It is the pay that is paid over and above the basic pay, for doing hazardous work at the job. The law mandates that such a payment be provided to people who are working under hazardous conditions/ high physical stress condition.
But, the law does not specify the amount of money given. The hazard pay rates are decided by the employer. Hazard pay is calculated based on the number of hours for which the employee was doing the hazardous job.
For example: Employees working in mines, in areas where exposure to dust/fumes is there come under this. The employees working under tough physical conditions like cramped places etc. are also given hazard pay.