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Legal Framework of Compensation

Labor laws in India establish a legal framework for compensation and regulate payment of wages, minimum wages, bonuses and equal remuneration. Key acts discussed include the Payment of Wages Act (regulates timely payment of wages), Minimum Wages Act (ensures basic needs are met), Payment of Bonus Act (mandates bonus for good work) and Equal Remuneration Act (provides for equal pay for equal work regardless of gender). The acts aim to prevent exploitation, provide fair wages and improve livelihoods while establishing employer obligations and penalties for non-compliance.

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2K views18 pages

Legal Framework of Compensation

Labor laws in India establish a legal framework for compensation and regulate payment of wages, minimum wages, bonuses and equal remuneration. Key acts discussed include the Payment of Wages Act (regulates timely payment of wages), Minimum Wages Act (ensures basic needs are met), Payment of Bonus Act (mandates bonus for good work) and Equal Remuneration Act (provides for equal pay for equal work regardless of gender). The acts aim to prevent exploitation, provide fair wages and improve livelihoods while establishing employer obligations and penalties for non-compliance.

Uploaded by

Sujata
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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LEGAL FRAMEWORK OF

COMPENSATION
INTRODUCTION

• Labour is one of the principal factors of production in all kinds of

establishments whether big or small, organized or unorganized, industrial

or commercial.

• With a view to ensure job security and satisfaction to the Labour to give

them their due wages along with certain employment benefits and to

prevent exploitation of Labour by the capitalists.


LABOUR LEGISLATIONS

• Payment of wages Act, 1936

• The minimum wages Act, 1948

• The payment of bonus Act, 1965

• The equal remuneration Act, 1976


PAYMENT OF WAGES ACT, 1936

• Regulates payment of wages to class of employees


• Guarantees payment of wages in time and without any deductions except those
authorized under the act.
• Provide responsibility for
1. Payment of wages
2. Fixation of wage period
3. Time and mode of payment of wages
4. Permissible deductions
PAYMENT OF WAGES ACT, 1936

• Wage means all remuneration in terms of money, including over time, bonus,
holiday or any other leave.
• Payment should be made before the 7th day of a month where the number of
workers is less than 1000 and 10th day otherwise.
• The act is applicable only to employees drawing wages not exceeding Rs. 6500
a month.
• Payment has to be made in currency notes or coins. Cheque payment or
crediting to bank account is allowed with consent in writing by the employee.
DEDUCTION FROM WAGES

• Employer is allowed to effect only authorized deductions, as specified in the act.


• This include
i. Fines,
ii. Deduction for services(amenities) given to employer,
iii. Absence from duty,
iv. Damages or loss,
v. Recovery of advances and loans,
vi. Payment to Insurance
THE MINIMUM WAGES ACT, 1948

• The minimum amount of remuneration that an employer is required to pay


wage earners for the work performed during a given period, which cannot be
reduced by collective agreement or an individual contract.
• Employers wants to decrease employee costs. Workers want wages for better
livelihood, housing, children’s education, medical requirements, provision for
old age, marriage, etc.
OBJECTIVES OF MINIMUM WAGE ACT

• To ensure that the employee can have the basic,


• To ensure that the employee can have the basic physical needs, good health
and a level of comfort.
• To prevent exploitations of Labour
• Authorities are empowered to fix minimum wages from based on market
inflation and cost of living index.
MINIMUM WAGES ACT, 1948

• Wages must be paid in cash


• Hours of work and holidays
• Providing extra wages for overtime
• Rest day
• Employer’s obligations and maintenance of records
PAYMENT OF BONUS ACT, 1965

• Payment of bonus to the employees

• Formed with an objective for rewarding employees for their good work for
the organization.

• The Act mandates payment of bonus to employees’ whose salary or wage is


up to or less than Rs.21,000 per month.
OBJECTIVES OF PAYMENT OF BONUS ACT

• To improve statutory liability to pay bonus(reward for good work) in case of


profits or losses.
• To prescribe formula for calculating bonus
• To prescribe minimum or maximum percentage bonus
• To provide redressal(rectify) mechanism(procedure) for not getting any bonus
ELIGIBILITY FOR BONUS

• Any employees who draws salary or wage up to Rs. 21,000 is eligible for
claiming bonus
• An employee will be entitled only when he has worked for 30 working days in
that year.
• Definition of employee on the basis of payment of bonus act:
• An employee means any person(except an Apprentice), employed on a salary
or wage not exceeding Rs. 21,000 p.m. in any industry to do any skilled or
unskilled work.
APPLICABILITY

• This act extends to whole of India (including Jammu & Kashmir)


• This act applies to every factory & establishment in which 20 or more persons
are employed on any of the financial year.
• Appropriate government may, by notification on the official Gazzate, make the
act applicable to establishments with more than 10 employees but less than
20 employees.
• Once the act becomes applicable, it shall remain applicable till the time
organization exists.
DISQUALIFICATION FROM BONUS

• Fraud
• Riotous or violent behavior on premises
• Theft, misappropriate or damage of company property
• Time limit for bonus payment: bonus shall be paid within 8 months from the
closing of the accounting year.
• Maximum amount of bonus: 20% of basic+ D.A
• Minimum amount of bonus: 8.33% of basic+ D.A or Rs 100 whichever is
higher.
EQUAL REMUNERATION ACT, 1976

• Equal pay for equal work


• Aims at providing for the payment of equal remuneration to men and women.
• ‘Remuneration’ means the basic wage or salary and any additional
emoluments whatsoever payable, either in cash or in kind.
OBJECTIVES OF THE ACT

• The equal remuneration act, 1976 aims:


1. To pay equal remuneration to men and women workers.
2. To prevent discrimination, on the grounds of gender, against women in the
matter of employment.
3. To provide increasing opportunity to women.
EQUAL REMUNERATION ACT, 1976

• Applicability: whole of India, applicable to all categories of work


• Duty of employer: to pay equal remuneration of same work.
• Not applicable for SC/ST.
• To maintain registers
• Advisory committee: constituted by appropriate govt. for women
opportunities. It consist 10 persons and half women and half men (5-5).
• Penalty: employer with fine and imprisonment or both if he/she does not
follow any rules.
THANK YOU

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