Payment of Wages
Section 15. Mode of payment of wages.
Wage Payment Methods:
All wages must be paid in one of the following ways:
Current coins or currency notes (cash)
Cheque
Direct deposit into the employee’s bank account
Electronic transfer
Special provision:
The appropriate Government can notify specific industries or establishments where employers must pay wages only by cheque or bank transfer, not in cash.
Section 16. Fixation of wage period.
The employer decides the wage period for employees. It can be:
Daily
Weekly
Fortnightly
Monthly
Key condition:
No employee’s wage period can exceed one month.
Flexibility:
The employer can set different wage periods for different establishments.
Section 17. Time limit for payment of wages.
17(1) Regular Wage Payments
The employer shall pay wages to employees according to their basis of engagement:
Daily basis: At the end of the shift.
Weekly basis: On the last working day of the week, before the weekly holiday.
Fortnightly basis: Within two days after the end of the fortnight.
Monthly basis: Within seven days of the following month.
17(2) Payment Upon Termination or Exit
If an employee is removed, dismissed, retrenched, resigns, or becomes unemployed due to closure, wages must be paid within two working days of such event.
17(3) Flexibility for Government
The appropriate Government may specify a different reasonable time limit for payment of wages depending on circumstances.
17(4) Effect of Other Laws
Nothing in this section affects any time limits for wage payment under other existing laws.
Section 18. Deductions which may be made from wages.
18(1) General Rule
Notwithstanding anything in any other law, no deductions shall be made from an employee’s wages except those authorized under this Code.
Explanation:
18(1)(a) Any payment made by an employee to the employer or his agent is deemed a deduction from wages.
18(1)(b) Any loss of wages for a good and sufficient cause arising from the following is not considered a deduction, provided the employer’s provisions meet the notification requirements of the appropriate Government:
18(1)(b)(i) Withholding of increment or promotion, including stoppage of increment.
18(1)(b)(ii) Reduction to a lower post or time-scale.
18(1)(b)(iii) Suspension.
18(2) Authorized Deductions
Deductions from the wages of an employee shall be made in accordance with this Code and may be made only for the following purposes:
18(2)(a) Fines imposed on the employee.
18(2)(b) Deductions for absence from duty.
18(2)(c) Deductions for damage to or loss of goods expressly entrusted to the employee for custody, or for loss of money which he is required to account for, where the damage or loss is directly attributable to his neglect or default.
18(2)(d) Deductions for house-accommodation supplied by:
the employer; or
the appropriate Government; or
any housing board set up under any law; or
any other authority engaged in subsidizing house-accommodation, as may be specified by notification from the appropriate Government.
18(2)(e) Deductions for amenities and services supplied by the employer, as authorized by the appropriate Government or any officer specified by it, provided that the deduction shall not exceed the value of such amenities or services.
Explanation:
For the purposes of clause 18(2)(e), the term “services” does not include the supply of tools or raw materials required for the purposes of employment.
18(2)(f)(i) Advances of any nature (including travelling allowance or conveyance allowance), and interest due in respect thereof, or for adjustment of overpayment of wages.
18(2)(f)(ii) Loans made from any fund constituted for the welfare of labour, as prescribed by the appropriate Government, and the interest due in respect thereof.
18(2)(g) Deductions for recovery of loans granted for house-building or other purposes approved by the appropriate Government, and the interest due in respect thereof.
18(2)(h) Deductions of income-tax or any other statutory levy levied by the Central or State Government payable by the employee, or deductions required by order of a court or competent authority.
18(2)(i) Deductions for subscription to, and repayment of advances from, any social security fund or scheme constituted by law, including provident fund, pension fund, health insurance scheme, or fund known by any other name.
18(2)(j) Deductions for payment to co-operative societies, subject to conditions imposed by the appropriate Government.
18(2)(k) Deductions made, with the written authorisation of the employee, for payment of fees and contributions for membership of any Trade Union registered under the Trade Unions Act, 1926.
18(2)(l) Deductions 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.
