Page 147 - DMGT306_MERCANTILE_LAWS_II

Mercantile Laws – II

Notes Self Assessment

State whether the following statements are true or false:
1. The State Government is responsible for enforcement of the Act in railways and air
transport services, while the Central Governments are responsible for it in factories.

2. Prior to 1936, there was no law regarding the regulation of payment to workmen.

8.2 Basic Provisions and Responsibility of this Act

The basic provisions of the Act are as follows:-
1. The person responsible for payment of wages shall fix the wage period upto which wage
payment is to be made. No wage-period shall exceed one month.
2. All wages shall be paid in current legal tender, that is, in current coin or currency notes or
both. However, the employer may, after obtaining written authorisation of workers, pay wages
either by cheque or by crediting the wages in their bank accounts.
3. All payment of wages shall be made on a working day. In railways, factories or industrial
establishments employing less than 1000 persons, wages must be paid before the expiry of the
seventh day after the last date of the wage period. In all other cases, wages must be paid before
the expiry of the tenth day after the last day of the wage period. However, the wages of a worker
whose services have been terminated shall be paid on the next day after such termination.

4. Although the wages of an employed person shall be paid to him without deductions of any
kind, the Act allows deductions from the wages of an employee on the account of the following:-
(i) fines; (ii) absence from duty; (iii) damage to or loss of goods expressly entrusted to the
employee; (iv) housing accommodation and amenities provided by the employer; (v) recovery
of advances or adjustment of over-payments of wages; (vi) recovery of loans made from any
fund constituted for the welfare of labour in accordance with the rules approved by the State
Government, and the interest due in respect thereof; (vii) subscriptions to and for repayment of
advances from any provident fund; (viii) income-tax; (ix) payments to cooperative societies
approved by the State Government or to a scheme of insurance maintained by the Indian Post
Office; (x) deductions made with the written authorisation of the employee for payment of any
premium on his life insurance policy or purchase of securities.

Example: One of the most famous payments of wages acts is the Payment of Wages Act
of 1936 in India. The law was passed by the Bombay High Court while India was still under
British colonial control. The act notes that unfair treatment of workers is common and takes
many forms. It specifically prohibits employers from making any unauthorized withholdings
from workers’ wages. The Payment of Wages Act of 1936 only applies to workers with incomes
below a certain threshold. It also only applies to industrial and railroad workers, who were
among the most imperiled groups in India in the 1930s.

8.2.1 Responsibility of this Act

Section 3 makes every employer responsible for the payment to persons employed by him of all
wages required to be paid under the Act. Quite apart from this the following persons shall also
be responsible for the payment of wages for persons employed otherwise by a contractor:
 In a factory, a person named as manager of a factory under the Factories Act, 1948.

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