The unorganized and ununionized employees, the largest workforce in India is not paid their wages(salary or pay ) into their bank accounts by their employers.These employees work in private small factories, shops and commercial establishments
The labour law applicable to these private factories like rice mills, flour mills, fabrication units, shops like groceries, stationeries, bookshops and commercial establishments like hotels, lodges, laboratories is the Payment of Wages Act,1936.
The method of payment of the employees’ wages prescribed by this law is in currency notes or by cheque or credit into their bank accounts.Now payment of the wage into employees’ bank accounts is NOT compulsory and statutorily binding on the employers.Here the employers never comply with the request of the employees to get their wages paid into their bank accounts and force their employees to accept payment of their wages in currency notes.Cash payment of the wages leads to payment of less than the legal wages. This results in glaringly exploitative malpractice stubbornly followed by employers for decades for the main reason that the employees are either illiterate, semiliterate, ignorant of their wage rates rights or simply afraid to demand their legal wages from their employers.Their fear is that their employment may be terminated immediately, though illegally and they may face the dreaded unemployment.
This widespread and chronic malpractice has resulted in extreme injustice and unfairness to the employees.It is stressed that it enables employers to pay less than the minimum wages fixed by the Government or wages mutually accepted orally by the employee and the employer, though their wages payment record shows correct but UNTRUE figures of minimum wages or mutually accepted wages.
When the labour law enforcement officer inspects the factory or shop or commercial establishment, the workers, in most cases, do not come forward to give true information of their actually received wages or refuse to sign their statement about their wages. In some rare cases, they reveal the payment of less than the minimum wages or mutually accepted wages.In very rare cases, there will be tally between the wage figures in the wage register and actual wage payment figures.The law enforcement authority is helpless in such an unfortunate situation of non-cooperation from the employees and cannot offer effective and efficient service to the employees.
The pressing legal solution to the legal deficiency is, therefore, an amendment of Section 6 of the Payment of Wages Act,1936 to the effect that the employees’ wages should be compulsorily paid ONLY into their bank accounts.This amended law will finally end the long-established, extremely exploitative and unjust practice indulged in by employers for decades.
The Indian Government has enacted an amendment to the Payment of Wages Act,1936 on 16-2-2017( vide: labour.gov.in/wages) for adoption of any one of the three options of wage payment by the employers: in currency notes or by cheque or credit into employee’s bank account.
The amendment does not uproot the malpractice.It needs to be re-amended and made applicable to all organized and unorganized employees working in factories, shops, and commercial establishments and statutorily binding on the employers COMPULSORILY to pay their employees’ wages ONLY into their bank accounts.Paperless payment of the employees’ wages into their bank accounts will also be in compliance with the two recent major government policies of paperless money transactions of the citizens and the opening of a free bank account by every citizen of the country.The suggested crucial amendment to the Payment of Wages Act,1936 will end the violation of the law and the malpractice.