This Chapter is regarding various laws for wages and employee benefits structure in Indian context

1. WAGE FIXATION & LEGISLATION
UNIT 4
By
Dr. Gandhali V. Kharge

2. Minimum Wages Act, 1948
 This Act to provide fixing of minimum wage rates in
certain employments. It is meant to help workmen to
strike of fair bargain with their employers and ensure fair
wages for them.
 Purpose- To achieve the prevention of exploitation of
labour.
 Eligible People
1. Permanent Employees
2. Contract Employees
3. Casual Workers
4. People on probation (having fix pay not minimum wage)
5. Trainees (get stipend & not minimum wage)

3. Minimum Wages Act, 1948
 The standard working class family should be taken to consist of three
consumption units viz., earner, the earning of women, children and
adolescents should be discharged.
 Minimum food requirement should be calculated on the basis of
intake of 2700 calories for an average Indian adult of moderate
activity.
 Clothing requirements should be estimated at capital consumption of
18 yards/ annum which would for average workers family of four i.e.
72 yards total.
 In respect of housing the rent corresponding to minimum area
provided for under ground. Industrial Housing Scheme should be
taken into consideration in fixing the minimum wage.
 Fuel, lighting and other miscellaneous items of expenditure should
constitute 20% of total minimum wage.
 Children education, medical requirement, minimum recreation
including festivals, ceremonies and provision for old age, marriage,
etc. constitute 25% of total minimum wages.

4. Payment of Wages Act, 1936
 This Act to regular payment of wages, imposition of fines and
deduction from wages to person’s employed in industry, drawing
wages less than Rs. 1600 per month.
 Main objections of this ACT are:
i) To pay the wages to the employees.
ii) To pay the wages at proper time as specified in the Act.
iii) To prevent unauthorised deductions.
 The Act is applicable to person employed in any factory, railway and
such establishments to which the State Government may, by
notification, extend the provisions of the Act, after giving three
months notice to that effect.
 No wage period shall be exceed one month in any case.
 Where less than 1000 persons are employed, wages shall be paid
before the expiry of the 7th day and in other cases before expiry of
the 10th day, after the last day of the wage period.

5. Payment of Wages Act, 1936
 In case of termination of employee from the services, he is
entitled to receive the wage earned by him before the expiry of
the 2nd working day from the day on which his employment is
terminated.
 Wages are to be paid to the employed person without
deductions of any kind except those authorised by or under the
Act, withholding of increments or promotion, reduction to a
lower post or time scale or to a lower stage or time scale and
suspension, are not to be deemed to be deduction from wages.

6. Equal Remuneration Act,1976
 The Act provides for payment of equal remuneration to men and
women workers for the same work or work of similar nature and for
prevention of discrimination on ground of gender against women in
matter of employment.
 The Act prohibits an employer from reducing the rate of
remuneration of any worker for purpose of employing with the above
provision relating to payment of equal remuneration to men and
women workers for the same work or work of similar nature.
 While making recruitment for the same work or work of similar
nature or in any condition of service subsequent to recruitment such
as promotion, training or transfer, the employer is prohibited from
making any discrimination against the women except where
employment of women in such work is prohibited or restricted by
under law in force. These provisions are effective on and from the
commencement of the Act.

7. Equal Remuneration Act, 1976
 For the purpose of providing increasing employment
opportunities for women, the Central and State Governments are
required to constitute one or more Advisory Committees to
advice them with regard to extent to which women may
employed in such establishments or employments, as specified
by the Central Government.
 The provisions of the Act relating to requirement of equal
treatment for men and women do not apply, if:
i. The terms and conditions of Women’s employment are, in
respect, affected by compliance with law regulating the
employment of women.
ii. Any special treatment is accorded to women in connection with
the birth, or expected birth of child. In these cases, the equal
requirement of men and women does not apply.

8. Workmen Compensation Act, 1923
 This Act aims to provide workmen and/or their
dependents some relief in case of accidents arising out
of and in the course of employment and causing either
death or disablement of workmen.
 It applies to workmen employed in factories, mines,
plantations, transport establishments, construction
work, railways, ships, circuses, & other hazardous
occupations & employments specified in Schedule II to
the Act.
 The Act does not apply to members of Armed Forces of
the Union & those workers who are insured under the
Employees State Insurance Act 1948.
 The coverage of this act is also to cooks employed in
hotels and restaurants.

