Govt clears ordinance allowing businesses to pay salaries via e-mode, cheque

The new move will enable businesses to pay salaries timely in addition to the existing provisions of payment in current coin or currency notes.

Govt clears ordinance allowing businesses to pay salaries via e-mode, cheque

The Union Cabinet on Wednesday approved a draft ordinance allowing businesses to pay salaries through electronic mode and cheques.

Amending the Payment of Wages Act, the new ordinance will permit business and industrial establishments, notified by respective State governments, to pay salaries timely through cheque or credit salary in employees' bank accounts in addition to the existing provisions of payment in current coin or currency notes.


"The Union Cabinet today approved the ordinance route to amend the Payment of Wages Act, 1936, to allow employers of certain industries to make payment through the electronic mode and cheques," a source was quoted by PTI as saying.

The Union government tabled a bill in this regard in Lok Sabha on December 15, 2016 and it was brought by the Labour Minister Bandaru Dattatreya during the ruckus in Parliament over demonetisation issue.

“One of the reasons for the ineffective enforcement of payments of wages to workers is the payment of wages in cash. So, the 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 Labour Ministry had reportedly said in a proposal earlier.

The new move proposed changes to the Section 6 of the Payment of Wages Act of 1936, which sanctioned the payment of wages in coin or currency notes, or in both.

However, states like Andhra Pradesh, Uttarakhand, Punjab, Kerala and Haryana have already made provisions for payment of wages through e-mode and cheque by making state-level amendments to the Act.

The new ordinance will pave way for major push for government’s plan for “digital and less cash economy”, claimed sources.