Understanding the New Wage Cap: How Does the Rs. 18,000 Limit Affect You?

Section 1(6) of the Payment of Wages Act, 1936 - Wages payable to an employed person - Specified amount of wages payable under Section 1(6)

NOTIFICATION NO. SO 2260(E), DATED 11-9-2012

In exercise of the powers conferred by sub-section (6) of Section 1 of the Payment of Wages Act, 1936 (4 of 1936), the Central Government, on the basis of figures of the Consumer Expenditure Survey published by the National Sample Survey Organisation, hereby specifies Rupees eighteen thousand per month as the wages under said sub-section (6).
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Please confirm what the impact of this cap amount will be on other Acts. Will it affect the PF Act as well? Please confirm.

Kind Regards,
Narsingh Shukla

Surely, it will have an effect on Form IV under the Payment of Wages Act annual return. Until the year ending 2012, we showed their wages as less than 10,000 for written purposes. Now, we will replace it with 18,000.

To clarify, the figure of 18,000 refers to the provision under subsection 6, section 1 of the Payment of Wages Act. This covers only those employees earning an average wage of 18K per month (including all deductions), which will be effective from October 2012.

All the best

The impact is that more employees will be under the PW Act. More employees will come under the hammer of Section 9 of the Act, i.e., 8 days' wages deduction for concerted absence. In factories, more workers holding positions of management or supervision or holding confidential positions will be eligible for OT wages.

Regards,
Varghese Mathew
Labor/HR Consultant
TVPM
[Phone Number Removed For Privacy Reasons]

Could you please inform me if, in the case of an employee's absence without notice under Section 9 of this act, the employer can deduct salary for up to 8 days? I have a question regarding whether the company can take action in the absence of one employee or if a minimum of 10 employees are required.

Thank you.

Regards

According to section 9(2) of the Payment of Wages Act, 1936, we can deduct up to 8 days' wages. The relevant portion of this section may be read as follows:

Section 9(2) - Deduction of Wages

Provided that, subject to any rules made in this respect by the appropriate Government, if ten or more employed persons acting in concert absent themselves without due notice (that is, without giving the notice required under the terms of their contracts of employment) and without reasonable cause, such deduction from any such person may include an amount not exceeding his wages for eight days, as may be due to the employer in lieu of due notice.

Regards,
R.N. KHOLA (LL&IR)
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Employees earning more than Rs. 18,000 per month as gross wages will not be affected by this Act.

Regards,
R.N. KHOLA
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