Cabinet passes ordinance to amend Payment of Wage Act, pay salaries through cheques or by using electronic modes

Government gives another push to digital transaction, on Wednesday the cabinet passes an ordinance debarring salary payment in cash. 

In a cabinet meeting on Wednesday, the government brought an ordinance to amend the Payment of Wage Act for allowing business and industrial establishments to pay salaries through cheques or by using electronic modes.

The ordinance passed will bring amendments in Payment of Wage Act, 1936, to nudge employers of certain industries to make payment through electronic modes and cheques.

According to sources,"The bill for the purpose was tabled in the Lok Sabha on December 15, 2016. It can be pushed for passage in the Budget session next year. Thus, instead of waiting for two more months, the government can issue the ordinance and later it will be passed in Parliament."

As per the practice, the government brings ordinance to amend laws for immediate implementation of new rules. An ordinance is valid for six months only. 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 pay wages to their employees through cheques or by crediting it to their bank accounts electronically.

The Bill was introduced by Labour Minister Bandaru Dattatreya amid din over demonetisation issue. It will also allow state governments to specify industrial or other establishments that adopt cashless modes for salarypayments. 

The new procedure will serve the objective of "digital andless cash economy", the bill states. 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.

(With agencies input)