NEW DELHI: The Centre on Wednesday decided to bring in an
ordinance
to amend the Payment of Wages Act for allowing business and industrial establishments to pay salaries through cheques or electronically.
"The
Union Cabinet
today approved the ordinance route to amend the Payment of Wages Act, 1936, to allow employers of certain industries to make payment through the electronic mode and cheques," a source said.
Employers will also have the option to pay wages in cash, the source added.
As per practice, the government introduces ordinance to amend laws for immediate implementation of new rules. An ordinance is valid for six months only. The government is required to get it passed in Parliament within that period.
The Payment of Wages (Amendment) Bill, 2016, seeks to amend Section 6 of the principal Act to enable employers to pay wages to employees through cheques or by crediting it to their bank accounts electronically.
The Bill was introduced by labour minister Bandaru Dattatreya amid din over the
demonetisation issue.
It will also allow state governments to specify industrial or other establishments that adopt cashless way for salary payments.
The new procedure will serve the objective of "digital and less-cash economy", the Bill stated.
The Act had come into force on April 23, 1936, providing for payment of wages in coin or currency notes, or in both. The provision for payment of wages by cheque or crediting it into bank account after obtaining the requisite authorisation of employee was inserted in 1975.
At present, the Act covers all those employees in certain categories of establishments whose wage does not exceed Rs 18,000 per month.
The Centre can make rules regarding payment of wages in relation to railways, air transport services, mines, oil fields and its establishments while states take a call on all other cases.
By making state-level amendments to the Act, Andhra Pradesh, Uttarakhand, Punjab, Kerala and Haryana have already made provisions for payment of wages through cheque and electronic transfer.
At present, with the written authorisation of an employee, wages can be given through cheque or transferred to his or her bank account.
Government's clarificationThe government has issued a clarification on amendment to Payment of Wages Act, amid reports in some sections of media that it is doing away with the provision of paying wages through cash.
Here's the full text of government's clarification:It is seen from the media reports that there is a general impression that is being created that the Government is bringing an amendment to the Payment of Wages Act to make mandatory the payment of wages to the workers only through cheque or accounts transfers. This is not the correct position.
It is clarified that the government proposes to bring an amendment to Section 6 of the Payment of Wages Act which will further provide crediting the wages in the bank account of the employees or payment through cheque along with the existing provisions of payment in current coin or currency notes.
This is being done to facilitate the employers from making payment of wages using the banking facilities also in addition to the existing modes of payment of wages in current coin or currency notes.
Also, the appropriate Government (Centre or State) will have to come up with the notification to specify the industrial or other establishments where the employer shall pay wages through cheque or by crediting the wages in employees’ bank account. It is, therefore, clear that the option of payment through cash is still available with the employers for payment of wages.
It may be understood that the Payment of Wages Act was passed in the year 1936 (eighty years ago) and the situation prevailing at that point of time has completely undergone a technological revolution. Most of the transactions now take place through the banking channels. The proposal of Ministry of Labour and Employment to bring an amendment to Section 6 of the Act is an additional facility of crediting the wages in the bank account of the employees or payment through cheque along with the existing provisions of payment in current coin or currency notes.
The above proposed amendment will also ensure that minimum wages are paid to the employees and their social security rights can be protected. Thus the employers can no longer under-quote the number of employees employed by them in their establishments to avoid becoming a subscriber to the EPFO or ESIC schemes.
It is also pointed out that the states like Andhra Pradesh/Telangana, Kerala, Uttarakhand, Punjab and Haryana have already come out with notifications to provide for payment through banking channels.