India: Government to Implement Cashless Wage Payment

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By Madhur Singh

India's parliament has approved a change in the law governing wage payment to make it possible for employers to pay wages online or by check without first seeking an employee's permission.

The upper house of parliament approved the Payment of Wages (Amendment) Bill Feb. 8, a day after lower house approval. The bill must now be signed by the president, a largely ceremonial step that may be completed within this month.

The bill will affect businesses of all kinds and sizes, as nearly all employ at least some workers—such as daily-wage sweepers—who are paid in cash.

The new legislation amends the Payment of Wages Act of 1936, under which all wages must be paid either in coin or in currency and only by check or bank transfer with an employee's written authorization.

The amendment will also allow the central or state governments to specify certain industrial or other establishments that must pay employees only by check or bank transfer.

The Payment of Wages (Amendment) Bill is part of the government's ongoing efforts to encourage cashless transactions following Prime Minister Narendra Modi's Nov. 8 decision to eliminate high-denomination currency notes as legal tender as a means of addressing the issue of unaccounted-for income. The new law is intended to ensure that workers are paid wages due and that employers are unable to tweak account books to evade taxes.

To contact the reporter on this story: Madhur Singh in Chandigarh at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

For more information on Indian HR law and regulation, see the India primer.

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