Wages in the widest sense mean any economic compensation paid by the employer under some contrast to his workers for the services rendered by them. Wage, therefore, include family allowance, relief pay, financial support and other benefits.
But, in the narrower Sense wages are the price paid for the services of labour in the process of production and include only the performance wages or wages proper. They are composed of two parts – the basic wage and other allowances.
The basic wage is the remuneration, by way of basic salary and allowances, which is paid or payable to an employee in terms of his contract of employment for the work done by him.
Allowances, on the other hand, are paid in addition to the basic wage to maintain the value of basic wage over a period of time.
Such allowances include holiday pay, overtime pay, bonus and social security benefits. These are usually not included in the definition of wage.
However, in India, different Acts include different items under wage, though all the Acts include basic wage and dearness allow come under the term wages. For example, under the Workmen’s Compensation Act, 1923, Section 2 (m), “wage for leave period, holiday pay, overtime pay, bonus, attendance bonus, and good conduct bonus” form part of wages.
Under the payment of wage act, 1936 section 2 (VI) “any award of settlement and production bonus, if paid, constitutes wage.”
But under the Payment of Wage Act, 1948, “retrenchment compensation, payment in lieu of notice and gratuity payable on discharge constitute wage.”
The following type of remuneration, if paid, do not amount to wages under any of the Acts:
(i) Bonus or other payments under a profit-sharing scheme which do not form a part of the contract of employment.
(ii)Value of any house accommodation, supply of light, water, medical attendance, traveling allowance; or -payment in lieu thereof or any other concession.
(iii) Any sum paid to defray special expenses entailed by the nature of the employment of a workman.
(iv) Any contribution to pension, provident fund, or a scheme of social security and social insurance benefits.