Government's Wage Payment Mandate: How Are You Handling the Shift to Bank Transfers?

Government Mandate on Wage Payments

The government has asked all principal employers and contractors to ensure payment of wages to employees, including contract workers, only through bank accounts. This change is going to be challenging for employers and contractors who still pay by cash. The computation, salary transfer statement in the prescribed format of the bank, salary statement, and upcoming statutory compliance are going to put the HR/Finance department in a difficult position at the end of this month.

Is there any official circular on this? If any fellow CiteHR members have received it, please share.

Regards

Challenges in Opening Bank Accounts for Workers

It is true. The process of opening bank accounts for workers is a tough task. I had firsthand experience in convincing workmen to open bank accounts under PMJDY (Pradhan Mantri Jan Dhan Yojana). We managed to open nearly 8,000 PMJDY accounts, but the idea did not work well. At civil engineering construction sites, which are the most unorganized sector, the average period of continuity for workmen is 3 to 4 months. Subcontractors often bring in new groups to replace the old ones, so the struggle continues.

Further, in civil engineering construction, there is a process of weekly payment of "Khoraki/Kharchi" in cash for workmen to maintain themselves. The problem is how to pay that? A process is suggested to involve vegetable vendors and grocers in mobile transactions through JioMoney or Paytm. However, I have serious doubts about its success since laborers would need training on "smartphones," "Wi-Fi," and the "transaction process," which seems impractical at this stage.

However, there is no other way but to adopt a "trial and error" process to resolve these problems.

Regards,

Are these circulars real or fake? They have been widely circulated on WhatsApp. It seems there is no copy on any of the government websites. Under which act is this notice issued? There is no mention of the same, which is never the case for any notifications from government departments. So I am not sure of the authenticity of this. Any clarity will be appreciated.

Dear Mr. Saswata Banerjee,

Earlier, Mr. PC Agarwal had raised a thread on the same subject. Please refer to the following link: https://www.citehr.com/575463-even-c...ough-bank.html

Thanks,
Dinesh Divekar

Dinesh,

My point is the same even in the other thread. Is this a real or fake letter? There is no copy online at the main labor department websites. There is no reference to law, section, or rules under which the instructions are issued. I don't think a senior government officer can or will do something at his own whim and fancy.

You can contact banks like Ratnakar and Central Bank of India. They offer prepaid payroll cards that can be reloaded. Please purchase these cards, reload money weekly, and distribute them to your employees or laborers. In case they are leaving, kindly ask them to surrender the card. If anyone fails to return the card, you can block it by contacting the banks. Hope this helps.

Regards,
Abdul Basith

I don't think a Rechargeable Cash Card available from banks is a solution to the cash demand of workmen who are looking for the cheapest groceries and vegetables for weekly consumption. I am referring specifically to the Civil Engineering Construction Industry, where work is likely carried out in remote locations that hardly have such facilities. Additionally, the shopkeepers should be willing to participate in the process. This is indeed a critical problem.

Perhaps a system of Cash-Coupons issued to workmen could be implemented, and arrangements could be made with shopkeepers so that these coupons can be exchanged for cheque payment. This would be a more straightforward process for workmen to operate.

Regards,

In Tamil Nadu, yesterday, some of the government agencies paid salaries to their employees - Rs. 3,000 to Rs. 5,000 in cash and the remaining amount was deposited into their accounts.

Dear Mr. Md. Basith,

The payroll card concept is an administrative convenience that cannot replace the expected compliance of actual bank deposition of wages into the workers' bank accounts. The complexity can thus be gauged from two points. First, the principal employer has to open a bank account for the contractual employees. Second, the contractual employees have to visit the bank to withdraw wages for daily chores.

Thank you.

The government has introduced the amendment to the Payment of Wages Act to put this rule into effect. It will be effective once the act is passed by the parliament. However, the same rule has been implemented by Maharashtra 6 years back. Check the amendment to sec 6 by Maharashtra.

The corrected text with proper formatting is:

It is available at the link below:
http://labour.nic.in/sites/default/f...WAct2017_0.pdf