Gazette, specify.] The Central Government vide S. O. 2260 (E) dated
September 11, 2012 enhanced the wage from Rupees Ten Thousand to Rupees Eighteen
Thousand per month as the wages under sub-section (6) of Section 1 of the Act. All Employees
whose wages do not exceed Rupees Eighteen thousand per month are, therefore, covered now
by the Payment of wages Act, 1936.

In Panther Power Kamgar Sanghathan and others v. Jhalani, Y. C.,2 where a writ petition was
filed seeking directions against the employer to pay wages due. Among the objections raised
was one pleading that the alternate remedy available to the petitioners under the Payment of
Wages Act, 1936, had not been availed hence the writ-petition was not maintainable. The High
Court of Bombay overruled this objection by simply pointing out that there was no employee
whose average rate of wages was less than Rs. 1600/- per month and the Act was applicable to
wages which averaged at Rs. 1600/- or more per month holding that alternate remedy under
the Act need not be exhausted where it was not applicable.

The Act is applicable to working journalists.3 By virtue of Section 25 of Motor Transport

Workers Act, 1961, the Act applies to payment of wages to motor transport workers. This Act
applies even to cases where wages are paid monthly. The Act applies to salaried employee if
the wage period does not extend to one month, hence an employee employed on a monthly
salary in a private stage carriage is entitled to the benefit of the Act.4 The Act before amendment
in 1957, did not apply to employees getting remuneration of more than Rs. 200/- per month
including Dearness Allowance. Dearness Allowance also forms part of wages as it comes
within the expression ‘other additional remuneration’ in the definition of wages in the Act.5
Though Dearness Allowance is paid under the orders of the Government, it cannot be treated
as an amount not payable under contract, express or implied, and included when calculating
the remuneration for the purposes of finding out the amount of wages payable to the employee.
When some money is payable to the employee by virtue of an order having the force of law,
the payment of the amount to the employee becomes a term of employment and, therefore,
must be held to become payable under an implied contract. The Payment of Wages Act does

2
Panther Power Kamgar Sanghathan and others v. Jhalani, Y. C., 1998 (1) LLJ 884.
3
Manager, Searchlight Press, Patna v. Factories Inspector, Patna, AIR 1960 Patna 33.
4
Labangalata Devi v. D.k. Azizullah, AIR 1958 Orissa 123.
5
Parliament Passes Bill For Wage Payment Via Cheques, Bank Transfers, The Wire February 08, 2017 available
at https://thewire.in/107015/parliament-wages-cheque-bank-transfer/ (Last visited on April 02, 2017).

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

not define who are the persons to be considered as workers employed in the industrial
establishment. For that purpose, one has to turn to the Industrial Employment Standing Orders
Act, 1946.6

The Act has been applied to Motor Omnibus Services in Assam, Andhra Pradesh, Bihar, West
Bengal, Tamil Nadu, Mysore, Tripura, Coorg, Delhi and Punjab; tramways in West Bengal,
Madras, Delhi and Tripura; plantations in Assam, West Bengal, Coorg, Tamil Nadu,
Travancore-Cochin, Bihar, Mysore, Punjab and Tripura; Inland Steam Navigation Services in
Bihar and Assam; Printing Presses in U.P; Government Transport concerns and private
transport companies in Punjab; Motor Goods Transport Services in Delhi; Industrial
establishments declared to be factories under Section 85 of the Factories Act, 1948, in Bombay
and Madras, quarries in Punjab, motor vehicles plying under State Carriage Permits and Public
Carriers, permits in Orissa; Bombay Docks; and workshops or other establishments in which
articles are produced, adopted or manufactured with a view to their use, transport of sale in
Punjab and Tripura; Tramways Services connected, with the Mysore Iron and Steel Works,
Bhadravati, Bamboo Forest Works establishments in Orissa and to all establishments in the
areas within the Greater Bombay, Ahmedabad, Poona and Municipal Boroughs of Sholapur,
Surat, Belgaum, Hubli, Kolhapur and Baroda to which the Bombay Shops and Establishments
Act, 1948, applies.7

3. ESTABLISHMENT

Industrial Establishment or other establishment for the purpose of this Act means,8

(a)Tramway Service or Motor Transport Service engaged in carrying passengers or goods or

both by road for hire or reward;

(aa) Air Transport Service other than sub-service belonging to, or exclusively employed in the
Military, Naval and Air Forces of the Union or the Civil Aviation Department of Government
of India;

(b) Dock, Wharf or Jetty;

6
(1964) 5 Fac. L.R. 391 (All).
7
G.M. Kothari : A study of Industrial Law, 1973, p.350.
8
Payment of Wages Act, 1936, Section 2(ii).

