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Unit 8: Payment of Wages Act, 1936

(iv) any sum by reason of the termination of employment of the person employed is payable Notes
under any law contract or instrument which provides for the payment of such sum, whether
with or without deductions, but does not provide for the time within which the payment is to be
made;
(v) any sum to which the person employed is entitled under any scheme framed under any law
for the time being in force; but does not include:
 any bonus (whether under a scheme of profit sharing or otherwise) which does not form
part of the remuneration payable under terms of employment or which is not payable
under any award or settlement between the parties or order of a Court;

 the value of any house accommodation, or of the supply of light, water, medical attendance
or other amenity or of any service excluded from the computation of wages by a general
or special order of the State Government;

 any contribution paid by the employer to any pension or provident fund, and the interest
which may have accrued thereon;
 any traveling allowance or the value of any traveling concession;

 any sum paid to the employed person to defray special expenses entailed on him by the
nature of his employment; or
 any gratuity payable on the determination of employment in cases other than those
specified in sub-clause (d).



Caselet Bank of India v. T.S. Kelawala and Ors.

n the case of Bank of India v. T.S. Kelawala and Ors., the question which came for
consideration was that whether an employer has a right to deduct wages unilaterally
Iand without holding an enquiry for the period the employees go on strike or resort to
go-slow. The appellant in this case is a nationalized bank. The demands for wage-revision
made by the employees of all the banks were pending at the relevant time, and in support
of the said demands the All India Bank Employees’ Association had given a call for a
countrywide strike.
The appellant-Bank issued a circular to all its managers and agents to deduct wages of the
employees who would participate in the strike for the days they go on strike. The Bank
issued an Administrative Circular warning the employee that they would be committing
a breach of their contract of service if they participated in the strike and that they would
not be entitled to draw the salary for the full day if they did so, and consequently, they
need not report for work for the rest of the working hours on that day. The court held that,
Section 7 (2) read with Section 9 of the Payment of Wages Act provides the circumstances
under which and the extent to which deduction can be made. It is only when the employer
has right to make deduction, resort should be had to the act to ascertain the extent to which
the deduction can be made. No deduction exceeding the limit provided by the act is
permissible even if the contract so provides. There cannot be contract contrary to or in
terms wider than the input of sections 7 and 9 of the act. Therefore wage deduction cannot
be made under section 7(2) of the payment of wages act if there is no such power to the
employer under the terms of contract.

Source: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1593043

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