The Centre on Tuesday decided to bring in an ordinance to amend the Payment of Wages Act for allowing business and industrial establishments to pay salaries through cheques or electronically.

The move will enable industries, notified by respective state governments, to make timely payment of wages to workers at a time when there is unavailability of cash due to demonetisation of Rs 1,000 and old Rs. 500 notes.

Labour Minister Bandaru Dattatreya had written to Finance Minister Arun Jaitley, expressing concerns about contractors making advance salary payments to workers in scrapped notes after demonetisation.


What is Payment of Wages Act ?

The Payment of Wages (Amendment) Bill, 2016, seeks to amend Section 6 of the principal Act to enable employers to pay wages to employees through cheques or by crediting it to their bank accounts electronically.

Since past one month government has been taking various steps to make India a cashless society, with this step government is taking the dream one step further .

It will also allow state governments to specify industries or other establishments that adopt cashless way for salary payments.

The new procedure will serve the objective of “digital and less-cash economy”, the Bill stated.

Present state of act

At present, the Act covers all those employees in certain categories of establishments whose wage does not exceed Rs 18,000 per month. An ordinance is valid for six months only. Therefore ,the government is required to get it passed in Parliament within that period.


Center is looking forward to make rules regarding payment of wages in railways, air transport services, to achieve the goal of achieving cashless society .

At present, with the written authorisation of an employee, wages can be given through cheque or transferred to his or her bank account.