Is It Fair for Companies to Pay Only for Days Worked? Seeking Guidance on Wage Practices

Dear Seniors, Please guide me on whether it is permissible for a company to have its employees work five days a week and pay them wages on a daily basis for the days worked. Should the company also be required to pay for the days the employee is not working in accordance with company instructions?

Thanks & Regards,
Hem Dev Thapar
Assistant Manager

All the labor laws are equally applicable to contractor laborers as well.

Regards,
J.N. Singh

An establishment is liable to grant its workers a day of rest with wages for six days of work under the relevant labor law. If the establishment, of its own volition, keeps it open only for five days and declares two days off in a week, it cannot deprive the workers of their right to wages since the workers may contend that they offer themselves for work on the sixth day. If wages are denied on a no work-no pay basis for the said two days in a week for no fault of the workers, it may result in illegal lay-off under the Industrial Disputes Act.

Regards,
B. Saikumar
HR & Labor Law Consultant
Chipinbiz Consultancy Pvt. Ltd
Mumbai
Mob: [Phone Number Removed For Privacy Reasons]

As I explained above, the Minimum Wages Act, Employees' Provident Fund and Miscellaneous Provisions Act, Payment of Bonus Act, Payment of Wages Act, Employees' Compensation Act/ESI, etc., are equally applicable to contractors' laborers as well.

Regards,
J.N. Singh

Clarification on Daily Wages and Weekly Time Off

Please explain that Mr. Hem Dev wrote the words "daily wages" in his query. Therefore, I believe your answer may not be correct regarding daily wages. When we hire a worker on a daily wage basis, we are not required to provide paid weekly time off according to the law.

Please clarify.

Regards,
Pardeep Sharma
PO at NP Group
[Phone Number Removed For Privacy Reasons]

I think there is a catch in the query. If I'm correct, the querist might mean that his firm employs certain shifts of men daily on a consolidated basis, say 100 man-shifts. In this case, it need not necessarily be the same persons repeatedly deployed on a regular basis for all five days. Maybe a few individuals (such as Mr. X or Mr. Y) are employed for only three shifts in a week, and for the remaining two days, individuals like Mr. C or Mr. D are employed. In this scenario, how should the weekly offs be allocated and to whom?

Am I correct, Mr. Hem Dev?

Regards,
Kumar S.

Employers are required to pay minimum wages to workers/employees as per the relevant State Government order. The payment of minimum wages is applicable only for the days worked. For instance, if employees work for 5 days in a week, they are entitled to wages for 5 days, not 7.

Monthly Minimum Wage Calculation

The monthly minimum wage calculation is: Monthly Minimum wage/26 days x Number of days worked as per the act and general rule.

If there is an agreement between management and workers that the monthly minimum wages notified will cover 30/31 working days, including the 2 days of weekly offs, then the calculation should be based on Monthly wages/30 or 31 x Number of days (worked days + weekly off days) for the wages bill preparation.

Regards,
D. Gurumurthy
LL.HR.IR Consultant

I hope you understand the query raised by you based on Mr. Gurumurthy's response. You are required to provide the monthly minimum wages set by the appropriate government for employees working five days a week since your organization only allows a 2-day holiday. If a worker is absent on any day during the month, their monthly wages will be reduced proportionately.

Thank you.

Dear Hemant and all,

I found from the Minimum Wages Act 1948 that the Appropriate Government can fix wages by the hour, the day, the month, or such other larger period as may be prescribed (Section 3(3)(b)). Hence, the time period specified in the Minimum Wages Notification of The Maharashtra Government has to be looked into. As I understand, the notification specifies both the daily and monthly wages. The legal position is very clear that no separate wages are payable for the weekly off day since daily wages are computed by dividing monthly wages by 26 days. So each day's wage is indeed 1+1/6 day's wage. Regarding the additional holiday given by your undertaking, since wages are payable for the work done, on the 6th day no work is done so no wages are payable. As you are only working 5 days in a week, the daily wages multiplied by the number of working days in the month are legal and proper.

Regards,
KK

I would like to request a favor. Could you please inform me if it is permissible to pay contract laborers based on a piece rate?

As per the Minimum Wages Act, the rate notified by the State Government could be a time rate, piece rate, or both. Please check the State Government notification to confirm if a piece rate is provided. If it is specified, then kindly follow it. In the scenario where a piece rate is not mentioned, and only a time rate is outlined, then for the work completed within 8 hours, the prescribed minimum wage should be paid, and it cannot be reduced by way of a piece rate.

