Monday, August 10, 2009

Payment by cheque or cash

Please advise whether there is a provision in labour laws regarding payment of wages/salaries through bank transfer only in all the cases, i.e. contractor and own staff.

All legal provisions relating to payment of wages are taken care in Payment of Wages Act, 1936. Major objective of this act is regulating payment of wages, imposition of fines and deductions from wages, and eliminating all malpractices by laying down wage periods and time and mode of payment of wages. It applicable to the employees receiving wages below Rs. 1,600 p.m. either directly or through a contractor, are also covered under the Act.

Section 6 of this act deals with mode of payment. It says all wages shall be paid in current coin or currency notes or in both. (Provided that the employer may, after obtaining the written authorization of the employed person, pay him the wages either by cheque or by crediting the wages in his bank account).

So it will depend on company policy how you want to pay. While forming policy keep in mind that mode of payment is also a source of exploitation if not taken care properly. Take an example of National Rural Employment Guarantee Scheme (NREGS) in this Scheme mode of payment was through postal and bank accounts. The payments, held up for months due to procedural delays in banks and post offices. You know it is very difficult for poor people to open bank account.

Same time it is more pathetic when cash money paid to worker through contractors. Many workers are not made any regular payments. Their money supposedly remains deposited with the contractor. The contractor gives them some money or sends it to their families when there is a need. Obviously if the contractor refuses to pay them the pending wages at the time of completion of work they will not have a proof of the same. (Every one know how smart contractors are they make false documents for legal purpose)

It is advisable to credit the wages in bank account of employees (if it possible to have account for poor people) it will make your process fast, respectable and reliable. Same time it will help in putting hold on corruption.

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