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Unit 8: Payment of Wages Act, 1936

Self Assessment Notes

State whether the following statements are true or false:
13. All deductions and realisations in respect of damage or loss shall be recorded in a register
to be kept by the person responsible for the payment of wages.

14. Deductions for house accommodation and for amenities and services rendered by the
employer are permitted.
15. Every payment made by the employed person to the employer or his agent.

8.8 Summary

 The Act applies to the wages of persons employed in any factory or by a railway
administration or by a contractor to a railway administration.
 The Act can be extended by the Provincial Government to any class of persons or
establishments after giving three months’ notice.

 For definition of ‘factory’ and railway administration, see notes under Section 2.
 The Act applies to all matters referred to therein except that it does not affect any special
law or any specific form of procedure prescribed under any law for the time being in force.
 The employer and employee are always been in conflict for one or the other reasons.

 Wages are one of those issues. And deduction from wages has always been criticized by
the employees.

 Though there are various provisions made under the Payment of Wages Act, 1936 where
deduction can be made in certain circumstances.

 But such deduction must be permissible deduction so that the employers do not get resentful
with such deduction.
 Therefore Section 7 to Section 12 specifically provides for the deduction that can be made
from the wages of the employee.

 A deduction for damage to or loss or goods expressly entrusted to the employed person
for custody, or for loss of money which he is required to account can be made where such
loss is directly attributable to his neglect or default.

8.9 Keywords

Allowance: An allowance is an amount of money set aside for a designated purpose.
Basic rate of pay: Basic rate of pay is used to calculate pay for work on a rest day or public
holiday.
Bonus: The word Bonus refers to extra pay due to good performance.
Deduction: An expense subtracted from adjusted gross income when calculating taxable income,
such as for state and local taxes paid, charitable gifts, and certain types of interest payments.
Factory: A building or buildings where goods are manufactured or assembled.

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