Employment Laws

Employment Laws Relating to Wages

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Employment Laws Relating to Wages

It is important for all Entrepreneurs and Business Owners to be aware of the employment laws relating to wages and benefits while operating a business in India. In this article, we look at some of the major laws that regulate minimum wages, payment of wages and bonus in India.

Minimum Wages Act, 1948

The Minimum Wages Act, 1948 lists all employments for which minimum wages are to be fixed by the appropriate Government. The Act promulgated by the Central Government, empowers State Governments to fix the minimum rate of wages for different types of employments in India. Currently, the National Floor Level of Minimum Wages in India is Rs.160 per day. Know more about minimum wages in India.

Payment of Bonus Act, 1965

The payment of Bonus Act is applicable to factory and other establishment in which 20 or more persons are employed on any day during a year, excluding some categories of employees. The Payment of Bonus Act mandates the payment of bonus to every employee in accordance with the Act, who has worked in the establishment for a minimum of 30 days and draws a salary or wage not exceeding Rs.10,000 per month.

As per the Act, for employees eligible under the Act, a minimum bonus of 8.33% of salary or wages earned or Rs.100 whichever is higher, is payable on completion of 5 years, even if there is no profit in the business. If the allocable surplus exceed the amount of minimum bonus, then bonus should be paid at a higher rate subject to a maximum of 20% of salary or wags. All bonus should be paid within 8 months from the close of the accounting year and a register showing the details of amount of bonus allocable and paid to each employee should be maintained.

Payment of Wages Act, 1936

The Payment of Wages Act regulates the payment of wages to workers within the timeframe stipulated in the Act and prevent unauthorised deductions. The Payment of Wages Act applies to employees who are in receipt of wages of below Rs.10,000 per month. The enforcement of the Payment of Wages Act is primarily done by the State Government, while the Central Government enforces the Act with respect to mines, railways, oilfields and air transport services.

As per the Payment of Wages Act, payment of wages must be paid before the seventh day of a month, for businesses having less than 1000 workers. In case of businesses having more than 1000 workers, wages must be paid  before the tenth day. Wages must be paid in cash. If wages are paid in cheque or bank account credit, a letter of authorisation must be obtained from the worker. Further, the Act also prohibits employers from making unauthorised deductions other than deductions for unauthorised absence from duty, deductions for house accommodations, recover of advances, etc.,

For more information about employment laws in India, you can consult an employment lawyer or labour lawyer through IndiaFilings.com

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