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The Payment of Wages Act fixes wage periods, the time by which wages must be paid, and the only deductions an employer may make from wages.
Check before you rely on thisCheck the current wage ceiling for coverage, the payment time limits for your establishment size and on termination, the overall deduction limit, and whether the Code on Wages provisions now apply instead.
01
The Act sets three things payroll must respect: the wage period cannot exceed a month; wages must be paid within time limits after the wage period ends, with separate limits for larger and smaller establishments and for employees whose employment is terminated; and only listed deductions may be made, within an overall cap.
02
It applies to employees in factories, railways and other establishments it lists or that governments notify, whose wages are below a ceiling the government sets by notification. Check whether the ceiling and coverage apply to your employees.
03
Watch for itRecovering an over-payment or a notice period shortfall from salary is a deduction too. Check that it falls within the Act's list and limits.
04
| Term | What it means |
|---|---|
| Wage period | The period wages are fixed for, no longer than a month |
| Authorised deduction | A deduction the Act permits |
| Overall limit | The cap on total deductions in a wage period |
| Payment on termination | Wages due on dismissal or discharge, payable within a shorter time |
05
The four labour codes, passed by Parliament in 2019 and 2020, came into force on 21 November 2025. Final central rules under all four codes were notified on 8 May 2026, and each state frames its own rules, some of which are still in draft. During the transition, the relevant provisions of the earlier Acts and their rules continue to apply, so check which rules govern your establishment in each state.
The Payment of Wages Act is among the laws consolidated into the Code on Wages, which sets its own payment time limits and deduction rules for employees generally.
Yes, deduction for absence from duty is authorised, in proportion to the period of absence as the Act describes.
The Act sets a shorter time limit for employees whose employment ends. Check the limit under the Act or the Code that applies to you.
Yes. Payment by cheque or bank credit is recognised, subject to the Act's conditions.
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