Additionally, it is advisable to research what others in the industry are paying to align with industry-level practices. By considering all these factors, a well-informed decision can be reached.

Regards,
KK

Mr. Hem,

You mentioned that the "company allows their workers to work 5 days a week and pay them wages on a daily basis for the days worked." Are you implying that the workers are not on the company's permanent payroll and are not receiving fixed monthly wages or salaries? If that is the case, it indeed presents a puzzle.

Kumar S.

First of all, you need to clarify for us whether you are calculating the minimum wage (daily paid amount) for the daily paid workers. Your question's answer depends on that only.

Regards,
Kamesh Khatana
[Phone Number Removed For Privacy Reasons]

Continuous Work Without Weekly Off: Legal Implications

I want to know if there is any violation of the law for having employees work continuously throughout the month without any weekly off. In our industry, continuous working is required, but we compensate for the weekly off by paying one day's wages in proportion to the monthly wages fixed for 26 days.

For example, if the minimum wages are Rs 6000/- with a weekly off, and a worker works for 30 days, we would pay wages as follows:
- Wages: Rs 6000
- 1/6th of Rs 6000: Rs 1000

Is there any legal violation for having duty continue for 30 days in a month without giving any weekly off, considering that wages in lieu of the weekly off are paid at the normal rate?

You can't work continuously after 6 days. You have to take a weekly off after 6 days or 48 hours of work. However, you are paid wages for the seventh day, it does not matter.

Regards,
Kamesh Khatana

I have learned several things from the above discussions, but I want to know if the rate of the minimum wage for one day is Rs. 100 and the worker is supposed to work only 5 days a week, i.e., approximately 20 days out of 30 days. We are stating that we pay the wages on a daily wage basis, not a monthly wage basis. As the minimum wage is Rs. 100, can we pay the amount (Rs. 100 x 20 = 2000) Rs. 2000/- to the worker, or do we have to pay the amount (Rs. 100 x 30 = 3000 / 20 = 150) on a Rs. 150/- per day basis, making the amount Rs. 3000/- per worker?

Please clarify.

Thanks and Regards,
Hem Dev Thapar

I have learned several things from the above discussions, but I want to know if the rate of the minimum wage for one day is Rs. 100 and the worker is supposed to work only 5 days a week, i.e., approximately 20 days out of 30 days. We are stating that we pay the wages on a daily wage basis, not a monthly wage basis. As the minimum wage is Rs. 100, can we pay the amount (Rs. 100 x 20 = Rs. 2000) to the worker, or do we have to pay the amount (Rs. 100 x 30 = Rs. 3000 / 20 = Rs. 150) on a Rs. 150 per day basis? The amount would be Rs. 3000 per worker.

Please clarify.

Thanks and Regards,
Hem Dev Thapar

Dear Hemdev,

Eligibility for Paid Weekly Off

There are two things:

1. As per the Payment of Wages Act, if an employee works three days in a week, they would be eligible for a paid weekly off.

2. If your daily wage workers are registered under any act, then they would be required to have a paid weekly off and will receive wages of 100*30.

Regards,
Kamesh KHATANA

Query Regarding One-Off for Contract Labor

Could you please inform me about the section or notification you mentioned where it states that a one-off payment should be provided after a contract laborer has worked for three days?

Thank you.

Best regards,
Hem Dev Thapar

It is not required to have the same structure/breakup for all employees. It depends entirely on the company policy. As HR professionals, we should explore the possibilities of equal treatment for all employees. Differentiation should not exist. If employees fall under the minimum wage category, the basic pay should ideally not be less than the minimum wage, although it is not essential.

Regards,
Kamesh Khatana

Thanks very much. Will you please advise more in this regard? The position is as follows:

Current Employment Situation

We engage the workers through labor supply contractors. Due to urgency, some workers are asked to perform continuous duty for 30 days in a month. Some are also asked to perform night duty, such as drivers and plant operators. In a month, they earn duty for about 40 to 45 days (eight hours per day). We pay them as follows: suppose the monthly wage is Rs 6000/- and a person performed 45x8 hours, 360 hours, i.e., 45 man-days duty in a month, then he is paid as follows:

6000/26 * 45
Total Rs 10385

Is there any problem from any of the labor laws or acts? Please guide us.

Regards,
Kamesh Khatana