Payment of Wages
The Employment – Unemployment Survey of 2011-12, presented by the National Sample Survey Office (NSSO), the total workforce of India is 474.23 million. However, out of this total workforce, only 8 per cent belong to the formal sector, and the remaining 92 per cent are working in the informal sector. Additionally, 60 percent of the growth of GDP is due to the contribution of these informal sector workers. According to the Indian Constitution, the Government of India is required to create employment opportunities and ensure that all workers (formal and informal sectors) have access to a reasonable standard of living that includes all socioeconomic and other welfare opportunities. Adhering to the Constitution of India, the Indian Government in the year 1948, right after independence, introduced legislation named the Minimum Wages Act of 1948. The legislative intent behind the Act was to make sure that workers in the informal sector receive at least a minimum amount of money as wages to avoid exploitation. However, before this Act, the Payment of Wages Act of 1936 was introduced. The Act made efforts so that informal sector workers could be linked with mainstream development by providing minimum wages, which can be utilised to increase living standards and benefit social development schemes. Payment of Wages Act, 1936 Since labourers and workers constituted the oppressed class, the concern of arbitrary deductions from wages and payments of wages that were not uniform was not given much attention. However, in 1925, a private Bill known as the Weekly Payment of Wages Bill was presented in the Legislative Assembly that dealt with these issues. However, at that time, the government rejected the Bill by claiming that the problem was already under assessment. The Indian Government maintained a connection with the regional or state-level administrations in 1926. It encouraged them to look into and gather the necessary data, materials, etc., about the challenges, as mentioned earlier, faced by the oppressed classes, specifically workers and labourers. The information gathered made it clearly evident that the problems, which included the employers’ arbitrary deduction of large amounts of money from wages and the inconsistent and delayed distribution of payments, which left workers in the most precarious of circumstances, were quite real. The Royal Commission on Labour was established in 1929 under the chairmanship of John Henry Whitley. The commission was established to investigate and evaluate the current working conditions in factories and other production sites in pre-independent India. The Commission provided the data collected from the provincial governments in British India. It was given the responsibility to do extensive research on the physical and mental well-being, productivity, access to health services, and living standards of the workforce, as well as on the relationships between employers and employees. Also, the Commission had to offer suggestions for the betterment of the workers. The Government of India collected information from the provincial governments. The report by the Royal Commission on Labour (1929) covered a wide range of problems faced by workers in various manufacturing facilities, including textiles, leather goods, underground mining, steam engines, and silvicultural factories, as well as employees engaged in public service departments. It covered nearly all of the problems that employees experience, from low pay, long working hours, and no leave considering bad health and well-being, no accommodation, lack or absence of trade unions, the establishment of workmen’s compensation fund, industrial disputes, etc. The report is so thorough that almost all worker welfare legislation and economic laws currently in existence, such as the Trade Union Act of 1926, the Industrial Disputes Act of 1947, the Payment of Wages Act of 1936, and the Minimum Wages Act of 1948, etc. Definition of Wages The term wages has been defined as all remuneration (whether by way of salary, allowances, or otherwise) payable to a person employed in respect of his employment or of work done in such employment. Under the Payment of Wages Act, wages include: Any remuneration payable under any award or settlement between the parties or order of a Court; Any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period; Any additional remuneration payable under the terms of employment (whether called a bonus or by any other name); Any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made; Any sum to which the person employed is entitled under any scheme framed under any law for the time being in force, but does not include: Any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a Court; The value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate Government; Any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon; Any travelling allowance or the value of any travelling concession; Any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; or Any gratuity payable on the termination of employment. Due Date for Salary Payment and Wages As per the provisions of the Payment of Wages Act, 1936, wages need to be paid to employees before the expiry of the 7th day of the last day of the wage period, where number of employees are less than 1000. In case the number of employee is less than 1000, wages must be paid before the expiry of the 10th day of the last day of the wage period. Further, wages must be paid only on working day and not on holiday. In case employment