New Delhi: A bill empowering the government to make it mandatory for employers of “certain business and industrial establishments" to pay salaries through cheques or by transfers to employees’ bank accounts was tabled in the Lok Sabha on Thursday.
The Payment of Wages (Amendment) Bill 2016 comes in the wake of measures taken by the government post demonetisation to move toward a cashless economy.
However, with the winter session of Parliament ending on Friday, the bill can only be discussed and voted upon in the 2017 budget session at the earliest.
The bill was introduced by labour minister Bandaru Dattatreya and seeks to amend certain sections of the Payment of Wages Act, 1936 which allowed the option of wages to be paid in coins, currency notes, cheques or by electronic mode.
However, once passed by Parliament, the law will give the central and state governments the power to make it mandatory for employers to pay wages only through cheques or by crediting bank accounts.
Although the bill does not mention any specific sectors, C.K. Sajinarayanan, president of trade union Bharatiya Mazdoor Sangh, said these included construction, textiles and some state-run companies.
Last month, the labour ministry in collaboration with the ministry of finance launched a campaign to open bank accounts for workers in both organized and unorganized sectors, who did not have a bank account. Having organized more than 75,000 campaigns nationwide, the labour ministry had opened over 2.4 million bank accounts for workers till 14 December, the ministry said.
The move sets up the infrastructure needed to allow payment of wages to employees’ bank accounts.
The government’s demonetisation move has had a significant impact on cash-based industries or businesses. The inability of employers to pay timely salary had hit daily wage labourers and contract workers in particular. Often these workers had to forego their daily wages because they had to stand in long queues at banks and ATMs to transfer money to their families. As a result, many workers engaged in cash-based industries have migrated back to their home towns and cities in search of work.
“The payment of wages through cheque or crediting it in the bank account of employed persons will reduce the complaints regarding non-payment or less payment of minimum wages, besides serving the objectives of digital and less cash economy," the bill states.
The governments of Andhra Pradesh, Uttarakhand, Punjab, Kerala and Haryana have already legislated such provisions by making amendments to their laws.
“The digitalization of payments will formalize the payment of minimum wages, which will increase the standard of living of the workers," said Sajinarayanan. He added that cashless payment of wages will also resolve the problem of intermediaries for contract workers, removing the scope for corruption.
Sajinarayanan said linking bank accounts to Aadhaar numbers will make it easier to verify whether or not employees are being paid minimum wages. Some employers are maintaining payment records on statutory wage registers but do not actually make the payments. Sajinarayanan said that such practices happen for both permanent and daily wage labourers. The proposed bill will remove this drawback.