PAYMENT OF WAGES UNDER THE CODE OF WAGES, 2019 AND THE RULES MADE THEREUNDER

Introduction

The Payment of Wages Act, 1936 provides for the payment of wages and the related procedure. The said Act was subsumed in ‘The Code of Wages, 2019’ (‘Code’ for short). The provisions relating to the payment of wages are contained in Chapter III of the Code (Sections 15 to 25). The Government framed rules for these purposes called as ‘The Code on Wages (Central) Rules, 2026’. The payment of wages is dealt with in the Chapter IV of the Rules from Rule 11 to Rule 20.

Fixation of wages periods

The Code provides different wage periods for payment. The employer is to select the wage period. The wage period may be daily or weekly or fortnightly or monthly. However, the wage period shall not exceed one month. Different wages periods may be fixed for different establishments.

Deduction from wages

The following deductions as authorised by the Code can be deducted from the wages of the employee-

• Fine imposed on him;
• For absence of duty;
• For loss or damage of goods entrusted to the employee for custody;
• Loss of money for which the employee is required to account;
• For House-accommodation supplied by the employer or by appropriate Government or any housing board set up under any law for the time being in force, whether the Government or such board is the employer or not, or any other authority engaged in the business of subsidising house-accommodation which may be specified in this behalf by the appropriate Government by notification;
• For such amenities and services supplied by the employer as the appropriate Government or any officer specified by it in this behalf may, by general or special order, authorise and such deduction shall not exceed an amount equivalent to the value of such amenities and services.
• For recovery of advances granted to the employee, including travelling or conveyance allowance;
• Deductions required by the order of Court or other authority competent to pass;
• Loans made from any fund constituted for the welfare of labour, as may be prescribed by the appropriate Government, and the interest due in respect thereof;
• 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 or any other statutory levy levied by the Central Government or State Government and payable by the employee;
• For subscription to, and for repayment of advances from any social security fund or scheme constituted by law including provident fund or pension fund or health insurance scheme or fund known by any other name;
• For payment of co-operative society subject to such conditions as the appropriate Government may impose;
• For payment of fees and contributions to the Trade Unions for the membership;
•  For recovery of losses sustained by the railway administration on account of acceptance by the employee of counterfeit or base coins or mutilated or forged currency notes;
• For recovery of losses sustained by the railway administration on account of the failure of the employee to invoice, to bill, to collect or to account for the appropriate charges due to the railway administration whether in respect of fares, freight, demurrage, wharfage and cranage or in respect of sale of food in catering establishments or in respect of commodities in grain shops or otherwise;
• For recovery of losses sustained by the railway administration on account of any rebates or refunds incorrectly granted by the employee where such loss is directly attributable to his neglect or default;
• For recovery of losses sustained by the railway administration on account of any rebates or refunds incorrectly granted by the employee where such loss is directly attributable to his neglect or default;
• With the written authorisation of the employee, for contribution to the Prime Minister’s National Relief Fund or to such other fund as the Central Government may, by notification, specify.

Deemed Deduction

      Any payment made by an employee to the employer or his agent shall be deemed to be a deduction from his wages.

     Any loss of wages to an employee, for a good and sufficient cause, resulting from-

(i) the withholding of increment or promotion, including the stoppage of an increment; or

(ii) the reduction to a lower post or time-scale; or

(iii) the suspension,

shall not be deemed to be a deduction from wages in a case where the provisions made by the employer for such purposes are satisfying the requirements specified in the notification issued by the appropriate Government in this behalf.

Limit for deductions

The total amount of deductions which may be made under sub-section (2) in any wage period from the wages of an employee shall not exceed 50% of such wage. If the total deductions authorised exceed 50% of the wages, the excess may be recovered in such manner, as may be prescribed, the excess shall be carried forward and recovered from the wages of succeeding wage period, in instalments so that the recovery in any month shall not exceed the 50% of the wages of the employee in that month.

No responsibility on the employee

Where any deduction is made by the employer from the wages of an employee but not deposited in the account of the trust or Government fund or any other account, as required, such employee shall not be held responsible for such default of the employer.