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

(c) Inland vessel mechanically propelled;

(d) Mine, quarry or oilfield;

(e) Plantation;

(f) Workshop or other establishment in which articles are produced, adapted or manufactured,
with a view to their use, transport or sale;

(g) Any establishment in which any work relating to construction, development or maintenance
of buildings, roads, bridges or canals or relating to operations connected with navigation,
irrigation, or the supply of water, or relating to the generation, transmission or distribution of
electricity or any other form of power, is being carried on;

(h) Any other establishment or class of establishments which the appropriate Government may,
having regard to the nature thereof, the need for protection of persons employed therein and
other relevant circumstances, specify, by notification in the Official Gazette.

It may be pointed out that by Act No. 38 of 1982 the existing definition of ‘industrial
establishment’ has been converted as the definition of 'industrial or other establishment' and a
residuary clause (h) has been inserted to enable appropriate Government to bring within the
purview of the definition, by notification in the Official Gazette any other establishment or
class of establishments which the Central Government or State Government may, having regard
to the nature thereof, the need for protection of persons employed therein and other relevant
circumstances, specify by notification in the Official Gazette.9

As stated earlier, the provisions of this Act are applicable to persons employed in any factory
or in any industrial establishment. The terms 'Industrial Establishment' and ‘factory’ have been
defined. So far as factory is concerned, it means a factory as defined in section 2(m) of the
Factories Act, 1948, and includes any place to which the provisions of at Act have been applied
under sub-section (1) of Section 85 thereof.12 Section 2(m) of the premises including the
precincts Factories Act, 1948, provides that factory means any thereof:

(i) whereon 10 or more workers are working, or were working on any day of the Preceding 12
months, and in any part of which a manufacturing process is being carried on with the aid of
power or is ordinarily so carried on, or

9
Supra note 7.

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

(ii) whereon 20 or more workers are working, or were working on any, day of preceding 12
months, and in any part of which a manufacturing process is being carried on without the aid
of power, or is ordinarily so carried on but does not include a mine subject to the operation of
Mines Act, 1952, or a Railway Running Shed.

4. IMPORTANT ASPECTS OF THE PAYMENT OF WAGES ACT, 1936

TIME OF PAYMENT OF WAGES

The Act provides remedy pertaining to payment of wage at regular intervals. The payment of
wages must be made in accordance with Section which lays down the following rules in regard
to the time of payment of wages. The wages of every person employed upon or in any railway,
factory or industrial or other establishment upon or in which less than 1,000 persons are
employed shall be paid before the expiry of the 7th day after the last day of the wage-period in
respect of which the wages are payable. The wages of every person employed upon or in any
other railway, factory or industrial or other establishment, shall be paid before the expiry of the
10th day after the last day of the wage-period in respect of which the wages are payable. It
means that if the number of persons employed in a factory or in industrial establishment or
railway, including daily rated workers is less than 1000, the wages have to be paid before the
expiry of the 7th day after the last day of the wage-period and where the number of persons
employed is 1,000 or it exceeds 1,000 the payment has to be made before the expiry of 10th
day after the last day of the wage-period in respect of which the wages are payable. The
different dates have been fixed for payment of wages because the person responsible for
payment of wages has to arrange for payment and he will naturally require more time than that
where the persons employed are less than 1,000.10

WAGE-PERIOD

For the purposes of this Act, wage-period means the period which has been fixed for work by
employer. The Act authorizes every person responsible for the payment of wages to fix periods
in respect of which such wages shall be payable. This is the statutory duty and power of such
person to fix wage-period and there is only one restriction that no wage-period shall exceed
one month. A perusal of Section 4 pertaining to fixation of wage-period would show that an

10
Object of the Act, available at http://www.whatishumanresource.com/the-payment-of-wages-act-1936 (Last
visited on April 07, 2017)

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employer is bound to fix wage period and that no wage period shall exceed one month. In other
words, wage cannot be fixed as payable quarterly, half yearly or yearly but they may be fixed
as payable daily, weekly, and fortnightly or monthly.16

(3) By amendment of this Act in 1964, a proviso was inserted in Section 5 (1) (b) 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 he, shall be paid before the expiry of the seventh day from the day of such
completion.

