For any business which has a certain number of people working for it, it is necessary to follow the provisions of Employee wages act where minimum amount is to be paid to the employees for their work in terms of hours or days. The minimum wages are declared by the government keeping certain factors in the account, and the businesses need to follow the same. For every company or business, it is an important act that must not be ignored. The employee wages act is mandatory to be followed by every business irrespective of its type of work or business, as well as the location. It also has numerous other provisions which are essential from the employees' point of views. In case of noncompliance of the same, there may be fine or punishment or even both to the respective authority of the business. The prime motive of the employee wages act is to ensure fair compensation to the workers who put their efforts and time for the business. However, it is not that the law looks at the interest of the employees only. It also has provisions under which a worker cannot have any contract to other employers while he is in a job with one employer. Hence the sole motive of the act is to create a better work culture where the employees and employers can stand together and work well.

What is the payment of wages act?

The payment of wages act is the employee wages act only, which is known as the payment of wages act 1936, and it applies to the whole of India, including the union territories. It applies to all the employees, whether they are part of a factory or railway or any other organization. It also applies to those who are directly applied by the employer or via a contractor.

The employee wages act is known as a primary act which safeguards the interest of the employees as far as wages are concerned. However, here one needs to remember that this act applies to those only who withdraw the wages 24000 or below it for a particular period of work. The above limit can be changed by a government notification under a gazette. Usually, it changes every five years after the recommendation of the National Sample Survey.

The provisions of law cover wide areas in terms of the organizations where it is mentioned in the law and almost every type of business is under the periphery of this law. It is primarily to save the employees from being exploited as in many cases people do not get work at all and hence those who can offer work take undue advantage of the people who are ready to work. The employee wages act can be a good weapon in the hand of employees if it is used rightly. Though there are also some other acts where the definition and area covered under wages differ from this act. The Wages under ESI act have a different definition, and its area of implementation also varies, which may not have as vast coverage as the employee wages act has.

Wages for a common man may have the simple meaning as what he gets in lieu of the work he has done or services he has offered to the employer. However, as per the law, this is not the only definition. The wages under the ESI act has little difference than the same defined in the employee wages act. Here are a few definitions of wages.

As per the law, wages means complete remuneration that includes various allowances under any head also. It is expressed by the employer or maybe implied also. It covers the remuneration, which may be as a part of any remuneration or reward or even penalty, which can be a settlement of a case out of the court also. Such wages also cover the remuneration of working on holidays and overtime as well as any other leaves under the terms of employment. If one gets it as a part of the termination, it is also considered as wages only. Hence it is a broad term that covers bonuses, legal compensation, and perks as well as allowances.

Under the ESIC wages act, there are also some responsibilities fixed on the part of the employers who need to pay wages. As per the provisions of the act, the concerned organization, whether it is a department, a store, or a factory or any other organization it or its relevant authority, is responsible for the payment of wages to the concerned employees. Here one may be the owner or any other person appointed by the owner who is the relevant authority for the payment to the required department or concerned employees of that department. It may be a government organization, semi-government organization, or a private organization that is covered under the ESIC wages. The concerned organization may be a service provider or a business or industry.

The ESIC wages also applies to the contractor, sub-contractor, and in case a contractor or sub-contractor cannot pay the employees, the employer who has hired such a contractor or subcontractor needs to make the payment to the employees. Hence the salaried employees' act covers a huge range of employees and employers under its periphery.

Who is covered under the Payment of Wages Act?

If the salaried employees act or payment of wages act is taken into account, they have a broad definition of employees, which not only covers the industries or private organizations but also government departments such as railway and public works departments.  It also talks about the fixation of the period for wages and revises the same at regular intervals as per the recommendation of the labour ministry.

As per the act, the employee wages can be of any frequency, and yet it can have coverage of wages act. It may be weekly, bi-weekly, fortnightly, daily, or even monthly. However, in any case, the wage period must not be more than 30 days as per the provision of wages act. It cannot be half-yearly, or yearly as well as quarterly. The act does not talk about the time frame by when the salary has to be paid as it can be paid on the 7th or 10th day of the month beginning from the 1st.

However, if the employer terminates the employee, he needs to pay him within the two days of the termination. In any other case of payment than the termination, it may be the duration of 30days, as mentioned earlier. Hence wages as per ESI Act have strict provisions for payment.

The payment of wages as per the act can be provided by cheque or offering a credit to the account of the concerned employer. The wages as per the ESI act also has provisions for certain deductions that can be made from the wages of the concerned person. These deductions can be in the form of TDS, PF, PT, and ESIC. In case of any more deduction, it has to be explicitly quoted in the salary slip, and the same has to be there in the pay policy of the concerned organization also.

Is the Minimum Wages Act applicable to private companies?

The simple answer to this question is yes, as the ESI wages act as well as salaried employees act clearly defines the employees who are covered whether they are hired by any private company or even by the government department. To protect the general workers from unfair deductions and less wages, the government also has covered private company employees in this act. However, there are also some restrictions on the number of employees and type of employment, which makes some exclusion of the companies too. The nature of work has to be regular, and the employment also needs to be regular of a particular nature only to attract the provisions made in these acts.

What if the provisions are not followed? 

Different acts have different provisions for penalty and punishment if the regulations are not followed as guided. There can be various reasons from the employers for not following the guidelines and provisions provided under different acts. The penalty and punishment can be there if there are deductions without fair reasons, delay of wages payment, and excessive deductions than what one can deduct officially.

There can be over deductions towards loss or damage to the business or employer as well as unfair deductions in case of amenities provided for employment, including house accommodation. In any such situation, there can be a penalty that begins from 1000 rupees, which can be extended up to 7500 rupees. This penalty may be attracted in case the period of wages to be provided exceed one month if the wages are not provided in a working day or paid in the form of other then the current currency notes or coins.

If the employer collects fine from the employees for any reason and there is no record maintained for the same, the penalty may be applicable. In case of use of penalty amount collected in an unfair manner or not providing the employees valid reasons for penalties in writing also, the provisions of penalty to the employer can be applied.

If the inspector who is discharging his duties to make the provisions of this law followed obstructed by any means, there could be a penalty of 3000 rupees to the employer. If the required record is not provided to the inspector on duty or any needed facility is not provided to facilitate the duty of the inspector, this penalty can be applied.

If the same punishable acts repeat on the part of the employer, he can be imprisoned for one month, which can be extended up to six months and with the penalty of 3750 to 8000 rupees, which can be further extended to the extent of 20000 rupees also.

What if the employee is dead?

In case of the death of an employee, the employer needs to pay his due amount to the person nominated by the employee. The employer also gets discharged from his duty of deposition of other amounts such as PF and ESI as well as PT and TDS, on an immediate basis. If the employee has nominated anyone, the due amount to him needs to be deposited to the concerned authority as guided by the concerned law and department.

Hence one can say that the provisions of employee wages act are made to safeguard the interest of the employees and, on the other side, allow the employers to hire genuine employees from society. Here one needs to note that there are several exceptions under different laws, and hence one needs to go through the provisions thoroughly as per the situation that occurs.

Overall the wages act is quite strict and not only in the interest of the employees or society but also fair enough for the employers who offer jobs to many aspirants.

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