Centre pushes employers to cashless payment of wage

Proposes to amend law to allow payment of wage through cheque and bank transfer

In its attempt to move towards a cashless economy, the labour ministry Monday proposed to empower state governments to notify industries which can specify employers to pay wages through cheque or by directly crediting it to the worker's bank account.

At present, an employer is required to obtain a written authorisation from the employee to pay wages either through cheque or by crediting it into the employee's bank account. The ministry has proposed to amend the Payment of Wage Act 1936 in order to make such payment legal. the Act covers all those employees in certain categories of establishments whose wage does not exceed Rs 18,000 per month.

The labour ministry has already sent an advisory to all state governments, labour department offices and concerned ministries asking them to ensure that payment of wages is done through banks only.

The labour ministry feels that payment in cash is the main reason why employees suffer from non-payment of wages. "With the passage of time, technology has gone a sea change. A large section of the employed persons have now bank accounts. So, payment of wages only through cheque or through bank transfer 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 ministry said in the proposed amendments.

Sources in the ministry said the approval from cabinet will come by one week after which the act will be enforced.

Incidentally, the proviso relating to "cheques and bank accounts" to the Section 6 of the Act was inserted in 1976. Following this insertion, the state governments of Andhra Pradesh, Uttarakhand, Punjab, Kerala and Haryana have already made provision in the said Act through state amendments for payment of wages through cheques or bank transfers.

The finance ministry has advised people not to pay any surcharge or convenience fee asked by shops for payment through debit cards.

In frequently asked questions (FAQs) on debit cards, the ministry informed the public that according to norms by card networks, shops should not ask for any additional amount called surcharge or convenience fee.

"You can refuse to pay an additional amount for use of your card and register a complaint with your bank on its website or otherwise," FAQs said.

To another question, the ministry said although all banks have waived merchant discount rate (MDR) up to December 31 this year, customers are not required to pay additional amount even after that if demanded by the shopkeeper, as this is to be paid by the shopkeeper.