(4) Where the employment of any person in an establishment is terminated by or on behalf of

the employer the wages earned by him shall be paid before the expiry of second working day
from the day on which his employment is terminated.

In this way, the rules for causing undue delay in payment of wages to persons employed in
factories, Railway and industrial or other establishments to which the Payment of Wages Act
is applicable, has been checked to a considerable extent.

UNLAWFUL DEDUCTIONS

Another important object of the Act was to safeguard the wages of the employees from
unlawful deductions which were made from the wages and consequently the workers received
only a meagre part of it. The Act has clearly enumerated deductions which may be made from
wages. No other deductions can be made except provided under the Act. Section 7(1) of the
Act provides that "Notwithstanding the provisions of the Railways Act, 1989 the wages of an
employed person shall be paid to him without deductions of any kind except those authorized
by or under this Act. “The words” in accordance with the provisions, of this Act refer to
Sections 8 to 13 of the Act. An employer cannot make deductions except those expressly
mentioned in Section 7 from the wages payable to an employee on account of his employment.
For the satisfaction of the claims that he might have against the employee on account of other
transactions, made outside the scope of his employment, the employer can bring a civil suit but
he cannot touch the was wages. This is restriction of the general law for the benefit of the
employee who is presumed to be less advantageously placed.11

11
Manager of Hindustan Journals Private Ltd. V. Govind Ram Sawal Ram, A.I.R. 1963 M.P. 25.

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

MEANING OF DEDUCTION

The Payment of wages 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.12 Any loss of wages resulting
from the imposition for good and sufficient cause, upon a person employed of any of the
following penalties, namely:

(1) the withholding of increment or mo on p: employed of an of the following penalties' at an

efficiency bar;

(2) the reduction to a lower post or time scale or to a lower stage in a timescale

(3) Suspension;

shall not be deemed to be deduction from wages in any case where the rules framed by the
employer for the imposition of any such penalty are in conformity with the requirements, if
any, which may be specified in this behalf by appropriate government, by notification in the
official gazette.

Thus, any loss of wages resulting from the aforementioned penalties shall not be i to be a
deduction from wages. Clause (I) of Explanation II to sub-section (1) of section 7 speaks of the
imposition for good and sufficient cause of the penalties mentioned therein. But that does not
empower the prescribed authority to sit in judgment over the order of punishment and decide
whether there was indeed good and sufficient cause for making the order. The expression 'for
good and sufficient cause' has been inserted in the provision only to, describe the kind of orders
contemplated by Explanation II. The order of penalty must not be order which is not commonly
accepted as being for good and sufficient cause. It must not be an order made arbitrarily. It is
to note that the Explanation II is in the nature of a definition. It is not a provision conferring
jurisdiction upon any authority. When that is so, the prescribed authority cannot rely upon the
Explanation II for defining its jurisdiction.13 Thus, the Explanation II indicates that for good
and sufficient cause the penalties can he imposed and they shall not be deemed to be a
deduction from wages if, first, penalties have been imposed accordance with the rules framed
by the employer and secondly such rules framed by the employer for imposition of any such
penalties, are in consonance with the requirements, if any, laid down by the State Governments,

12
Explanation I to Section 7.
13
Divisional Personnel officer v. Chhotey Lal Saxena, 1971, A.L.J. 255.

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by notification in the Official Gazette.14 In this wages shall be paid without any way Section
7(1) of the Act provides that wag deductions except those authorized by or under this Act.
Section 7 mentions certain items which alone can be deducted from the wages. Anything
outside that list is not liable to deduction.15 It has been observed by the High Court of Orissa
in Sambunath Battacharjee V. Orient Paper Mills,16 which had made a contract to pay an
employer cannot refuse to pay by deduction from the pay or make delay in payment. With
object of protecting classes of employees as provided, by making available cheap and speedy
remedy, Legislature brought the Act to statute book creating special forum. Being a benevolent
statute liberal interpretation is to be given to deduction and delay. Non-payment of entire salary
on the due date is delay and non-payment of a part of whole of the salary for the period when
payment is to be made is deduction. It does not cover only admitted deduction or delayed
payment. Where the entitlement to payment by an employee is disputed, Authority appointed
under section 15(1) can go into the merits of the dispute.

