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Payment of Wages Act, 1936 in India | Fines - Pionhr

The Payment of Wages Act


The Payment of Wages Act is to ensure the proper payment of wages to the employees without any kind of delay or unauthorized deduction in the payment.


It extends to the whole of India. It is applicable to every person employed in

  • Any factory,
  • Any railway or through sub-contractor in a railway
  • A person employed in an industrial or other establishment.

The State Government may by notification extend the provisions to any class of persons employed in any establishment or class of establishment.

Method of Payment

The wages can't be paid in kind; it needs to be paid in cash, i.e. the country's current currency, note or coin.

The amount can also be paid by cheque or by direct crediting to the bank account of the employee after getting the authorization in writing.

Authorized Deduction

The employer needs to pay the wags to the employee without any kind of deduction other than the authorized reason as per the Payment of Wages Act. The list of authorized deduction from wages includes: -

  • Fines
  • Absence from duty/ leave without pay.
  • House accommodations provided by the employer.
  • Proven damage or loss of goods by the employee.
  • Deduction of wages as recovery of advance payments.
  • amenities and services supplied by the employer
  • deductions for recovery of advances of whatever nature (including advances for travelling allowance or conveyance allowance), and the interest due in respect thereof, or for adjustment of over-payments of wages and loans
  • 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 (19 of 1925),
  • deductions for payments to co-operative societies approved by the State Government
  • deductions, made with the written authorisation of the person employed for payment of any premium on his life insurance policy

However, there are specific rules for the wages deduction in each condition as well.

Deduction for absent on duty as per Sec. 9 of the Act

  • The absence being during the period of time when the staff was required to work.
  • If over 10 employees remain absent, then the deduction of wages can exceed the wages of 8 days.

Deduction for damage or loss as per Sec. 10 of the Act

  • The amount of deduction cannot exceed the amount of damage or loss caused. If it is an asset, the depreciation also needs to be calculated.
  • The employee will be given a chance to show cause.
  • A complete record of these kinds of deductions needs to be maintained in a register.


However, as per the Sec. 15 of the Act, an employee has the right to appeal against the deduction as per the Payment of Wages Act. An application can be made to the concerned authority by: -

  • The Employee himself,
  • His/her Legal practitioner,
  • Official of registered trade union,
  • Any person acting with the permission of the authorized personnel or,
  • Any inspector under this act.

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Payment of Wages Act,  1936

This act mainly regulates the payment of wages to certain classes of persons employed in particular kinds of industries. This act's importance and benefits can't be denied as it  ensured employees should get their payment on time and without any unauthorized deduction.
The Payment of Wages Act, 1936  seems to be a remedy against the employer's unauthorized deduction. Although this act also has several rules here, we are discussing a few crucial benefits of this Act.

Regular Pay

According to The Payment of Wages Act, 1936,  the employee's payment should be done before the 7th day of each month if the number of employees in the organization is  upto 1000. If the number of employees is more than 1000, then the payment should be done before the 10th day of each month. The wage period shouldn't exceed 1 month.

The Payment of Wages Act, 1936 also mentions that the regular pay act is the only applicable to  for those employees whose drawing wages is not  exceeding Rs 6,500/- month. This act is not applicable to  employees whose wage is Rs 24,000/- or more.

Mode of Payment

Under The Payment of Wages Act, 1936 , the payment should be done in currency notes or coins. But the organization can also pay using a cheque or crediting to the account of the employee, but for this, the organization needs to have employee consent in writing.

Deduction of Wages

The employer can reduce employee wages, but they are only allowed to do authorized deductions like fines, absence of duty, damage/loss of assets, recovery of loans & advance given to the employee by the employer. According to The Payment of Wages Act, 1936  an employer can also deduct payment related to the cooperative society and insurance. 

Why Should You Choose PionHR? 

We are the best Payroll processing vendor, and we have trained and skilled professionals to help you with all kinds of the wages payment process. Not all business owners know these kinds of the wages payment process and run an organization successfully following The Payment of Wages Act, 1936 , the Act becomes more crucial.

Our HR and payroll staff are well trained and aware of The Payment of Wages Act, 1936 . And they  help the business owner run the organization successfully. Our wages of payment process are cost-effective and affordable Payroll Software for all business owners from small to large businesses.