Deductions from Wages - Payment of Wages Act(1936), Industrial Laws | Industrial Laws - B Com PDF Download

The wages of an employed person shall be paid to him without deductions of any kind except those authorised by orunder this Act.Every payment made by the employed person to the employer or his agent shall, for the purposes of thisAct, be deemed to be a deduction from wages.

Any loss of wages resulting from the imposition, for good and sufficient cause, upon a person employed of any of thefollowing penalties, namely:-

(i) the withholding of increment or promotion (including the stoppage of increment at an efficiency bar);

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

(iii) suspension;

shall not be deemed to be a deduction from wages in any case where the rules framed by the employer for theimposition of any such penalty are in conformity with the requirements, if any, which may be specified in thisbehalf by the State Government by notification in the Official Gazette.Section 7(2) Deductions from the wages of anemployed person shall be made only in accordance with the provisions of this Act and any other deduction is unauthorized. The Authorised deductions may be of the following kinds only, namely:

(a) fines;

(b) deductions for absence from duty;

(c) deductions for damage to or loss of goods expressly entrusted to the employed person for custody, orfor loss of money for which he is required to account, where such damage or loss is directly attributable tohis neglect or default;

(d) deductions for house-accommodation supplied by the employer or by government or any housing board set upunder any law for the time being in force (whether the government or the board is the employer or not) or any otherauthority engaged in the business of subsidising house-accommodation which may be specified in this behalf by the StateGovernment by notification in the Official Gazette.

(e) deductions for such amenities and services supplied by the employer as the State Government or any officer specifiedby it in this behalf may, by general or special order, authorise. The word “services” here does not include the supply oftools and raw materials required for the purposes of employment;

(f) deductions for recovery of advances of whatever nature (including advances for travelling allowance orconveyance allowance), and the interest due in respect thereof, or for adjustment of over-payments ofwages;

(ff) deductions for recovery of loans made from any fund constituted for the welfare of labour inaccordance with the rules approved by the State Government, and the interest due in respect thereof;

(fff) deductions for recovery of loans granted for house-building or other purposes approved by theState Government and the interest due in respect thereof;

(g) deductions of income-tax payable by the employed person;

(h) deductions required to be made by order of a court or other authority competent to make such order;

(i) deductions for subscriptions to, and for repayment of advances from any provident fund to which the

Provident Funds Act ,1925, applies or any recognised provident fund as defined in section 58A of the IndianIncome Tax Act, 1922 , or any provident fund approved in this behalf by the State Government, during thecontinuance of such approval;

(j) deductions for payments to co operative societies approved by the State Government or any officer specified by it in this behalf or to a scheme of insurance maintained by the Indian Post Office,

(k) deductions, made with the written authorisation of the person employed for payment of any premium on his life insurance policy to the Life Insurance Corporation Act of India established under theLife Insurance Corporation Act,1956, or for the purchase of securities of the Government of India or of any StateGovernment or for being deposited in any Post Office Savings Bank in furtherance of any savings scheme of any suchgovernment.

(kk) deductions, made with the written authorisation of the employed person, for the payment of hiscontribution to any fund constituted by the employer or a trade union registered under the Trade Union Act,1926, for the welfare of the employed persons or the members of their families, or both, and approved bythe State Government or any officer specified by it in this behalf, during the continuance of such approval;

(kkk) deductions, made with the written authorisation of the employed person, for payment of the feespayable by him for the membership of any trade union registered under the Trade Union Act, 1926.

(l) deductions, for payment of insurance premia on Fidelity Guarantee Bonds;

(m) deductions for recovery of losses sustained by a railway administration on account of acceptance by theemployed person of counterfeit or base coins or mutilated or forged currency notes;

(n) deductions for recovery of losses sustained by a railway administration on account of the failure of theemployed person to invoice, to bill, to collect or to account for the appropriate charges due to that administrationwhether in respect of fares, freight, demurrage, wharfage or in respect of sale of food in catering establishments orin respect of sale of commodities in grain shops or otherwise;

(o) deductions for recovery of losses sustained by a railway administration on account of any rebates or refundsincorrectly granted by the employed person where such loss is directly attributable to his neglect or default;

(p) deductions, made with the written authorisation of the employed person, for contribution to the PrimeMinister’s National Relief Fund or to such other Fund as the Central Government may, by notification in the OfficialGazette, specify;

(q) deductions for contributions to any insurance scheme framed by the CentralGovernment for the benefit ofits employees.The list of deductions given by section 7(2) is exhaustive. If an employer makes any deduction, the burdento prove that the deduction does fall under the several clauses of Section 7(2), lies upon the employer.Section 7(3)Notwithstanding anything contained in this Act, the total amount of deductions which may be made undersub-section (2) in any wage-period from the wages of any employed person shall not exceed-

(i) in cases where such deductions are wholly or partly made for payments to co- operative societiesunder section 7(2)(j) , seventy-five per cent of such wages, and

(ii) in any other case, fifty per cent of such wages.

Provided that where the total deductions authorised under sub-section (2) exceed seventy five per cent or,as the case may be, fifty per cent of the wages, the excess may be recovered in such manner as may beprescribed.Section 7(4) Nothing contained in this section shall be construed as precluding the employer fromrecovering from the wages of the employed person or otherwise any amount payable by such person under any lawfor the time being in force other than the Indian Railways Act, 1890.