• Legis Scriptor

Wage Theft

Authored By- Mahee Chouksey

Keywords: Federal, Legislation, Wage Theft, Payment, Provision


In September, the parliament of India composed the Code on Wages Bill, 2019. The Bill directly facilitates the federal government to overhaul the minimum statutory wages for millions of workers. The Bill is the initial in the sequel of four labour codes that the government is struggling to rationalise its 44 labour laws and enhance the solace of doing business in the country.

It seeks to subsume adequate provision of the earlier law pertaining to worker's wages, it’s payment and bonus. The extra three codes will deal with civil security, industrial safety and interest, and industrial connections.


The word wage theft encompasses a variety of input that arises when workers do not receive their legally or contractually guaranteed wage.

Some packages to bail out commerce and businesses must enact illustrative procedures of labour practice and give rise to these conditional of institutional support – inscribed agreements, documentation, steadfastness to fair and comparable wages, public protection, and workers’ security. A wage payment fund for workers in intermediate and small scale enterprises must be declared openly as this is the toughest whack economic place. The opportunity to re-inject the significance of labour liberties and welfare as central to the comeback of a deteriorating economy.

Ordinary characteristics of wage theft are:

1. If non- payment overtime

2. If giving workers their last pay review after a worker evacuates a job.

3. If not paying for all the hours worked

4. If not reimbursing minimum wage

5. If not paying a worker at all

Are contract workers enclosed under the Payment of Wages Act?

The overheads of the Act are duly sufficient to the contract labour employed by any factory or building if the occupation in which they are immersed is contrarily wrapped by the Payment of Wages Act, 2019.

Types of deductions:-

Following illustrated are the crucial deductions that are allowed under the Payment of Wages Act, 1936-

1. Penalties;

2. Deduction for the basic period of absence

3. Deduction for the destruction or losing of goods expressly authorized to the employed person;

4. Deduction for house accommodation;

5. Deduction for the extravagances and assistance delivered by the employer with a commitment to the employee;

6. Deduction for the comeback of advance and interest, and adjustment of overpayment;

7. Deductions for the healing of loans from any fund comprised for the interest of labour as approved between employer and worker;

8. Deduction for income tax;

9. Deduction on injunctions of a judiciary or other administration;

10. Deduction for subscription and reimbursement of advance from any Provident Fund;

11. Deduction for expenditures to cooperative communities as decided between employer and employee;

12. Deduction of premium for LIC policy on the composed authorization of the employed person; or any other investment for Post Office Saving Schemes;

Regardless, as illustrated in section 7 of the Act, the cumulative percentage of deductions should not outperform 75% of wages of the employee in any wage interval if the whole or a portion of the deductions is meant for the payments to cooperative communities. Those in other cases should not surpass 50%.

Protocol and Provisions relating to fine reduction from the wage

Supposing of penalties that require to be compelled on the employee it should only be for the acts and negligences that are illustrated in the list of which has been authorized by the appropriate Administrator. Fines should not surpass 3% of the wages in a month. This necessities to be regained within 90 days of the duration of act or omission, be inflicted after an adequate show purpose procedure, and cannot be assessed on an employee of shorter than 15 years of age.

Employers have mandatory to uphold attending registers in the prescribed forms-

1. Register of wages;

2. Register of fines;

3. Register of the deduction for damages or loss

4. Register of advances

Revising of minimum wages

According to the description and procedure illustrated under the Minimum Wages Act, 1948 for preoccupation of the item and revising of minimum wages, the Government authorizes a committee which comprises a proportional number of delegates of employers and employees in the scheduled employment and autonomous persons not surpassing one-third of a total number proposed by Government. The committee makes the recommendation to the Government and on acknowledgement will be disclosed in the Official Gazette and will come into force from the date of notification.

Provision pertaining to favourable payment of wages to employees

According to the provisions under The Payment of Wages Act, 1936, wages needs to be paid-

1. Previously the expiry of the 7th day after the last day of the wage period, where there are less than 1000 workers employed and in rest trial on the 10th day;

2. By way of the current coin or currency notes and by cheques or by crediting the wages in the employee’s bank account after obtaining his written authority;

3. It should be a working day;

4. Formerly the expiry of the second day, to the person whose employment is discontinued.

By the perspective of steadying wage law across the country, the Rajya Sabha passed a Regulation on 2nd August 2019. The bill is known as the Code on Wages, 2019, and was initially exemplified by the minister of labour in the Lok Sabha on 23rd July 2019. It effectively modifies and replaces four legislations, namely:

1. The Payment of Wages Act, 1936,

2. The Minimum Wages Act, 1948,

3. The Payment of Bonus Act, 1965, and

4. The Equal Remuneration Act, 1976.

Prerequisite of The Code on the Wage bill, 2019 directly simplified explanation of wage eliminates assortment of wage definition which can considerably lessen prosecution as well as compliance cost for employees. Presently 12 several labour laws defined wages differently overseeing litigation in improvement to complication in its enactment.

National minimum wage

The national floor minimum wage must be proclaimed under the Labour Code on Wages, established on the proposals of the Anoop Satpathy-led specialist committee, which formulated Rs 375 per day. This insurance under minimum wage regulation must also be broadened to home-based or own-account workers, as well as domestic workers, who have numerous employers and are confronting revocation of orders or casualty of work due to the pandemic and lockdown.

The Upswing to, it is crucial to ascertain threefold bodies established on the Industrial Disputes Act (1947) to permit the administration to agent negotiations between employers and workers in divisions such as garments and textiles. This is mandatory to guarantee that the enforcement of minimum wage regulations attains sectors where workers’ bargaining strength is insufficient.

The enthusiasm and vitality of the Indian workers are at its depressed. Actual as several among us have aspired to furnish abrupt assistance in terms of food and allowances, it is not substantial. Workers not only need food but are also outstanding their legal wages – both during this crisis and after. In Decades of a lack of obligation to minimum wage criteria and institutional preservation against wage, the conspiracy has the made workers boosting susceptible, leading up, to this destruction under the pandemic and lockdown

In whatever way, deep inspection of the Wage Code discloses that it has eliminated or reduced meaningful provisions of aforesaid legislations. As India scuffles with a wage disaster, that entails the lives and livelihoods of its substantial informal labour population, the proficiency of the Wage Code to safeguard wages warrants a critical debate.

In the case of Sanjit Roy vs. State of Rajasthan[1] in 1983, any payment less than the minimum wage are actionable by imprisonment in the initial instance. The Supreme Court had brought up in Sanjit Roy v State of Rajasthan in 1983 that non-compliance with minimum earnings amounts to compelled labour, which is constitutionally forbidden (PUDR 2017). Whereas employers had criminal liability, under the current Wage Code, they only have civil detriment. Additionally, employers found to be infringing the Wage Code will be lent the opportunity to comply with the provisions of the Wage Code or give justifications for infringement, and only compounded offences will lead to retributions.


A serious re-examination of labour codes is likely to jeopardize the assertions of workers in the informal frugality. The Labour Code on Wages (2019), for example, has curtailed the obligation of the administrator employer for the payment of wages. It does so by broadening the explanation of “principal employer” to encompass contractors and site managers as well. Such an explanation generates anxieties in remedying accountability on the principal employer in cases of wages being refuted, particularly where there are long chains of intermediaries with numerous labour contractors comprised.

[1] 1983 AIR 328 Reference