In an effort to further push the country towards a cashless economy, the central cabinet has approved the ordinance for paying salaries via electronically, amending an 80-year-old law which governs payment of salaries under Rs 18,000, all over India.
With this, payment of salaries to employees through the cashless mode in certain industries has been made mandatory by the government. The new ordinance will be applicable to public sector for now, and the private sector will be added later under the purview.
The Payment of Wages Act, 1936, ensured payment for employees or laborers in coin or currency notes, or in both. The provision for payment of wages by cheque was inserted in 1975. However, with the introduction of cashless payments, the Act needed another amendment, which ensured that employees receive their payments via electronic mode.
An ordinance to amend an act has a time limit of six months. During this time, the government is required to get the same passed in Parliament. Andhra Pradesh, Uttarakhand, Punjab, Kerala, and Haryana have already made provisions for cashless payment of wages by making state-level amendments to the Act.