New Delhi, December 21: The Modi government today has approved an ordinance for an amendment to Payment of Wages Act to promote usage of cheque and other electronic modes for salary payment of workers. Prime Minister Narendra Modi met his Cabinet colleagues today in New Delhi where the move was discussed and approved. The new procedure will serve the objective of "digital and less cash economy", the bill states.
The Payment of Wages Act currently allows for payments in currency or coin. In another major step by the central government, with its ambitious dream of achieving a complete cashless economy, this ordinance will be encouraging to make salary payments in cheques. The government’s cashless move is expecting to bring transparency in the economic system. On other side this ordinance doesn't mean that henceforth the salaries will only be paid in cheque.
The salaries will be paid in cheques or will be directly transferred into the account of the employees. One of the other possible reasons for the passing of the ordinance might also be to ban the under-reporting the number of employees. Government hopes that the move will lead to employers declaring actual number of workers and paying them Employees Provident Fund.
State governments will need to notify this ordinance before it comes into effect in various areas. Government clarified that option of payment through cash is not being done away with.
At present, with the written authorization of an employee, wages can be given through cheque or transferred to his or her bank account. By making state-level amendments to the Act, Andhra Pradesh, Uttarakhand, Punjab, Kerala and Haryana have already made provisions for payment of wages through cheque and electronic transfer.