Can We Legally Delay Wage Payments in Manufacturing During Tough Times?

As you are all aware, manufacturing units are currently experiencing a downturn. This situation is particularly challenging for automobile-based companies.

Postponing Wage Payments

The question at hand is whether we can postpone the wages payable to all employees from the 7th of every month. According to the rule I have read, wages should be paid within seven days (before the completion of the seventh day) of attendance. Can we then close the attendance by the 15th of every month and pay wages within seven days? That is, before the 22nd of every month. Is there a way to implement this? We would need to submit a letter to the inspector of factories to request a change in our factory's wage payable date.

As per Section 4 of the Payment of Wages Act, the wage period can be fixed. The section is reproduced below:

Fixation of Wage-Periods

1. Every person responsible for the payment of wages under Section 3 shall fix periods (referred to as wage-periods in this Act) in respect of which such wages shall be payable.

2. No wage-period shall exceed one month.

You can make the fortnightly payment instead of the monthly payment. The payment duration should not exceed one month. If you do so, you can close the attendance on the 15th and 30th/31st of the month. You can pay them on the 22nd and 7th of every month.

Mr. Gupta has given the details of Section 4 of the Payment of Wages Act for your reference.

Regards,

Thank you for your replies. So, we can calculate the wage period from the 16th of one month to the 15th of the next month, and we can pay the salary before the 22nd, which means within 7 days. Do we have to pay 15 days' salary and can start changing it? Or should we inform the Inspector of Factories and get approval from them?

Yes, you can make changes after paying the salary for 15 days. Under Section 4 of the Act, the person responsible for wage payment can determine the wage period. Therefore, issue an order in accordance with the Act and inform the staff and workers who will be impacted by this change. Ask for any objections they may have and then make a decision after considering their objections. Please also verify the deadline for payment of ESIC, EPF, or any other legal obligations like TDS.

Thank you.

Payment of Wages Act Overview

The Payment of Wages Act addresses two major aspects:

1. Fixation of wage period and timely payment.
2. Deductions.

Wage period denotes the attendance period, and timely payment as per Section 5(a) indicates the 7th day of the closing of the month. This is not applicable to the attendance period if the employee strength is up to 999 employees. Under no circumstances should it exceed the time limit.

Thanks,

Regards,
Mritunjay Nath Sahu
GM (HR)

No, you cannot do this. You have to pay the salary for the calendar month, and you do not have the option of paying for any period that is half of one month and half of another month. What the other members are suggesting is to pay the salary every 15 days, which means paying twice a month.

I do not understand what benefit you will derive by changing the payment date from month-end to halfway through a month. I mean, it will just change the date. The amount or your cash flows do not change at all.