Compensation to employee and Indian Labor Law

There are different labour laws governing the compensation and reward of an employee. They are as follows

Payment of wages Act 1936

The object of this act is to provide payment of wages to employees in time without any delay, without unreasonable deduction from the wages, if any deductions are to be made by the employer, those should be reasonable and in accordance with this act and procedure for payment of wages.

Justified deductions can be made from wages according to the Act

• [Section 7] Deductions which may be made from wages
• [Section 8] Fines
• [Section 9] Deductions for absence from duty
• [Section 10] Deductions for damage or loss
• [Section 11] Deductions for services rendered
• [Section 12] Deductions for recovery of advances
• [Section 12A] Deductions for recovery of loans
• [Section 13] Deductions for payments to cooperative societies and insurance schemes

Workmen compensation Act 1923

The object of the Workmen Compensation Act 1923 is to provide compensation to the workman who meets with an accident in the course of employment, causing injury and making him partially or totally disabled or sometimes causing death. Conditions when the employer is not liable to pay compensation to the employee who met with an accident in the course of employment.

Payment of bonus Act 1965

The object of this act is to compulsory payment bonuses to employees whose salary of wage is not exceeding Rs.21000/-, irrespective of profit or loss of the business.

• Minimum amount of bonus payable to employees is 8.33% [section 10]

Payment of Gratuity Act, 1972

The object of this act is the compulsory payment of gratuity to any employee who has completed five years of continuous service at the time of his retirement, resignation, or death or disablement due to accident or disease. Provided that the completion of continuous service of 5 years shall not be necessary where the termination of the employment of any employee is due to death or disablement.

Gratuity = Monthly salary X 15 X Number of years of service

26

• Monthly salary= last month drew salary by the employee.
• 26 = total the number of working days in a month.
• 15 = the number of days in half of the month.

[Sec 4(3)] The maximum amount of gratuity payable to an employee shall not exceed 3, 50,000/- rupees.

(According to the latest 2010 amendment the maximum gratuity payable amount was increased to rupees 10,00,000/-)