In a bid to push cashless economy, Union Cabinet chaired by Prime Minister Narendra Modi 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. This move will provide opportunity for employers to have an option to transfer the wages electronically or by cheques.
Due to chaos in Parliament, the Centre could not pass the Payment of Wages (Amendment) Bill, 2016, which 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 present 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. This Act covers all those employees in certain categories of establishments whose wage does not exceed Rs18,000 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.