9. Workmen Compensation Act, 1923
 As per Section 3(1) of the Act, the following conditions must
necessarily be satisfied in order to qualify for compensation:
1. He must be a workmen within the meaning of this Act.
2. Personal injury must have been caused by accident.
3. The injury must have been caused by accident.
4. The accident must have arisen out of and in the course of
employment.
5. The injury caused by the accident must have resulted in the
workman’s death or permanent total disablement or temporary
disablement.
 Disablement means reduction in earning capacity. It may be partial
or total disablement.
 Partial Disablement: a) Temporary partial disablement
b) Permanent partial disablement
 Total Disablement: a) Temporary b) Permanent

10. Workmen Compensation Act, 1923
 Temporary partial disablement means that which reduces the earning
capacity of the workmen in the employment in which he was engaged
at the time of accident.
Amount of compensation = 25% of monthly wages
 Permanent partial disablement means that which reduces, for all
time, the earning capacity of a workmen in every employment in which
he was capable of undertaking at the time.
Amount of compensation = 60% of monthly wages ×Relevant factor.
 Total disablement means whether of a temporary or permanent nature,
which incapacitates a workmen for all work which he was capable of
performing at the time of accident
Amount of compensation = 60% of monthly wages ×Relevant
factor/Rs.90000 which ever is more.
 In the case of Death Amount of compensation = 50% of monthly wages
×Relevant factor/Rs.80000 which ever is more.

11. Workmen Compensation Act, 1923
 The injury does not result in the disablement for a
period exceeding 3 days
 The injury results in death or permanent total
disability due to
a) The worker was at the time of accident, under the
influence of drink or drugs
b) The worker wilfully disobeyed any order expressly
given for ensuring safety.
c) The worker wilfully removed any safety devices
which he knew would harm.

12. Employee State Insurance Act, 1948
 This Act forms for social security of labours.
 The scheme is administered by an autonomous corporation with
the Minister of Labour at the centre assists Chairman, the
Union Health Minister as the Vice- Chairman, the
representatives of the State- Governments, employers and the
medical profession nominated by the Central Government.
 This Act covers all employees from Factories where 10 or more
employees are working and shops, hotels, restaurants, cinema
halls, Road motor transport undertakings, Newspaper
establishment employing 20 (Twenty) or more persons.
Moreover, Private Medical Institution and Educational
Institutions employing 20 (Twenty) or more persons in certain
States .
 The existing wage-limit for coverage under the Act, is Rs.
15,000/- per month (excluding remuneration for overtime) w.
e. f:- May 01, 2010.

13. ESI Act, 1948
 ESI Contribution:
Employee’s Contribution( 1.75 % of Gross salary) + Employer’s
Contribution (4.75% of Gross Salary) = Total (6.5% of Gross Salary)
 The amount of contribution (Employee’s and Employer’s share) is to
be deposited with the authorized bank (State Bank Of India) through
Online Generated Challan, on or before 21st day of the Succeeding
month, of month following the calendar month.
 The following benefits are provided under section 46.
1. Medical benefit
2. Sickness benefit
3. Maternity benefit
4. Disablement benefit
5. Dependents benefit
6. Funeral expenses
7. Others Benefits

14. Employees’ Provident Fund Act, 1952
 Every Factories or Establishments employing 20 (Twenty) or more
persons from the date of its setup are covered under the Act,
under Sec -1(3). Cinema Theatres employing 05 (Five) or more
persons are covered under the Act. Government of India after
giving 02 Months notice may apply the provisions of this Act to
Establishments where less than 20 persons are employed.
 Where an Establishment consists of different departments or has
branches, whether situated in the same place or in different
places, all such departments or branches shall be treated as parts
of the same establishment, under Sec - 2A.
 Establishments to which this Act “Once Applies” shall continue to
be Governed by this Act notwithstanding that the number of
persons employed therein at any time falls below then 20
(Twenty) person.
 The Current Wages Ceiling Limit for coverage under the Act is ₹:
15,000/(Basic + DA) p/m month w.e.f. Sep’ 2014,(Earlier it was ₹ :
6,500/- w. e. f. June, 2001, & before that it was ₹ : 5000/-p/m)

