Laws Relating To Wages / Salary In India

 Minimum Wages Act, 1948 

The Minimum Wages Act, of  1948 (the Minimum Wages Act) provides for fixing of minimum rates of wages in certain employments. The minimum wages are prescribed by States through notifications in the State’s Gazette under the Minimum Wages Rules of the specific State.

In terms of the provisions of the Minimum Wages Act, an employee means (i) any person who is employed for hire or reward to do any work, skilled or unskilled manual or clerical, in scheduled employment in respect of which minimum rates of wages have been fixed; (ii) an outworking, to whom any articles or materials are given out by another person to be made up,  cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed for sale for the purposes of the trade or business of that other person; and (iii) an employee declared to be an employee by the appropriate Government.

The term “wages” has been defined to mean all remuneration capable of being expressed in terms  of money which would if the terms of the contract of employment express or implied were fulfilled, be payable to a person employed in respect of his employment or work done in such employment and includes house rent allowance but does not include: but does not include the  value of the following,

1. Any house accommodation or supply of light, water and medical attendance; or b. Any other amenity or any service excluded by general or special order of the  appropriate Government;

2. Any contribution paid by the employer to any personal fund or provident fund or under  any scheme of social insurance;

3. Any travelling allowance or the value of any travelling concession; 

4. Any sum paid to the person employed to defray special expenses entailed on him by the  nature of his employment; or

5. Any gratuity payable on discharge.

Further, the Minimum Wages Act requires the employer to pay to every employee engaged in scheduled employment wages at a rate not less than the minimum rates of wages as fixed by a  notification without any deduction (other than prescribed deductions, if any).3

Payment of Wages Act, 19364

The Payment of Wages Act, of 1936 (the Payment of Wages Act) is an Act to regulate the payment of wages to certain classes of employed persons. The Payment of Wages Act seeks to ensure that employers make timely payments of wages to the employees working in the establishments and to prevent unauthorized deductions from the wages.

According to the Payment of Wages Act, all wages shall be in current coins, currency notes, or both. It is, however, provided that the employer may, after obtaining the written authorization of the employed person, pay him the wages either by cheque or by crediting the wages in his bank account.

Payment of Bonus Act, 19655

The Payment of Bonus Act, 1965 (the “Bonus Act”) provides for the payment of bonuses to persons employed in certain establishments in India either based on profits or based on production or productivity and applies to every establishment in which 20 or more persons are employed and to all employees drawing remuneration of less than Rs 10,000.  Those employees who have worked for less than thirty days are not eligible to receive a bonus under the Bonus Act. The Bonus Act provides for a bonus between 8.33%  (minimum) and 20% (maximum). However, for the calculation of the bonus, a maximum salary of Rs 3,500 is considered.