Definition of wages as per act in India.

Definition of Wages

The term wages has been defined as all remuneration (whether by way of salary, allowances, or otherwise) payable to a person employed in respect of his employment or of work done in such employment. Under the Payment of Wages Act, wages include:

• Any remuneration payable under any award or settlement between the parties or order of a Court;
• Any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period;
• Any additional remuneration payable under the terms of employment (whether called a bonus or by any other name);
• Any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made;
• Any sum to which the person employed is entitled under any scheme framed under any law for the time being in force, but does not include following :
• Any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a Court;
• The value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate Government;
• Any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon;
• Any travelling allowance or the value of any travelling concession;
• Any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; or
• Any gratuity payable on the termination of employment.

Due Date for Salary Payment and Wages

As per the provisions of the Payment of Wages Act, 1936, wages need to be paid to employees before the expiry of the 7th day of the last day of the wage period, where number of employees are less than 1000. In case the number of employee is less than 1000, wages must be paid before the expiry of the 10th day of the last day of the wage period.

Further, wages must be paid only on working day and not on holiday. In case employment of any person is terminated, the wages earned by him must be paid before the expiry of the second working day from the date of termination.

Mode of Payment of Salary and Wages

Salary and wages should be paid only in current coins or currency notes or both. The wages can also be paid by cheque or by crediting into bank account, however, in order to do so, the employer has to obtain written authorization from the employed person.

Deductions from Salary or Wages under the Payment of Wages Act

The employer is allowed to deduct the following from the salary or wages of an employee under the Payment of Wages Act.

• Fines;
• Deduction for absence from the duty;
• Deduction for the damage to or loss of goods of employed person;
• Deduction for house accommodation supplies by the employer;
• Deduction for the amenities and service supplied by employer;
• Deduction for recovery of advances and interest, and adjustment of overpayment;
• Deductions for recovery of loans from any fund constituted for the welfare of labour;
• Deduction for income tax payable by the employed person;
• Deduction on orders of a court or other authority;
• Deduction for subscription and repayment of advance from any Provident Fund;
• Deduction for payments to cooperative societies;
• Deduction of premium for LIC policy on written authorization of the employed person; or any other investment for Post Office Saving Schemes;

The total amount of deductions should not exceed 50 % of the wages of the employee in any wage period. If whole or part of the deductions is meant for the payments to co- operative societies, then the deductions cannot exceed 75%.

Payroll calculation formula

Here is the formula to calculate payroll in India,

Net Salary?= Gross Salary – Gross Deductions

here,

Gross Salary?= Basic Salary + HRA + All types of Allowances + Reimbursements + Arrears + Bonus

Gross Deductions?= Professional Tax + Public Provident Fund + Income Tax + Insurance + Leave adjustments + Loan repayments (if any)

As an entrepreneur, it’s very important to recognize the importance of payroll processing.

The most important yet untouched element in payroll processing is the morale of an employee.

Delay in Salary Payment or Wages

When there is delay in payment of wages or any deduction has been made from the wages, in such case, application can be made to the authority. Following is the list of person, who can make application to the authority:

• The person himself; or
• Any legal practitioner; or
• Any official of a registered trade union, duly authorized in writing;
• Any inspector; or
• Any other person acting with the permission of the authority.

What is Form 11 Rule 26(2)? This form is related to the issuing of a wage slip to an employee as per rule 26 (2) of minimum wages central rules,?every employer shall issue a wage slip to every person employed by him at least a day prior to the disbursement of the wages.

?

What happens if a company doesn't pay on time?

If an employer does not pay on time, it can:?affect an employee's financial security and wellbeing. damage the working relationship. lead to legal action.