Cabinet approves ordinance to pay salaries via cheques

The move will enable companies to ensure timely payment of wages to workers at a time when there is cash crunch due to demonetisation of Rs. 1,000 and old Rs. 500.

The Centre approved the promulgation of an ordinance on Wednesday to enable industries to pay wages by cheque or by direct credit into bank accounts of workers earning up to Rs. 18,000 a month, without taking their explicit consent as required under the present 1936 law.

Union Minister of State for Labour and Employment Bandaru Dattatreya said wage payment through the banking system would only be optional, until State governments or the Centre come up with a notification for specific industries.

“The current provisions of payment of wages through cash will remain. We are only giving employers another option,” Mr. Dattatreya said after the Cabinet meeting.

The move assumes significance in the context of the government’s efforts to promote cashless transactions after its decision to scrap the old Rs. 500 and Rs. 1,000 currency notes.

Mr. Dattatreya had introduced the Payment of Wages (Amendment) Bill, 2016 in the Lok Sabha on December 15, but it couldn’t be cleared owing to the impasse in Parliament. The present law states that all payment of wages should be in cash, with a provision asking employers to obtain written permission of the worker to pay either by cheque, or by crediting the wages to his or her bank account.

Mr. Dattatreya had introduced the Payment of Wages (Amendment) Bill, 2016 in the Lok Sabha on December 15, but it couldn’t be cleared owing to the impasse in Parliament. The present law states that all payment of wages should be in cash, with a provision asking employers to obtain written permission of the worker to pay either by cheque, or by crediting the wages to his or her bank account.

The ordinance, which will need the President’s assent to become law, proposes changes to Section 6 of the Payment of Wages Act of 1936. The Centre or State governments may specify the industry through official notifications where the payment of wages shall be through cheques or direct credit in bank accounts.

Heera Lal Samaria, Additional Secretary in the Labour and Employment Ministry, said authorisation of the employee would not be required after the law came into effect.

Unwarranted: CITU

“The haste in ensuring payment of salaries through banks through an ordinance is unwarranted, particularly when the entire banking service is in disorder...,” said Tapan Sen, general secretary, Centre of Indian Trade Unions. It sought to take away the worker’s right to take wages in their preferred mode, he said.