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Contents of the act

Chapter 1 (sections 1 & 2) Introduction, Objects, Applications

Chapter 2 (section 3 to 13) Chapter 3 (sections 14 to 19) Chapter 4 (sections 20 to 26) Miscellaneous Payment and Deductions of Wages Authorities Under the Act

Wages [sec 2(vi) ]

WAGES means all remunerations capable of being expressed in terms of money, which would if the terms of the contract of employment, expressed of implied, were full filled, be payable to person employed irrespective of his employment or of work done in such employment and includes house rent allowances.

Fixation of wage-periods [ sec-4 ]

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

Time of payment of wages [ sec-5 ]

Time of payment of wages :-

The wages of every person

employed upon or in --(a) any railway, factory or [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 [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.

Method of Payment [ sec-6]

(a) Wages to be paid in current coin or currency notes. All wages shall be paid in current coin or currency notes or in both.

(b) Wages shall include any bonus of the description given in sub clause (1) of clause (vi) of section 2.

Deductions [ sec 7 to 13]

7(1) says that every payment made by the employed person to the employer or his agent shall, for the purposes of this Act, be deemed to be deduction from wages. It also lays down that any loss of wages resulting from any imposition, upon a person, shall not be deemed to be a deduction from wages.

Deduction for absence from

(1) Deductions may be made under 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 larger 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: Deductions for absence from duty.

Deductions for damage of loss.

A deduction under 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.

A deduction shall not be made under (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.

Deductions for services rendered.

A deduction of section 7 shall not be made from the wages of an employed person, unless the houseaccommodation 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 houseaccommodation amenity or service supplied .

Deductions for recovery of loans.

Deductions for recovery of loans granted under section 7 shall be subject to any rules made by the State Government regulating the extent to which such loans may be granted and the rate of interest payable thereon.

Deductions for payments to cooperative societies and insurance schemes.

Deductions under section 7 shall be subject to such conditions as the State Government may impose. Deductions for payments to co-operative societies and insurance schemes.


All such deductions and all realizations 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.

Case Law Studies.

Gopalan V/s Augmati Chit Fund HELD:- Statutory bonus of 8 1/3 %is payable whether there are profits to the accounting year or not. After coming into force of the Payment of Bonus Act, bonus has become an implied term of employment not dependent upon the profits and therefore comes under the category of remuneration. Viewed in this light the wages as a general term would include.

Arvind Mills LTD. V/s K.R. Gadgil (AIR 1941 Bom. 26) HELD:-the general purpose of the Act is to provide that employed persons shall be paid wages in a particular form and at regular intervals without any unauthorized deductions". The

use of expression "Certain classes of persons" in the preamble

applies to persons drawing on an average wages less than rupees one thousand six hundred per a month .