In digital drive, govt issues ordinance for wage transfer Imparting further momentum to digital transactions, the Cabinet on Wednesday approved an ordinance to allow an employer to pay wages of less than R18,000 a month by cheque or digitally to bank accounts, besides in cash, by removing a requirement of employees’ written consent for the same in such cases, reports fe Bureau in New Delhi. The move follows the government’s failure to pass the Payment of Wages (Amendment) Bill, 2016 in the winter session.
The ordinance also seeks to enable both the Centre and states to specify the industrial/other units, by gazette notification, “the employer of which shall pay to every employed person, the wages ONLY by cheque or by crediting in his bank account”.
Labour is in the Constitution’s concurrent list. Labour minister Bandaru Dattatreya said that the electronic mode of payment of wages will reduce complaints regarding non-payment or part payment of minimum wages, besides serving the objective of digital/less-cash economy. “This will ensure that minimum wages are paid to the employees and their social security rights are protected. Thus the employers can no longer under-quote the number of employees employed by them in their establishments to avoid becoming a subscriber to the EPFO or ESIC schemes,” he said.
Separately, the finance ministry asked public sector banks (PSBs) to lower fees on e-transfers through Immediate Payment Service (IMPS) and Unified Payments Interface (UPI) to help migrate more people to the digital platform. It asked the PSBs not to charge in such cases in excess of what is applicable for National Electronic Funds Transfer (NEFT) fund transfer of over R1,000. Currently, NEFT transfers attract fees as follows: R2.5 for up to R10,000; R5 for R10,000-1 lakh; R15 for R1-2 lakh; and R25 for transfers beyond R2 lakh; all subject to service tax. The changes in charges would be effective till March 31, 2017.
For Unstructured Supplementary Service Data (USSD) transactions above R1,000, the ministry said a further discount of 50 paise on these rates shall apply. The USSD is mobile short code message and used mainly for banking services on feature phones. Earlier, the government had waived the USSD fee of R1.50 till December 30, 2016.
The ordinance on digital transfer of wages would replace Section 6 of the 80-year-old Payment of Wages Act 1936. It will require the President’s assent to come into force and will remain valid for six months from issuance, within which it needs to be approved by Parliament. As per the Act, employers would require to have the employees’ written authorisation to transfer wages into bank accounts.