15. EPF Act, 1952
 Contribution in EPF:
Employee's Share (12% (of Basic pay + DA)) + Employer’s
Share (3.67% (of Basic pay + DA)) or Rs. 1250 whichever is
max.
 Employees’ Prov. Fund Scheme-1952
1. Retirement
2. Medical Care
3. Housing Loan
4. Family Obligations
5. Education of Children
6. Financing of Insurance Policy

16. Employees Gratuity Act, 1972
 Shop and establishment covered under SHOPS AND
ESTABLISHMENT ACT- 10 or more persons - immediately preceding
to 12 months.
 Once this act applies – continue to be governed – irrespective of
no of persons
 Employee does not include- holds post under central or state
government
 Teacher cannot be called as employee due to amendment to this
Act.
 Gratuity is payable when there is : Continuous service of 5
yrs(not necessary incase of death or disablement)
 Incase of death ,the amount shall be paid to nominee or legal
heir
 Time limit- Within 30 days of gratuity becoming payable
 Maximum Amount-The gratuity payable to an employee shall not
exceed Rs. 10,00,000

17. Employees Gratuity Act, 1972
 Calculations of Gratuity:
 For Monthly salaried employees:
Last drawn wages x 15/26 x Completed years of Service (incl. a part of year
in excess of 6 months)
As • Month = Period of 26 Days
• 15 days wages = Last drawn wages x 15/26
 For Piece Rate Employees:
Last drawn wages x 15/26 x Completed years of Service(incl. a part of year in
excess of 6 months)
• Last drawn wages = Total wages received during 3 months immediately
preceding termination/Days actually worked
• Last drawn wages shall not include overtime wages
 For Seasonal Establishment
Such an employee shall be paid gratuity at the rate of 7 days wages for each
season

18. Payment of Bonus Act, 1965
 There are four types of Bonus according to according to Supreme Court of India
in New Maneek Chowk Spinning & Weaving Company Vs. Textile Labour
Association 1961 Gujrat, viz., Production Bonus, Bonus as an implied term of
contract between the parties, Customary Bonus in connection with some
festivals, Profit Bonus.
 Profit Bonus has given statutory recognition in Payment of Bonus Act, 1965.
 Payable to all category of employees drawing wages up to Rs. 10,000 per month
and engaged in any kind of work, whether unskilled, skilled, managerial,
supervisory, manual, etc.
 An employee dismissed from services for fraud, riotous or violent behaviour,
theft, misappropriation or sabotage of any property of the establishment is not
eligible for bonus.
 This Act designed
1. To impose statutory liability upon the employer of every establishment covered
by the Act to pay bonus to employees in the establishment.
2. To define the principles of payment of bonus according to the prescribed
formula.
3. To provide for payment of min. & max. bonus linking to payment of bonus with
the scheme of set- off & set- on.

19. Payment of Bonus Act, 1965
 This Act applies to every factory and other establishment in which 20 or more
persons are employed on any day of the accounting year. Bonus will be paid
within 8 months from closure of the accounting year.
 Bonus is differed wage and it is right accrued to employees, its not charity on
the employer.
 There is provision of punishment (fine or imprisonment or both) to employer, if
he fails to calculate and distribute bonus within 8 months from the closure of
accounting year.
 Every employee is entitled to get a min. bonus 8.33% of salary drawn in the
accounting year or Rs. 100 whichever is higher.
 In case of employees have not completed 15 years of his age the it would be Rs.
65.
 The max. bonus should not exceed 20% of salary of accounting year.
 All the employees of General Insurance Companies, LIC, Central & State Govt.
Establishments, Indian Red Cross society, Universities & educational
institutions, hospitals, Chambre of Commerce, RBI, UTI, Local bodies, etc. are
also not entitled to Bonus under the Act. If they are paid bonus, it is ex- gratia
payment.