CMA Laws and Ethics Payment Of Wages Act 1936 Question and Answers

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Payment Of Wages Act 1936

Question 1. Objective and Scope of the Payment of Wages Act, 1936
Answer:

  • Regulates the payment of wages to certain classes of persons employed in the industry.
  • Prevents exploitation of workers by ensuring timely payment without unauthorized deductions
  • The scope of this act is limited to the person drawing the wages for the month, which does not exceed $ 24,000 per month w.e.f. 29.08.2017.
  • The department is enforcing this legislation on the persons employed at the registered factories.
  • Applies to the whole of India including J&K.
  • Prevents exploitation of workers by ensuring timely payment without unauthorized deductions.

Question 2.Responsibility for payment of wages
Answer:

  • Every employer shall be responsible for the payment to persons employed by him of all wages required to be paid under this Act.
  • Employer includes legal representatives of the deceased employer.

Question 3. Fixation of wage period and time of payment of wages
Answer:

  • The wage period should not exceed one month.
  • In case an employee is engaged in an establishment in which less than one thousand persons are employed, wages shall be paid before the expiry of the seventh day after the last day of the wage period.
  • In case an employee in an establishment in which more than one ‘ thousand persons are employed, wages shall be paid before the expiry
    of the tenth day after the last day of the wage period.
  • Prevents exploitation of workers by ensuring timely payment without unauthorized deductions.

Wages to be paid in currency coins and currency notes

Read and Learn More CMA Laws and Ethics Paper

Question 4. Deduction which may be made from wages
Answer:

Following deductions can be made by an employer while making payment of wages:

  • Fines.
  • Deduction for absence of duty.
  • Deduction for damage to or loss of goods expressly entrusted to the employed person.
  • Deduction for house accommodation supplied by an employer.
  • Deduction for amenities and services provided by the employer.
  • Deduction for recovery of advances provided by employer.
  • Deduction for recovery of loan given by employer.
  • The deduction is required to be made by order of a Court.
  • Deduction for subscription to, and repayment of advances from any provident fund.
  • The deduction is made with the written authorization of the person employed for payment of any premium on his Life Insurance Policy.
  • Deduction for contribution to funds made for the welfare of employees.
  • Deduction for contributions to any insurance scheme framed by the Central Government for the benefit of its employees.

Question 5.Mode of Payment
Answer:

  • Wages can be paid in coins or currency notes or both
  • employers may pay by cheque or by crediting the wages in the bank A/C of the employee.

Question 6.Maintenance of registers and records
Answer:

An employer shall maintain registers and records giving full particulars of the person employed by him, work performed by them, wages paid to them, the deduction made from wages, etc.

Question 7.Claims arising out of deduction from wages or delay in payment of wages and penalty for malicious or vexatious claims
Answer:

  • The State Government shall appoint an authority to hear and decide claims arising out of deductions from the wages or delay in payment of wages.
  • An aggrieved person can apply to the authority appointed by The State Government.
  • Where an application is made by an applicant, the authority shall hear the applicant and the employer.
  • After hearing and further enquiry the authority can direct the refund to the employed person of the amount deducted or the payment of delayed wages.

Question 8.Other Noteworthy Points
Answer:

  • Includes contract employees
  • The deduction of the fine imposed cannot exceed 3% of the wage

Payment Of Wages Act 1936 Short Note Question And Answers

Question 1. Write a short note on the following Limit of deductions from wages
Answer:

Limit of Deductions from Wages:

Section 7(3) provides up to which limit of the wage, the deductions may be made from the wages of the employees. Notwithstanding anything contained in this Act, the total amount of deductions that may be made in any wage period from the wages of any employed person shall not exceed:

  • In cases where such deductions are wholly or partly made for payments to cooperative societies – 75% of such wages and
  • In any other case – 50% of such wages.

Where the total deductions authorized under sub-section (2) exceed seventy-five percent or as the case may be, fifty percent of the wages the ‘ excess may be recovered in such manner as may be prescribed.

Payment Of Wages Act 1936 Descriptive Question And Answers

Question 1. Comment on the following based on legal provisions Works Manager has deducted INR 500 from wages towards the cost of tools and raw materials supplied to workers for employment (Payment of Wages Act).
Answer:

As per the Payment of Wages Act, of 1936, the deductions will be made only if there is a provision in this regard. Tools etc. are not eligible for deductions as per this Act, hence the works manager is wrong if he deducts any amount on account. of tools and raw materials.

Question 2. Wages can not be paid by cheque but can be paid in kind. Answer based on the provision of Payment of Wages Act 1936.
Answer:

An employer may after obtaining the written authorization of employed persons pay them the wages either by cheque or by crediting to their Bank A/c. In all other cases, wages shall be paid in current coins or currency notes or both but cannot be paid in kind.

Question 3. What are the conditions to deduct for recovery of advances made under the Payment of Wages Act, of 1936?
Answer:

Deductions under Clause (f) of sub-Section (2) of Section 7 (the Payment of Wages Act, 1936) shall be subject to the following conditions namely:

  • Recovery of the advance of money given before employment began shall be made from the first payment of wages in respect of a complete wage period, but no recovery shall be made of such advances given for traveling expenses;
  • Recovery of advances of money given after employment began shall be subject to such conditions as the Appropriate Government may impose;
  • Recovery of advances of wages not already earned shall be subject to any rules made by the Appropriate Government regulating the extent to which such advances may be given and the installments by which they may be recovered.

