Centre to amend 80 year old act to allow payment of wages via cheque, bank transfer

The Centre on Wednesday brought in an ordinance to amend the 80-year-old ‘Payment of Wages Act’ to allow business and industrial establishments to pay salaries through cheques or wire transfer.

“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,” reported PTI.

Employers will also have the option to pay wages in cash.

The ordinance to amend the law will be valid for a period of six months, within which the government will have to get it passed in Parliament. It was introduced by Labour Minister Bandaru Dattatreya.

The amendment will be made to Section 6 of Payment of Wages Bill, 2016, to enable employers to pay wages to employees through cheques or by crediting it to their bank accounts electronically.

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 principal 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 transferring to bank account, after obtaining the employee’s authorisation, was inserted in 1975.

Since then, workers associated with certain categories of establishments and earning less than Rs 18,000 per month have been covered under the Act.

Although the Centre can make rules regarding payment of wages to its own staffers, employed with railways, air transport services, mines, oil fields among others, the states can decide on other cases.

Currently, Andhra Pradesh, Uttarakhand, Punjab, Kerala and Haryana have made provisions for payment of wages through cheque and electronic transfers.