The Union Cabinet today gave its approval an Ordinance to allow business and industrial establishments to disburse salaries to their workers and employees through electronic mode or by cheque.
News agency PTI reported that the Union Cabinet, chaired by Prime Minister Narendra Modi, approved an Ordinance to amend the Payment Of Wages Act, 1936.
Employers will also have the option to pay wages in cash, it said.
Union Minister Bandaru Dattatreya clarified that all wage workers, who earn less than Rs 18,000, will come under the new ordinance.
The measure is believed to have been taken to officially facilitate the payment of salaries through cashless mode post the government’s move to demonetize high-value currencies.
At present, a huge chunk of the organized sector, especially factories, tea gardens and construction companies, pay the wages of labourers by cash.
Currently, with the written authorisation of an employee, wages can be given through cheque or other mode to his or her bank account. However, it has not been made official by way of law.
Reacting to the development, CPI leader Gurudas Dasgupta said that the decision will create problem for employees as withdrawal from banks is still difficult in several parts of the country.
“Cashless society is not possible. We will move amendment in the Parliament,” he said.
Under the existing law, salary through cash mode was official but the latest decision will empower companies not to seek employees’ written permission to transfer their wages directly into bank accounts.
The Ordinance amends Section 6 of Act that states that ‘employers can pay by cheque or credit it to the bank account only after written authorization is given by the employee’. The Ordinance is meant to remove this written authorization part to enable cashless payment.
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