Time limit for payment

The payment of wages is to be done-

• daily basis - at the end of the day;
• weekly basis – on the last working day of the week but before the weekly holiday;
• fortnightly basis – before the end of the second day after the end of the fortnight;
• monthly basis – before the seventh day of the succeeding month.

If an employer resigned or removed from service, retrenchment or dismissed from service – within 2 days from the date of such resignation, removal, retrenchment or dismissal.

These time limits shall not be affected by any other law for the time being in force. The appropriate Government may, provide any other time limit for payment of wages where it considers reasonable having regard to the circumstances under which the wages are to be paid.

Payment to the contractual employee

Where the employees are employed in an establishment through a contractor, the company or firm or association or any other person who is the proprietor of the establishment shall pay to the contractor, the amount payable in respect of the wages of employees in accordance with the provisions of the Code.

Payment to the part time employee

An employee shall not be entitled to receive wages for a full normal working day, in case the employee had agreed to work on part time basis, as per the terms of the employment or not entitled to receive such wage under any other labour law for the time being in force.

Fines

No fine shall be imposed on any employee save in respect of those acts and omissions on his part as the employer, with the previous approval of the appropriate Government or of such authority. The Deputy Chief Labour Commissioner (Central) having jurisdiction over the place of work of the employee concerned shall be the authority for approving acts and omissions.

A notice specifying such acts and omissions shall be exhibited in physical form or electronically in Hindi, English and local language at the conspicuous place in the premises of the work place in which the employment is carried on and a copy of the notice shall be sent electronically or by speed post to the Inspector-cum-Facilitator having jurisdiction.

The employer shall give intimation electronically or in writing to the employee concerned specifying therein the particulars of acts and omissions done by the employee, warranting the imposition of fine, for showing cause within 7 days. After hearing the employee, the fine may be imposed on the employee. If no reply is received from the employee within the time stipulated in the notice, the employer may impose penalty. The same shall be informed to the employee within 15 days of such deduction.

The total amount of fine which may be imposed in any one wage-period on any employee shall not exceed an amount equal to 3% of the wages payable to him in respect of that wage-period.  No fine shall be imposed on any employee who is under the age of 15 years. No fine imposed on any employee shall be recovered from him by instalments or after the expiry of 90 days from the day on which it was imposed.

The fine shall be deemed to have been imposed on the day of the act or omission in respect of which it was imposed.

The Register of fines

All fines and all realisations thereof shall be recorded in a register to be kept in such manner and form as may be prescribed; and all such realisations shall be applied only to such purposes beneficial to the persons employed in the establishment as are approved by the prescribed authority.

Absence from duty

Deductions from the wages of the employees may be done because of absence from duty. If 10 or more employed persons acting in concert absent themselves without due notice and without reasonable cause, such deduction from any such person may include such amount not exceeding his wages for 8 days as may by any such terms be due to the employer in lieu of due notice.  An employee shall be deemed to be absent from the place where he is required to work if, although present in such place, he refuses, in pursuance of a stay-in strike or for any other cause which is not reasonable in the circumstances, to carry out his work.

Damage or loss

A deduction for damage or loss shall not exceed the amount of the damage or loss caused to the employer by negligence or default of the employee. The deduction shall not be made until the employee has been given an opportunity of showing cause against the deduction or otherwise than in accordance with such procedure as may be prescribed for the making of such deductions. All such deductions and all realisations thereof shall be recorded in a register to be kept in such form as may be prescribed.

Deduction for house amenities

Deduction shall be made from the wages of an employee, for the house-accommodation amenity or service has been accepted by him as a term of employment or otherwise and such deduction shall not exceed an amount equivalent to the value of the house-accommodation amenity or service supplied and shall be subject to such conditions as the appropriate Government may impose.

Recovery of advances

The deductions for recovery of advances given to an employee shall be subject to the following conditions, namely-

(a) recovery of advance of money given to an employee before the employment began shall be made from the first payment of wages to him in respect of a complete wage-period but no recovery shall be made of such advances given for travelling expenses;

(b) recovery of advance of money given to an employee after the employment began shall be subject to such conditions as may be prescribed;

(c) recovery of advances of wages to an employee not already earned shall be subject to such conditions as may be prescribed.