Government approves ordinance on Payment of Wages Act

The union cabinet has approved the ordinance on Payment of Wages Act that relates to the payment of wages. The ordinance facilitates central government administered establishments to pay salaries by cheque or credit salary in employees’ bank accounts. Accordingly, the ordinance will amend Section 6 of the Payment of Wages Act, 1936. It should be noted that the payment can also be made through existing provisions of payment in currency notes or current coin.

Since Labour is in the concurrent list, the ordinance would not be applicable to the local state administered institutions unless they too adopt this measure. The states like Andhra Pradesh, Uttarakhand, Punjab, Kerala and Haryana have already made provisions for payment of wages through cheque and electronic transfers by making amendments to their respective state-level Acts.

As the ordinance will be valid for only 6 months, the government needs to pass it in Parliament before that time period. The new ordinance will help to promote digital and cashless economy and will also check under-reporting of salaries and end the exploitation of wage workers. At present, a large chunk of the organised sector like factories, tea gardens and construction companies, pay the wages to their employees by cash.