MODE OF PAYMENT

Section 6 of the Payment of Wages Act, 1936, categorically provides that all wages shall be
paid in current coin or currency notes or in both. Anything agreed to be paid in kind in the
circumstances contemplated by the definition of 'wages' is covered by the expression 'capable
of being so expressed' but as required by Section 6 it has to be converted into money according
to its value and then paid in coins or currency notes.17

Certain States have amended Section 6 of the Payment of Wags Act, viz., Assam, Bihar,
Gujarat, Maharashtra and Orissa providing that certain portion of amount of bonus payable to
employed person may be paid in the shape of the National Savings Certificates or in certain
compulsory schemes.18

The State of Punjab has amended Section 6 of the Payment of Wages Act in the Year 1962.
Section 6 as amended by the Punjab Act 15 of 1962 was challenged on the ground of violation
of Article 14 of the Constitution of India. It was held that the Payment of Wages Act is

14
Ibid.
15
Payment of Wages Act, Paycheck available at http://www.paycheck.in/main/labour-law-india/work-and-
wages/payment-of-wages-act (Last visited on April 05, 2017).
16
Sambunath Battacharjee V. Orient Paper Mills, (1995) I.L.L.J. 159.
17
M.P.State Road Transport Corpn. V. Industrial Court, A.I.R. 1971 M.P. 54.
18
Wage payment by cheque, account transfers not mandatory till notified: Govt, Business Line December 21,
2016 available at http://www.thehindubusinessline.com/news/national/wage-payment-by-cheque-account-
transfers-not-mandatory-till-notified-govt/article9438112.ece (Last visited on April 18, 2017).

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essentially meant for the benefit of industrial employees not getting very high salaries and the
provisions of the above Act were enacted to safeguard their interest. As the above classification
is founded upon an intelligible differentia, has a rational basis and is related to the object of the
welfare of the low-paid industrial workers, it is difficult to strike down the impugned Act on
the score of Article 14 of the Constitution.19

It was further held that the object of legislation in providing in Section 6 of the Payment of
Wages Act that wages shall be paid in current coins or in currency notes was to ensure the
payment of wages in cash and not in any other form. As a result of amendment made in Section
6 an element of compulsory saving has been introduced not in the monthly wages but in the
bonus payable to an industrial worker because it is provided that a certain portion of the bonus
may be invested in the manner prescribed. An enactment making provision for compulsory
saving of a part of a bonus payable to an industrial worker should be deemed to be piece of
legislation which is covered by the words “welfare of labour” in Entry 24 of the Concurrent
List reproduced above. Subject matter of legislation falls within Entry 24, of List III in
Schedule VII of the Constitution and infra vires.20

It may be concluded that the Payment of Wages Act, 1936, has been enacted by the legislature
for the purpose of ensuring regular payment of wages to small salary holders so that they may
be able to make their both ends meet. It ensures that such employees are paid their wages in a
specified or particular form at regular determined intervals without unauthorised deductions, it
prohibits the employers to delay or withhold payment of amount earned by workmen beyond
the period specified in the Act. This statute, therefore, calls for a benevolent or beneficial
construction, a construction advance the remedy and suppress the mischief. In case of doubt,
the construction should be placed in favour of the employee. To apply the rule of strict
construction would amount to defeating the real object and purpose of this enactment. Thus the
word 'wages' as used in the statute must be construed to mean 'earned wages' as distinguished
from potential wages.”21

The Act makes it imperative that the wages are to be paid in current Coin or currency notes or
in both. The Act has been amended in 1976 and a proviso has been added to Section 6 of the

19
Parliament passes Payment of Wages (Amendment) Bill 2017; enables salary payments via cheques, e-mode,
The Financial Express February 08, 2017 available at http://www.financialexpress.com/economy/parliament-
passes-payment-of-wages-amendment-bill-2017-enables-salary-payments-via-cheques-e-mode/543161/ (Last
visited on April 17, 2017).
20
Milki Ram v. State of Punjab
21
Union of India v. Triloki Nath Basin, 1961 (2) L.L.J. 62.

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Act which reads as "provided that the employer may after obtaining written, authorisation of
the employed person, pay him the Wages either by cheque or by crediting the wages in his
Bank account." Thus now it is no longer necessary to pay the wages in current coins or currency
notes where the employer is authorised in writing by the employed person to pay wages either
by cheque or by crediting the wages in his bank account.

