The Payment of Wages Act, 1936 makes sure that wages are paid on time, in full, and without arbitrary deductions. It applies to persons employed in industrial establishments, including Railways (directly or through contractors), whose wages are within a ceiling notified by the Central Government.
- 'Wages' means all remuneration payable in money under the terms of employment. It does not include travelling allowance, the value of house accommodation, contributions to pension or provident fund, or gratuity on termination.
- On railways (other than factories), the person nominated by the railway administration for the local area is responsible for payment.
Wage Period and Time of Payment
| Point | Rule |
|---|---|
| Wage period | Fixed by the employer; never more than 1 month |
| Fewer than 1,000 persons employed | Pay before the end of the 7th day after the wage period |
| More than 1,000 persons employed | Pay before the end of the 10th day after the wage period |
| Employment terminated by the employer | Pay before the end of the 2nd working day after termination |
| Mode | On a working day, in current coin or currency notes, not in kind |
Fines (Section 8)
- A fine may be imposed only for acts and omissions in a displayed, approved list, and only after a show-cause opportunity.
- Total fines in a wage period must not exceed 3% of the wages for that period.
- No fine on a person below 15 years of age; no recovery in instalments, or after 90 days from the date of the act.
- All fines go to the Staff Benefit Fund, and a register of fines must be kept.
Deductions
- Only authorised deductions are allowed: fines, absence from duty, loss of goods or cash entrusted to the employee, house accommodation, amenities, recovery of advances and overpayment, income tax, court orders, PF subscription and advances, co-operative society dues, and any other deduction with the employee's written authority.
- Total deductions must not exceed 75% of wages where co-operative society payments are included, and 50% in other cases.
Notices, Registers and Claims
- Display an abstract of the Act (in English, Hindi and the regional language), the wage period, the date of payment and the list of acts and omissions.
- Keep a register of fines, a register of deductions for loss or damage, and a register of wages at the work spot.
- Claims on wrong deductions or delayed wages are heard by an authority such as a Commissioner for Employees' Compensation, a Regional or Assistant Labour Commissioner with at least 2 years' experience, or a presiding officer of a Labour Court.
- Breaches such as delay, non-payment or unauthorised deductions are punishable with a fine of Rs 1,500 to Rs 7,500.
Labour Codes
The four Labour Codes came into force on 21 November 2025. The Code on Wages, 2019 now subsumes the Payment of Wages Act. Departmental papers still ask about the Act by name, so learn the provisions above, but check current orders for any changed figures.