Wages: Definition and Meaning

Due to issues with the payment of wages to workers employed in the industry, India's wages law legislated. The workers weren't given regular payments for their salary. The payment system lacked both standardisation and regulation. The workers' wages were heavily withheld by the bosses for trivial concerns. In the name of wages, the workers received pitiful sums.

In response to this threat, the Payment of Wages Act of 1936 was enacted with the intention of regulating regular wage payments and reining in unauthorised deductions for specific work categories. In 1948, lawmakers in India passed the Minimum Wages Act in an effort to impose harsher penalties on employers.

What are wages?

A wage is the sum of money that an employer pays to an employee in exchange for labour (also known as payment, personnel costs, or labour).

By Section 2(vi) of the Act, "wages" are defined as all compensation that is expressed in monetary terms or has the potential to do so. A task wage or piece rate, an hourly or daily rate (wage labour), or a payment based on an easily quantifiable amount of work completed are all possible methods of payment.

Mode of Paying Wages

Only current coins, currency notes, or both should be used to pay salaries and wages. Although the employer must get the employee's written consent in order to do so, wages can also be paid via check or by crediting a bank account.

Applicability of Wages

Wages that average less than INR 6,500 per month are covered and safeguarded by the Payment of Wages Act, according to clause 1(6) of the Act. Additionally, as stipulated in the Payment of Wages Act, the Act applies to the payment of wages to people working in factories, on railroads, or in other establishments.

Wages in Kind

According to Section 11, the salary must be paid in cash. If a payment is made somewhere in full or in part according to custom, the government may compel the payment partially or completely by publishing a notice in the official gazette.

Wage Committee

The relevant government must establish a pay commission with representatives from both the company and employee sides. As a result, the chairman of the salary committee shall be a neutral party with no stake in the employment program. The Minimum Wages Act's appointment procedure is designed in this way to prevent any possibility of labour discrimination.

Deductions that can be Made from Wages

Employers should only make deductions in accordance with this statute when paying wages to their employees. The employer shouldn't deduct what he wants to. Deductions refer to all payments made by an employee to their employer.

These examples don't qualify as deductions −

  • Stoppage of the employee raises

  • Stopping the employee's promotion

  • Termination of the incentive due to employee underperformance

  • Demotion of employee

  • Suspension of the job

Unlawful Withholding from Wages

All deductions are illegal unless they fall under the exceptions listed in Section 7 of the Payment of Wages Act of 1936. This is a comprehensive list, and any deductions from the workers' salaries taken for reasons different from those listed in Section 7 will be regarded as unlawful deductions. The following are a few examples of approved grounds −

  • Fine

  • Absent from the work

  • Deduction of Income Tax


The exploitation of people employed in these industries has been greatly reduced thanks to the obligations of the employers that were outlined above. In comparison to their prior circumstances, the workers are now in a better position. Even if we have made great progress, it is still necessary to completely implement the Act's goals and keep an eye on the employer.


Q1. What is the minimum wage in India according to the labour law?

Ans. According to our Constitution, the government must make every effort to provide jobs that allow people to live decently and take advantage of recreational, social, and cultural opportunities to the fullest extent possible. The Minimum Wages Act of 1948 was enacted to establish minimum wages in certain occupations, and its provisions are intended to achieve social justice for those employed in scheduled employment by establishing minimum wage rates for them.

Q2. Do contract employees fall within the Payment of Wages Act's protection?

Ans. If the employment in which they are engaged is otherwise covered by the Payment of Wages Act, the requirements of the Act are properly applied to the contract labour employed by any factory or establishment.

Q3. What is the employer's duty with regard to paying employees' wages?

Ans. Every employer is liable for paying all salaries owed to his employees under the Payment of Wages Act of 1936, and in the case of those employees −

  • A person the employer has identified as being in charge of adhering to the Act's rules

  • A person appointed by the contractor who is directly under his supervision in the case of a contractor

Q4. How are wages paid?

Ans. The Payment of Salaries Act of 1936 states unequivocally that the following methods of paying wages to employees are acceptable: Daily compensation is received. Week-by-week payment is accepted. Fortnightly payments are required. monthly payment accepted.