RESPONSIBILITY FOR PAYMENT OF WAGES

Section 3 of the Payment of Wages Act, 1936 makes provisions in imperative terms for
responsibility for payment of wages. It provides that every employer shall be responsible for
the payment to persons employed by him of all wages required to be paid by him under the
Act:22

The Parliament has made a very significant amendment in the year 2005 relating to
responsibility for payment of wages.23 The whole Section 3 has been substituted for old one. It
is as under:

(1) Every employer shall be responsible for the payment of all wages required to be paid under
this Act to persons employed by him in case of person 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 establishments;

(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 who is directly under his
charge ; and

(e) in any other case, a person designated by the employer as a person responsible for
complying with the provisions of the Act,

the person so named, the person responsible to the employer, the person so nominated or the
person so designated, as the case may be, shall be responsible for such payment.

22
Indian Kanoon available at https://indiankanoon.org/doc/794158/ (Last visited on April 08, 2017).
23
Ibid.

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(2) Notwithstanding anything contained in sub-section (1), it shall be the responsibility of the
employer to make payment of all wages required to be made under this act in case of contractor
or the person designated by the employer fails to make such payment.

Under the provisions of newly substituted Section 3 the responsibility for payment of wages
has been clearly indicated that in factories the responsibility for payment is on the 1 who has
been named as the manager of the factory under Section 7 (1)(f) of the Factories Act.

In industrial or other establishments the responsibility for payment of wages is on the

responsible to the employer for the supervision and control of establishment person who is in
case of railways, if the employer is the railway administration, it may nominate a person for
payment of wages for the local area concerned. In such situation the person so nominated shall
be duty bound for payment of wages.24

In Cases of contractors, a person designated by such contractors for this purpose and in any
other cases any person designated by the employer as a person responsible for complying with
the provisions of the Act shall be responsible for payment of wages under the provisions of the
Act.

In order to clarify the position in this behalf it has been provided that the person named a
manager in the factory, the person responsible to the employer for supervision and the control
of the establishment, the person so nominated or the person so designated in terms of clauses
(a), (b), (c), (d) and (e) of the sub-section (1) of section 3 shall be responsible for such
payments.25

A Manager who has been dismissed can have no subsisting responsibility for wages that fell
due while he was a Manager.26 It has been observed that under Section 3 of the payment of
Wages Act, in case of factories having a manager the responsibility, of payment of wages is of
that Manager. But nevertheless if the Manager resigns or is dead or is removed then the
responsibility again becomes the responsibility of the employer. He cannot be heard to say that
because at on his responsibility was gone for good and if the Manager had defaulted in payment

24
Ministry of Labour & Employment, Government of India available at http://labour.gov.in/gazette-notification
(Last visited on April 12, 2017).
25
Supra note 21.
26
D.M.Godse v. State and another, AIR All. 652.

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

of wages, it must be the manager who must be pursued even after his resignation, death or
dismissal.27

The word ‘employer’ has not been defined in the Act, and under its ordinary connotation, it
must be held that in a private limited company the Directors are the employers. They are,
therefore, liable to pay wages, unless the case comes under the proviso Section 3 of the Act.28
It has been observed that in construing Section 3 and deciding to what meaning has got to be
given to the expression “employer” one must look at Section 15(3). “Authority” has got to
hear the employer when an application is made by the employee, and it is clear that the person
who has got to be heard is the person who is employer at the date, when the application for
wages has been made. Therefore, the material date to consider is not who was responsible for
payment of wages when the wages accrued but the material fact to consider is who was the
person responsible for the payment of wages at the date when the application is made. Under
Section 7(5) of the Factories Act, if there was no named Manager of a factory at the date when
the application was made, then the occupier would be deemed to be the Manager of the factory.
The person who is in the ultimate control must be a person in India who can be got at the
Factory. If there is no factory existing at the date when the application is made, the proviso
would have no application, in which case we must construe the main section, itself.

It is only an employer who can dismiss servants employed for a particular purpose, and a person
cannot possibly contend that he is not the employer when he exercises the most important
power of an employer to dispense with the services of employees.29 The question of liability
under Section 3 being jurisdictional fact, is subject to judicial review under Article 226 of the
Constitution.30

27
Chiranji Lal Modi v. S.R.Chakravarthy and others, (1963) (1) L.L.J. 724.
28
Bhal Gore Coal Co. Ltd. And others v. Indrajit Singh and others AIR 1964 Pat. 292.
29
Ganpati Laxman v. Lionel Holland, AIR 1955 Bom. 431.
30
Shaw Wallace & Co. Ltd. v. Authority Payment of Wages Act, 1965 (II) F.L.R. 224.

