Centre takes the ordinance route to push cashless wage payments

As the country grapples with cash shortage following demonetisation, the Union Cabinet on Wednesday gave its nod for taking the ordinance route to amend the Payment of Wages Act, 1936, allowing business/industrial establishments to pay salaries of those earning less than ₹18,000/month through cheques or electronic transfers.

Trade unions slammed the “dubious and suspect” timing of the decision “at a time when banking services are already messed up” following demonetisation of ₹500/1,000 notes, saying this would add to the woes of lakhs of already cash-hit unorganised sector workers.

“The Cabinet has approved the proposed amendments to the Act, mainly Section 6, which will further provide crediting wages in the bank account of employees or payment through cheque or account transfers,” Labour Minister Bandaru Dattattreya, said at a press conference. He, however, clarified that pending notifications by the Centre or States the “option of payment through cash is still available with the employers”. Andhra Pradesh, Telangana, Kerala, Uttarakhand, Punjab and Haryana have already come out with notifications to provide for payment through banking channels, he added.

As per the amendments, an employer would no longer require written authorisation from an employee for wage payment through cheque or electronic transfer.

“The day the notification is issued, this will be applicable to all firms, even in the private sector,” said the Minister, adding that it will be notified soon in the Central sphere, covering sectors such as Railways, transport, coal and mines.

Asked why the government chose the ordinance route, Dattatreya said this was because of the present context (the push for cashless payments), also, “I had introduced the amendment Bill in Lok Sabha (during Winter session), but because of chaos (on demonetisation) it could not be discussed and passed,” he said.

An ordinance is valid for six months and the government needs to get it passed by Parliament within that period.

As labour is in the concurrent list, the Minister said the decision was taken to “stop exploitation of unorganised sector workers and also take care of the long-pending demand of trade unions”, adding that the role of the States was “very important”.

Tapan Sen, Rajya Sabha MP and General Secretary, Centre of Indian Trade Unions (CITU), however, lashed out at the BJP government. “We have been demanding this for workers, but in banking service areas. What will be the fate of workers where banking services are not there? Nobody knows when the cash situation will ease?”

Demanding immediate payment of wages and making available adequate cash to workers, CITU also announced country-wide protests on January 3 against the impact of note ban on unorganised sector workers, farmers, small businesses, traders and street vendors.