What is Payments of Wage Act?
The Payment of Wages Act, 1936 was enacted to address issues related to illegal wage deductions and delays in salary payments to workers. It ensures that employees receive their wages on time and without unauthorized deductions, and it applies to certain categories of workers employed in industries. The Act aims to streamline salary payments, ensuring fair treatment and transparency for workers regarding their compensation.
Key Provisions of the Act:
Timely Payment: Employers must ensure that employees receive their wages by the 7th day of the month if there are fewer than 1,000 workers, or by the 10th day if there are more than 1,000 workers. The wage period cannot exceed one month. The Act applies to employees earning up to INR 6,500 per month.
Authorized Deductions: Employers can only make deductions for specific reasons, such as fines, unauthorized absence, damage or loss of company property, loan repayments, or insurance. Unauthorized deductions are prohibited.
Mode of Payment: According to the Act, wages must be paid in currency notes or coins. Direct bank transfers are allowed only if the employee agrees to this mode of payment.
The Act helps protect employees from unfair pay practices, ensuring they are compensated fairly and promptly according to legal standards.