Lok Sabha passes Payment of Wages Bill to ensure wage payments through e-transfer & cheques

payment-of-wages-amendment-bill-2016

The Lok Sabha today passed the Payment of Wages (Amendment) Bill, 2017 which seeks to enable employers to pay wages to workers through cheque or directly crediting to their accounts. The bill, moved by Labour and Employment Minister Bandaru Dattatreya in the House, will replace the Ordinance promulgated by the President on 28th December last year.


Key Provisions of the Bill

  • Permit the employer to pay an employee’s wages: (i) by cheque; or (ii) by crediting them into his bank account or (iii) in coin or currency notes. It removes the requirement of obtaining prior written authorization for payment of wages by cheque or through a bank account.
  • It empowers Union or state government to specify certain industrial or other establishments where the employer should pay his employees only by: (i) cheque; or (ii) crediting the wages in his bank account.

Background:

  • Under the 1936 Act, all wages must be paid either in coin or currency notes, or both.  However, the employer may pay his employee’s wages either by cheque or by crediting it into his bank account, after obtaining his written authorisation.
  • The Bill amends the 1936 Act to permit the employer to pay an employee’s wages: (i) in coin or currency notes; or (ii) by cheque; or (iii) by crediting them into his bank account.  The Bill removes the requirement of obtaining written authorization for payment of wages by cheque or through a bank account.
  • However, the relevant central or state government may specify certain industrial or other establishments where the employer should pay his employees only by: (i) cheque; or (ii) crediting the wages in his bank account.
  • The Union Government had decided to take the ordinance route amend the Payment of Wages Act, 1936 because after demonetisation of the Rs. 500 and Rs. 1,000 banknotes in November 2016 had led to a cash crunch, and employers were finding it tough to pay workers in cash.
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