Lok Sabha passed The Payment of Wages (Amendment) Bill, 2017 on 07/02/2017

The Payment of Wages (Amendment) Bill, 2017

  • The Payment of Wages (Amendment) Bill, 2017 was introduced in Lok Sabha on February 3, 2017 by the Minister of Labour and Employment, Mr. Bandaru Dattatreya.  The Bill amends the Payment of Wages Act, 1936. 
  • The Bill replaces the Payment of Wages Ordinance, 2016 which was promulgated on December 28, 2016. 
  • Method of payment of wages: Under the 1936 Act, all wages must be paid either in coin or currency notes, or both.  However, the employer may pay his employee’s wages either by cheque or by crediting it into his bank account, after obtaining his written authorisation. 
  • The Bill amends the 1936 Act to permit the employer to pay an employee’s wages: (i) in coin or currency notes; or (ii) by cheque; or (iii) by crediting them into his bank account.  The Bill removes the requirement of obtaining written authorisation for payment of wages by cheque or through a bank account.
  • However, the relevant central or state government may specify certain industrial or other establishments where the employer should pay his employees only by: (i) cheque; or (ii) crediting the wages in his bank account.

A bill, under which specified industrial units will have to pay salaries and wages to workers only either through cheques or by electronic transfer to their bank accounts, was passed by the Lok Sabha on Tuesday. “The initiative is aimed at promoting the welfare of workers,” Labour Minister Bandaru Dattatreya said, adding that the legislation was aimed at bringing transparency, promoting digital economy and timely payments of wages to workers.

The Payment of Wages (Amendment) Bill 2017, which was passed by a voice vote, enables the Centre and states to specify the industries which will come under the ambit of the new provision for which the Government had brought an Ordinance in December, he said, observing that the bill was a tribute to the memory of Bhim Rao Ambedkar.
Asked why the government had brought an Ordinance on the issue, the minister said it was an extra ordinary situation.
“If you will give more support, we will do more for workers…we need to further improve the situation of workers,” he said, adding more and more bank accounts of workers would help them get full wages.
During a discussion on the bill, MPs from almost all political parties including Congress, Trinamool Congress and TDP supported the measure but came down hard on the government for taking the Ordinance route to bring the provision, saying it was the result of “post demonetisation syndrome”.
As per the bill, employers will have to pay wages to workers through cheques or credit their bank accounts without obtaining written authorisation of the employees.
It replaces the Payment of Wages (Amendment) Bill 2016, which was introduced in Lok Sabha on December 15, 2016 and also seeks to repeal the Payment of Wages (Amendment) Ordinance 2016 promulgated on December 28, 2016.
The Minister said the ordinance was promulgated because the bill introduced on December 15, 2016 could not be taken up for consideration and passage in Lok Sabha. The decision to adopt ordinance route to amend the Act was taken by the Union Cabinet on December 21.
“The legislation will benefit the workers who are vulnerable to exploitation. It will also help them get minimum wages, provident funds and other benefits,” he said.
Participating in the debate, N K Premachandran of RSP slammed the government for promulgating the Ordinance saying such a route is taken in an extraordinary situation. He also accused the government of encroaching on the law-making domain of Parliament.
“This government has taken the Ordinance route 26 times and 11 times, Ordinance was repromulgated…It is a fraud on the Constitution,” he said.
Adhir Ranjan Chowdhury (Congress) also attacked the NDA government for the promulgating the Ordinance and cited certain loopholes in the current legislation. He also demanded that adequate infrastructure be put in place to implement the provision.
“The Ordinance is reflective of post-demonetisation syndrome. Due to demonetisation, the labourers were jolted. Lakhs of labourers lost jobs,” he said. There were demands also for stringent action against employers issuing post-dated cheques and for dealing with cases of cheque bounce.
P Ravindra Babu of TDP said payment through cheque is not foolproof and demanded measures to punish erring employers.
Replying to the debate, the Minister said 45 establishments will be covered under the provision while Government may notify establishments which will require to follow the law.
The amendment enables the Centre as well as state governments to notify industries where employers shall have pay wages either through cheque or crediting that into workers’ bank accounts.
As per the bill, the new procedure will serve the objective of “digital and less-cash economy”. The Act had come into force on April 23, 1936, providing for payment of wages in coin or currency notes, or in both.
The provision for payment of wages by cheque or crediting it into bank account after obtaining the requisite authorisation of employees, was inserted in 1975.
At present, the Act covers all those employees in certain categories of establishments whose wage do not exceed Rs 18,000 per month.
The Centre can make rules regarding payment of wages in relation to railways, air transport services, mines, oil fields and its establishments while states take a call on all other cases.
By making state-level amendments to the Act, Andhra Pradesh, Uttarakhand, Punjab, Kerala and Haryana have already made provisions for payment of wages through cheques and electronic transfer.
At present, with the written authorisation of an employee, wages can be given through cheque or transferred to his or her bank account.
Among those who participated in the debate include Varaprasad Rao (YSR Congress Party), Jay Prakash Narayan Yadav (RJD) and Sanjay Jaiswal (BJP), Sushmita Dev (Congress), Rajesh Rajan.