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5. CONCLUSION

Industrialisation in India has brought a huge social and economic change which transformed it
from an agrarian society into an industrial one. With the passage of time, problems relating to
payment of wages to persons employed in industry started emerging. And to regulate the
exploitation of labour, Govt. of India has enacted the Payment of Wages Act in the year 1936
after the recommendation of the Royal Commission of Labour.

The Payment of Wages Act, 1936 serves a useful purpose as it prevents exploitation of labour
and provides necessary cushion to workers as it makes mandatory for the employer to pay
wages to the workers before expiry of a specified day after the last day of the wage period.
Employers cannot withhold wages earned by workers nor can they make any unauthorized
deduction. If payment of wages is delayed or wrongful deductions are made, workers or their
trade unions can file a claim before the Authority under Payment of Wages Act, 1936 and
appeal can be filed against the order of the Authority.

The general purposes of the Act is to provide that the employed persons shall be paid their
wages in a particular form and at regular intervals without any unauthorized deductions. In this
way the object of this Act are three fold:

(1) it provides that the employed persons shall be paid their wages in a particular form;

(2) the payments will be made at regular intervals;

(3) it prohibits unlawful and unauthorized deductions from the wages.

Also, It has been observed by the Supreme Court that "the Act was passed to regulate the of
wages in certain classes of persons employed in any factory or by a Railway Administration or
by a person fulfilling a contract with a Railway Administration or in any industrial
establishment to which State Government by notification has extended this Act.

It may be concluded that the Payment of Wages Act, 1936, has been enacted by the legislature
for the purpose of ensuring regular payment of wages to small salary holders so that they may
be able to make their both ends meet. It ensures that such employees are paid their wages in a
specified or particular form at regular determined intervals without unauthorised deductions, it
prohibits the employers to delay or withhold payment of amount earned by workmen beyond
the period specified in the Act. This statute, therefore, calls for a benevolent or beneficial
construction, a construction advance the remedy and suppress the mischief. In case of doubt,

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 OBJECTIVES OF PAYMENT OF WAGES ACT, 1936

the construction should be placed in favour of the employee. To apply the rule of strict
construction would amount to defeating the real object and purpose of this enactment.

So after doing the research the researcher came to the conclusion that the hypothesis which the
researcher presumed is absolutely correct. Earlier, the researcher was of the view that the
enactment of Payment of Wages Act, 1936 provides security of wage payment to the workers.
And after conducting this research and the researcher came to know various things about the
Payment of Wages Act, 1936. That is how it evolved, the necessity of the act and various
aspects of the act. That is timely payment of wage, unlawful deduction, authorized deduction,
mode of payment, responsibility of employer to pay wage to the employees etc. so these are
some of the important aspects of the Payment of Wages Act, 1936 and these provisions prove
the hypothesis of the researcher to be absolutely correct.

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BIBLIOGRAPHY

BOOKS
 MISHRA, S.N. Labour & Industrial Laws, Allahabad: Central Law Publications, 28TH ed.,
2016.
 GOSWAMI, Dr. V.G. Labour & Industrial Laws, Allahabad: Central Law Agency, 10TH ed.,
2015.
 PADHI, P.K. Labour and Industrial Laws, New Delhi: PHI, 2ND ed., 2012.
 SRIVASTAVA, S.C. Industrial Relations and Labour Laws, Noida: Vikas Publishing House
6TH ed., 2012.

WEBSITES
 https://thewire.in/107015/parliament-wages-cheque-bank-transfer/
 http://www.paycheck.in/main/labour-law-india/work-and-wages/payment-of-wages-
act
 http://www.whatishumanresource.com/the-payment-of-wages-act-1936
 http://labour.gov.in/gazette-notification
 https://indiankanoon.org/doc/794158/
 http://www.financialexpress.com/economy/parliament-passes-payment-of-wages-
amendment-bill-2017-enables-salary-payments-via-cheques-e-mode/543161/
 http://www.thehindubusinessline.com/news/national/wage-payment-by-cheque-
account-transfers-not-mandatory-till-notified-govt/article9438112.ece

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