18(2)(m) Deductions for recovery of losses sustained by the railway administration due to the failure of the employee to invoice, bill, collect, or account for charges due to the railway administration, whether in respect of:
fares, freight, demurrage, wharfage, and cranage;
sale of food in catering establishments;
commodities in grain shops or otherwise.
18(2)(n) Deductions for recovery of losses sustained by the railway administration on account of rebates or refunds incorrectly granted by the employee, where such loss is directly attributable to his neglect or default.
18(2)(o) Deductions, made with the written authorisation of the employee, for contribution to the Prime Minister’s National Relief Fund or to any other fund specified by the Central Government by notification.
18(3) Notwithstanding anything in this Code and subject to any other law in force, the total amount of deductions under sub-section (2) in any wage period shall not exceed fifty per cent of the wages of an employee.
18(4) Where the total deductions authorised under sub-section (2) exceed fifty per cent of the wages, the excess may be recovered in such manner as may be prescribed.
18(5) Where any deduction is made by the employer from the wages of an employee under this section but is not deposited in the account of the trust, Government fund, or any other account as required by law, the employee shall not be held responsible for the employer’s default.
Section 19. Fines.
19(1) No fine shall be imposed on any employee except for acts and omissions specified by the employer with the previous approval of the appropriate Government or any prescribed authority under sub-section (2).
19(2) A notice specifying such acts and omissions shall be exhibited in the prescribed manner on the premises where the employment is carried on.
19(3) No fine shall be imposed until the employee has been given an opportunity to show cause or as per the prescribed procedure for imposition of fines.
19(4) The total amount of fine in any one wage-period shall not exceed 3% of the wages payable to the employee for that wage-period.
19(5) No fine shall be imposed on any employee under the age of fifteen years.
19(6) No fine shall be recovered in instalments or after ninety days from the day it was imposed.
19(7) Every fine shall be deemed to have been imposed on the day of the act or omission for which it was imposed.
19(8) All fines and realisations shall be recorded in a register in the prescribed form and applied only for purposes beneficial to the employees, as approved by the prescribed authorit
Section 20. Deductions for absence from duty.
20(1) Deductions under clause (b) of sub-section (2) of section 18 may be made only for the absence of an employee from the place(s) where he is required to work, whether for the whole or part of the period during which he is required to work.
20(2) The amount of such deduction shall not exceed the proportion of wages corresponding to the period of absence in relation to the total period within the wage-period during which the employee was required to work.
Provided that, subject to any rules made by the appropriate Government, if ten or more employees acting in concert absent themselves without due notice (as required under the terms of their employment) and without reasonable cause, the deduction from each such employee may include an amount not exceeding his wages for eight days, or such amount as may be due to the employer in lieu of notice under the contract.
Explanation: For the purposes of this section, an employee shall be deemed absent from the place of work if, although present, he refuses to carry out his work in pursuance of a stay-in strike or for any other cause not reasonable in the circumstances.
Section 21. Deductions for damage or loss.
21(1) A deduction under clause (c) or clause (n) of sub-section (2) of section 18 for damage or loss shall not exceed the amount of the damage or loss caused to the employer by the negligence or default of the employee.
21(2) No deduction shall be made under sub-section (1) until the employee has been given an opportunity of showing cause against the deduction or otherwise in accordance with the procedure prescribed for making such deductions.
21(3) All such deductions and their realisations shall be recorded in a register to be kept in such form as may be prescribed.
Section 22. Deductions for services rendered.
A deduction under clause (d) or clause (e) of sub-section (2) of section 18 shall not be made from the wages of an employee, unless the house-accommodation, amenity, or service has been accepted by him as a term of employment or otherwise. 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.
Section 23. Deductions for recovery of advances.
23 Deductions under clause (f) of sub-section (2) of section 18 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.
Section 24. Deductions for recovery of loans.
Deductions under clause (g) of sub-section (2) of section 18 for recovery of loans granted to an employee, regulating the extent to which such loans may be granted and the rate of interest payable thereon, shall be such as may be prescribed.
Section 25. Chapter not to apply to Government establishments.
The provisions of this Chapter shall not apply to the Government establishments unless the appropriate Government, by notification, applies such provisions to the Government establishments specified in the said notification.
