President Pranab Mukherjee on Wednesday approved an ordinance to amend the Payment of Wages Act, which will allow companies to pay their employees’ salaries by cheque or through a bank transfer, The Hindu reported. However, it is not mandatory for companies to pay through the banking system.
According to the Payment of Wages Act 1936, if a company needs an employee’s permission to pay a salary via cheque or bank transfer. However, according to the amendment, employers need not take permission from employees whose wages are less than Rs 18,000 a month. The Ordinance will also let the state or central government decide which industries or establishments should mandatorily pay the employees’ salary through the banking system.
On December 21, the Centre had approved the draft ordinance proposing to amend Section 6 of the Act. The Union Labour Ministry on December 2 had said this move would “reduce complaints regarding [the] non-payment or less payment of minimum wages” and enable a smooth transition to a cashless economy.
The country has been facing a severe cash crunch since November 8, when Prime Minister Narendra Modi announced that Rs 500 and Rs 1,000 notes would be demonetised. Modi has since been trying to promote a cashless economy.