Question 4. Anil Pvt. Ltd. imposed a fine on Anurag, one of its employees for regularly reporting late for work. The fine was imposed on 4ft June 2014. The management wanted to recover the amount in November 2014 during a half-yearly increment. Can the Company recover this amount of fine, state your views as per the Payment of Wages Act, 1936.
Answer:

As per Section 8 (6) of the Payment of Wages Act 1936, no fines can be recovered after the expiry of 90 days from the date on which it is imposed. So ABC Pvt. Ltd. will not be able to recover the fine in November 2014 as the gap exceeded 90 days.

Question 5. The responsibility for the payment of wages is that of the employer. Explain.
Answer:

Sec. 3 of the Payment of Wages Act, 1936, lays down that every employer shall be responsible for the payment to persons employed by him of all wages
required to be paid under the Act. In Addition To the employer, the following persons shall also be responsible for the payment of wages.

  1. In factories, the person named as manager,
  2. In industrial or other establishments, the person, if any, who is responsible to the employer for the supervision and control of the industrial or other establishments;
  3. Upon railways otherwise than in factories, the person nominated by the railway administration on this behalf for the local area concerned;
  4. In the case of a contractor, a person designated by such contractor;
  5. In any other case, a person designated as responsible for complying with the provisions of the Act.

Question 6. What are the different kinds of deductions that can be made from wages under the Payment of Wages Act, of 1936?
Answer:

  • Section 7 gives the details of the deduction from wages.
  • The wages of an employed person shall be paid to him without deductions of any kind except those authorized by or under this Act.
  • Every payment made by the employed person to the employer or his agent shall for this Act, be deemed to be a deduction from wages.
  • Any loss of wages resulting from the imposition, for good and sufficient cause upon a person employed of any of the following penalties, namely:-
  • The withholding of increment or promotion (including the stoppage of increment at an efficiency bar);
  • The reduction to a lower post or time scale or a lower stage in a time scale; or
  • Suspension;
    • Shall not be deemed to be a deduction from wages in any case where the rules framed by the employer for the imposition of any such penalty conform with the requirements if any which may be specified on this behalf by the Appropriate Government by notification in the Official Gazette.
    • Section 7(2) provides that Deductions from the wages of an employed person shall be made only by the provisions of this Act and may be of the following kinds only namely:
  • Fines;
  • Deductions for absence from duty;
  • Deductions for damage to or loss of goods expressly entrusted to the employed person for custody, or for loss of money for which he is required to account, where such damage or loss is directly attributable to his neglect or default;
  • Deductions for house accommodation supplied by the employer or by the government or any housing board set up under any law for the time being in force (whether the government or the board is the employer or not) or any other authority engaged in the business of subsidizing house accommodation which may be specified in this behalf by the appropriate Government by notification in the Official Gazette;
  • Deductions for such amenities services supplied by the employer as the Appropriate Government or any officer specified by it on this behalf may by general or special order authorize;
  • Deductions for recovery of advances of whatever nature (including
    advances for traveling allowance or conveyance allowance), and the interest due in respect thereof, or for adjustment of over-payments of wages;
  • Deductions for recovery of loans made from any fund constituted for the welfare of labor by the rules approved by the appropriate Government and the interest due in respect thereof;
  • Deductions for recovery of loans granted for house-building or other purposes approved by the appropriate Government and the interest due in respect thereof;
  • Deductions of income-tax payable by the employed person;
  • Deductions required to be made by order of a court or other authority competent to make such order;
  • Deductions for subscriptions to and for repayment of advances from any provident fund to which the Provident Funds Act, 1952 applies or any recognized provident funds as defined in Section 2(38) of the Indian Income Tax Act, 1961 or any provident fund approved in this behalf by the appropriate Government during the continuance of such approval;
  • Deductions for payments to cooperative societies approved by the appropriate Government or any officer specified by it on this behalf or to a scheme of insurance maintained by the Indian Post Office and
  • Deductions, made with the written authorization of the person employed for payment of any premium on his life insurance policy to the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 or for the purchase of securities of the Government of India or any State Government or for being deposited in any Post Office Saving Bank in furtherance of any savings scheme of any such government.
  • Deductions made with the written authorization of the employed person, for the payment of his contribution to any fund constituted by the employer or a trade union registered under the Trade Unions Act, 1926 for the welfare of the employed persons or the members of their families, or both, and approved by the appropriate Government or any officer specified by it in this behalf, during the continuance of such approval;
  • Deductions made, with the written authorization of the employed person, for payment of the fees payable by him for the membership of any trade union registered under the Trade Unions Act, 1926;
  • Deductions, for payment of insurance premium on Fidelity Guarantee Bonds;
  • Deductions for recovery of losses sustained by a railway administration on account of acceptance by the employed person of counterfeit or base coins or mutilated or forged currency notes;
  • Deductions for recovery of losses sustained by a railway administration on account of the failure of the employed person to invoice, bill, collect, or account for the appropriate charges due to that administration, whether in respect of fares, freight, demurrage wharfage, and carnage or respect of the sale of food in catering, establishments or respect of the sale of commodities in grain shops or otherwise;
  • Deductions for recovery of losses sustained by a railway administration on account of any rebates or refunds incorrectly granted by the employed person where such loss is directly attributable to his neglect or default;
  • Deductions, made with the written authorization of the employed person, for contribution to the Prime Minister’s National Relief Fund or to such other Fund as the Central Government may, by notification in the Official Gazette specify;
  • Deductions for contributions to any insurance scheme framed by the Central Government for the benefit of its employees.

Nothing contained in this section shall be construed as precluding the employer from recovering from the wages of the employed person or otherwise any amount payable by such person under any law for the time being, in force other than the Indian Railways Act 1890.

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