The union cabinet on Wednesday passed an ordinance to facilitate digital transfer of salaries by employers across the country. However, the cash payment system will continue, a senior official said.
"An additional way of payment has been introduced through this ordinance. The old system of cash would also remain," the official said following a meeting of the cabinet.
"This is being done to facilitate the employers from making payment of wages using the banking facilities in addition to the existing modes of payment of wages in current coin or currency notes," he added.
The Labour Ministry in a statement, however, clarified that the proposed amendment would not make mandatory the payment of wages to the workers only through cheques or account transfers.
"The proposal of Ministry of Labour and Employment to bring an amendment to Section 6 of the Payment of Wages Act, 1936, is an additional facility of crediting the wages in the bank account of the employees or payment through cheque along with the existing provisions of payment in current coin or currency notes," it said.
Also, the appropriate government (Centre or state) will have to come up with the notification to specify the industries or other establishments where the employer shall pay wages through cheques or by crediting the wages in the employees' bank account, it added.
The Ministry said that the proposed amendment would also ensure that "minimum wages are paid to the employees and their social security rights are protected".
"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," it said.
The Ministry also pointed out that states like Andhra Pradesh/Telangana, Kerala, Uttarakhand, Punjab and Haryana have already come out with notifications to provide for payment through banking channels.