INCREASE IN WAGE CEILING UNDER
PAYMENT OF WAGES ACT
The Payment of Wages Act, 1936 (Wages Act) was enacted to ensure
timely payment of wages to workers and prevent unauthorized deductions
from being made out of the wages of workers. Wages Act applies to
workers employed in a factory, railway administration, industrial and
other establishments.
Wages under the Wages Act means all remuneration (whether by way of salary allowances or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment and includes additional remuneration under terms of employment, remuneration in respect of overtime, any sum payable under any law by virtue of termination of employment etc but excludes bonus, value of house accommodation, contribution of employer to pension or provident fund, travelling allowance etc.
Recently, the Ministry of Labour and Employment vide its notification dated 28 August 2017 has increased the wage ceiling under the Wages Act. Under the said notification, the Wages Act shall be now applicable to employed persons in respect of a wage period, who draw wages not exceeding Rs 24,000 (Rupees Twenty Four Thousand Only), per month, employed in such establishments as prescribed under the Wages Act. Such increase in the wage ceiling has been made based on the figures of the Consumer Expenditure Survey.
Previously, the Central Government had enhanced the wage ceiling to Rs 10,000 (Rupees Ten Thousand Only) in 2007. Subsequently, the same was revised to Rs 18,000 (Rupees Eighteen Thousand Only) in 2012. This measure was taken to ensure that a large number of employed persons did not go out of the purview of the Act due to successive rise in wages levels resulting from rise in the cost of living. Thus, with a view of covering more employed persons, the Central Government has further enhanced the wage ceiling from Rs. 18,000 per month to Rs 24,000 per month.
Wages under the Wages Act means all remuneration (whether by way of salary allowances or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment and includes additional remuneration under terms of employment, remuneration in respect of overtime, any sum payable under any law by virtue of termination of employment etc but excludes bonus, value of house accommodation, contribution of employer to pension or provident fund, travelling allowance etc.
Recently, the Ministry of Labour and Employment vide its notification dated 28 August 2017 has increased the wage ceiling under the Wages Act. Under the said notification, the Wages Act shall be now applicable to employed persons in respect of a wage period, who draw wages not exceeding Rs 24,000 (Rupees Twenty Four Thousand Only), per month, employed in such establishments as prescribed under the Wages Act. Such increase in the wage ceiling has been made based on the figures of the Consumer Expenditure Survey.
Previously, the Central Government had enhanced the wage ceiling to Rs 10,000 (Rupees Ten Thousand Only) in 2007. Subsequently, the same was revised to Rs 18,000 (Rupees Eighteen Thousand Only) in 2012. This measure was taken to ensure that a large number of employed persons did not go out of the purview of the Act due to successive rise in wages levels resulting from rise in the cost of living. Thus, with a view of covering more employed persons, the Central Government has further enhanced the wage ceiling from Rs. 18,000 per month to Rs 24,000 per month.
MHCO COMMENT:
The Wages Act is applicable to employed persons in factories and establishments working primarily in the unorganised sector. The increase in the wage ceiling by the Central Government attempts to benefit sizeable number of workers who were previously deprived of the benefits of the Wages Act.
The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.com for any assistance.
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