Salary in Cash Banned – Payment of Salary through Bank Account

By | November 14, 2017

Salary Only through Cheque or Direct Bank Transfer/ No salary in Cash – Government Ordinance

No more salary payment in cash: The Central Government passed The Payment of Wages (Amendment) Bill 2017 which enables the Centre and state governments to specify employers to pay wages only through cheque or by transferring money into bank accounts of the employees.

Salary in Cash Banned Scheme

The Bill specifies that the industrial or another establishment, the employer of which will have to pay wages to every person employed only by cheque or by crediting it in his bank account. The bill seeks to remove the requirement of written authorization from workers for making payment through cheque or bank transfer. The ordinance comes into force with immediate effect.

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The bill has a provision of six months imprisonment for violation of the Act. It also authorizes for an appropriate action under the Factories Act 1948.

Aims of the Bill

  • It is aimed at improving the compliance with labor laws. It will help stop the exploitation of workers by paying low wages in cash.
  • To strengthen the rights of workers through a transparent manner of payment.
  • To promote the digital cashless economy.

Some of the states that include Andhra Pradesh, Uttarakhand, Punjab, Haryana, and Kerala have already made necessary state-level amendments to the Act and made provisions for payment of wages through cheque or bank transfer.

Impacts of the Bill

There has been a debate that a large percentage working people even don’t have bank accounts. It is also feared that people working in unorganized sector many of whom keep changing their place of work would find it difficult and how practical the cashless mode of payment would be for them.

It might face some difficulties in the initial stage, but it would definitely prove beneficial in the long term. For a long time, a complaint was that majority of the workers in unorganized sectors are not being paid wages according to the laws; they get exploited as there is no proof of the wages they have been paid as they were paid in cash. The bill will help prevent such practice.

Many times employers do under-quote the number of employees employed by them in the industry or establishments for various reasons. With the introduction of the bill, such practices can no longer be continued.

The amendment bill will encourage digital transactions; it would help reduce the need for cash by employers towards making payment for salaries. It is a step forward in ensuring that minimum wages were paid to employees and they are protected for their social security rights.

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