note demonetisation

The cashless wage ordinance has brought more distress than relief for industrial workers

Factory workers in Delhi complain of an inordinate delay in receiving their wages, and no payment for overtime.

In the immediate aftermath of the demonetisation announcement, several factories in Delhi’s industrial areas continued to pay their workers in old high-value denominations that had been outlawed. The push by the government in subsequent weeks to ensure that factories go cashless – it passed an ordinance in December that permitted factories to pay workers via cheque or electronic funds transfer – meant that employers then paid workers via cheque or bank transfer. But this brought a set of new problems for industrial workers who are already dealing with a shortfall in available work because of a demonetisation-induced slowdown.

Employers are not only delaying handing out cheques, they are directing workers to delay depositing them. But most importantly, trade union members allege that employers are now cheating their workers of their dues for putting in overtime. Helpless in an employers’ market, the workers have no option but to acquiesce.

Delayed wages

Ramakant Yadav, 45, works in the engineering department of a factory that produces spare parts for power transmission equipment at Mayapuri industrial area in West Delhi. He received a cheque for his work in December on January 25.

Under the provisions of the Payment of Wages Act, which provides employers with a seven-day grace period to pay their workers wages for the previous month, workers are supposed to receive their pay by the seventh of each month.

“I received my cheque 18 days late,” said Yadav. “It came with a condition – the management has asked us not to drop it in the bank before the coming Monday without taking permission. Life becomes tough due to such a delay in receiving our wages. We need cash for at least essentials like bread and milk. But what can we do? There are hardly any jobs in industrial areas these days.”

After industrial workers across the country complained that their employers were still paying them in old currency following demonetisation, on December 21, the government passed an ordinance to amend the Payment of Wages Act, 1936, to allow employers in certain industries to pay their workers via cheque or electronic transfers.

Several trade unions across the country criticised the ordinance. They said that it took away workers’ right to receive wages through means other than cash only after consenting to it in writing.

Unpaid overtime

Trade union officials said that the ordinance has not eased the troubles of workers.

“Following the ordinance, nearly 90% industrial units in Delhi are paying employees through cheque but this has brought a new set of problems,” said Chhotelal Tiwari, general secretary, South West Delhi, Centre of Indian Trade Unions, which had vehemently criticised the ordinance. “There is an inordinate delay in payment of salary through cheques. Many units are yet to issue cheques and this is giving workers a hard time. Some workers have also been issued with post-dated cheques, and some employers have put conditions that the workers should not deposit the cheques in banks without seeking permission from the management.”

Tiwari added that payments through cheques or electronic mode meant that employers had to pay their workers the legal minimum wage, which is higher than what workers were drawing earlier. As a result of this, employers were forcing their staff to put in overtime, and not paying them for it. According to the law, the pay for overtime is double the hourly rate.

“Employers now have to pay the minimum wages as the payment is made through cheque,” said Tiwari. “So the employers exploit them by making them work for 12 hours instead of eight and do not show the four overtime hours on record.”

Ramakant Yadav and the other workers in his factory – those who remain after mass termination of factory workers in the weeks following the demonetisation announcement – said that they had not been paid for overtime during the last three months. The story repeats itself in factories across Mayapuri industrial area.

“There has been no overtime payment since the management has started paying through cheque,” said Abdul Kareem Sheikh, a native of West Bengal’s Burdman district who works at a garment factory in Mayapuri.

But he said that he had a bigger problem.

“I am among the very few ones who are still receiving my salary through cash and we have been asked to open bank accounts at the earliest,” said Sheikh. “But I am unable to do so as I do not have any address proof pertaining to Delhi. I live in a rented room and my landlord has refused to provide anything in writing.”

Take it, or leave it

The drop in employment opportunities following demonetisation means that factory workers are not in a good position to negotiate with factory managements either, and they have to accept whatever they are paid, said Rajesh Kumar, general secretary, Delhi, of the Indian Federation of Trade Unions

In the past two months, workers have seen factories shutting down, closing certain departments or reducing their operational capacity, thus leading to mass sacking of workers, said Kumar. He added that around 75% of those sacked are yet to find work again as the factories haven’t yet recovered from the blow of demonetisation.

“Presently, there is no voice to protest,” he said.

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