Under the constitution, the power to make laws rests with the Legislature. However, in cases when Parliament is not in session, and ‘immediate Action’ is needed, the president can issue an ordinance. An Ordinance is a Law, and could introduce Legislative changes. PM Modi on 21st Dec.2016, makes cashless salary mandatory, amends 80-year-old Law. A step further towards cashless economy, the Central Cabinet approves the Ordinance for paying wages via electronic means—Government has given its consent for cashless salary. The Government also approved to amend Section 6 of payment of Wages Act. The New Ordinance will be applicable to Public sector, with the private sector, under the purview of the new move paving way for Transparency. The Union Cabinet today approved the ordinance route to amend the payment of Wages Act,1936, to allow employers of certain Industries to make payment through the electronic mode and cheques. Employers will also have the option of paying wages in cash too. This Executive order will be only applicable to pay salaries by cheque or credit salary in employee’s bank accounts. This Executive order will be only applicable to Central Government Administered establishments. As of now, it’s only applicable to central government not for state government Administered institutions unless they too adopt these measures since Labour is in the con current list.

Most Importantly by amending this 80-year old law will bring a section of the industrial sector and other establishments under the ambit of the government’s plan of checking corruption by going cashless for more transparency & cleaner system. The government has encouraged employers to go for digital payment,especially after the ban on high denomination notes on November 8. What we find in the current scenario a huge chunk of the organized sector, especially factories, tea gardens and construction companies, pay the wages of labourers by cash. The bill for this purpose was tabled in the Lok Sabha on December15, 2016.Thus instead of waiting for two months, the government can issue the ordinance and later it will be passed in Parliament.

As per the practice, the government brings ordinance to amend laws for immediate implementation of new rules. The Bill was introduced by Law Minister Bandaru Dattatreya amid huge cry over the Demonetization crisis. It will also allow state governments to specify industrial or other establishments that adopt cashless way for salary payments. The new procedure will serve the objective of ‘digital and less-cash economy’, the Bill stated. First the act came into force on Aril 23rd 1936, providing for payment of wages in coin or currency notes, or in both. The provision for payment of wages by cheque or crediting it into bank account after obtaining the requisite authorization of employee was inserted in 1975. The Centre can make rules regarding payment of wages in relation to railways, air transport services, mines, oil fields, and its establishments while states take a call on all other states too. By making State level amendments to the Act, Andhra Pradesh, Uttarakhand, Punjab, Kerala, and Haryana have already made provisions for payment of wages through cheque and electronic transfer. At present wages, can be given through cheque or transferred to his/her bank account with the written authorisation.It will also allow State machinery to specify industrial establishments to adopt cashless way for salary payments. The government post its Demonetization move have been encouraging and initiating various steps to move country towards cashless economy.The old system of cash would also remain.

This move will enable companies to ensure timely payment of wages to workers at a time when there is cash crunch due to DeMonetization of Rs. 1,000& Rs.500.” One of the reasons for the ineffective enforcement of payments of wages to workers is the payment of wages in cash. So the payment of wages only through cheque or through bank transfer in the bank account of employed persons will reduce the complaints regarding non-payment or less payment of minimum wages, besides serving the objectives of digital and less cash economy”, the Labour Ministry in its proposal  dated December 2. Labour Minister Bandaru Dattatreya had written to Finance Minister Arun Jaitley, expressing concerns about contractors making advance salary payments to workers in scrapped notes after Demonetization.

The Enemy Property Ordinance is coming up after President Pranab Mukherjee twice red flagged Parliament’s failure to pass the ordinance and the Prime Minister’s decision to bypass cabinet is set to lapse on December 27. The Enemy Property Act, which dates to 1968, plugs the loopholes in the law which guards against claims on Properties left by people who migrated to Pakistan and china after the wars of 1962, 1965 and 1971. Under this Law, such property was vested with a department called the custodian of Enemy Property for India. The landed enemy properties in India are spread across many states. In addition, there are movable properties categorised as enemy properties.

In order to facilitate digital transfer of salaries, Cabinet has passed an Ordinance. This will clearly protect the interest of the Labourers especially of Provident Fund which will be duly credited into their respective accounts through cheques rather than cash. This will pave for an effective machinery to disburse salaries into their accounts without any delays. This Ordinance is passed post Demonetization move as the economy is pushing itself towards Digitization and Cashless Economy, for more Transparent and administered way of disbursing the salaries of Industrial establishments. Amidst the roaring of United opposition in various ways either by stalling the Parliament or hurling Corruption charges against PM Modi at various public places, this move will go long way in making this large segment of Indian population go cashless. This will help economy grow in Transparent and Governance issues will be addressed paving India for a transformed & Progressive Nation, empowering every Indian –SabkaSaathSabkaVikas

Jai Hind


Dr.S. Sukanya Iyer