Payment of wages set to go cashless

Mukesh Ranjan

Tribune News Service

New Delhi, December 2

In line with government’s bid to popularise digital transactions following the demonetisation move, the Centre is set to amend the law regulating payment of wages in industrial and other establishments by making it “mandatory” for employers to pay remunerations to their employees either through cheques or bank transfers.

Talking to The Tribune sources, while quoting the Cabinet draft note prepared by Ministry of Labour and Employment, which has been duly approved by the legislative department of the Ministry of Law and Justice, said, “Seeking an amendment in the Section 6 of the Payment of Wage Act, 1936, a proposal is mooted to get approval of the Union Cabinet, which will enable the appropriate government to specify the industrial and other establishments and mandate them to pay to their employees’ wages either through cheques or by transferring funds to their bank accounts.”

The proposal to this effect is ready and will be taken up by the Union Cabinet next week, as all the formalities relating to the draft note are complete, the sources said, adding the government intends to take the draft amendment Bill to Parliament in the ongoing session itself.

Currently, Section 6 of the Act mandates that all wages “shall be paid in current coins or currency notes or in both”. However, the employer may, after obtaining the written authorisation of the employees, can “pay the wages either by cheques or by crediting the amount in the bank accounts of employees”.

Incidentally, the proviso relating to “cheques and bank accounts” to the Section 6 of the Act was inserted in 1976. Following this insertion, the state governments of Andhra Pradesh, Uttarakhand, Punjab, Kerala and Haryana have already made provision in the said Act through state amendments for payment of wages through cheques or bank transfers.

Justifying the government’s move to make “cheques and bank transfer” mandatory for paying wages, the draft note, the sources said, has argued that technology has gone a “sea change” and a large section of employed persons have now bank accounts and therefore the time has “come to adopt “digital transaction”.

“The change in the mode of wage payment will also reduce the complaints regarding non-payment or paying less than minimum wages, besides serving the objective of digital and cashless economy,” the note added.