The Payment of Wages (Amendment) Act, 2017 came into effect through a Notification in the Official Gazette of India dated 16th February 2017 and had retrospective effect from 28th December 2016. The said Act amends the parent Act i.e. Payment of Wages Act, 1936 and replaces the Payment of Wages Ordinance, 2016 which was promulgated on December 28, 2016.
KEY POINTS: –
- 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 authorization. The Amendment Act 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 said Act removes the requirement of obtaining written authorization 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.
- Section 20 of the Parent Act provides for penal provisions in cases of violation of provisions of the Act. Moreover, the inspector can initiate appropriate action under the Factories Act 1948.
As per the Amendment Act, the new procedure will serve the objective of “digital and less-cash economy”. This Amendment Act shall also benefit the workers in terms of fair payments, bring more workers into formal employment and allow more workers to get social security benefits.