How Can We Resolve Labor Payment Strikes Post-Demonetization Without Cash Payments?

Addressing Labor Payment Issues Post-Demonetization

Post demonetization, we asked all laborers at the site to submit their account details, which should be in their name, to process the October payment on November 10, 2016. However, due to time constraints, we accommodated payments to 80% of the laborers using account numbers not in their names for the October wages.

The laborers provided a declaration stating they would submit account details in their names for payments from November onwards. To date, they have not submitted these details and are requesting cash payments exceeding Rs. 20 lakhs.

We cannot meet the laborers' demand for cash payments except in emergencies. Consequently, the laborers have been on strike since January 6, sitting at the site and demanding payment for the strike period, claiming they are eligible for the "Right to Strike."

Additionally, these laborers are disrupting other labor teams who are willing to work during the strike.

How can this situation be addressed? Please help.

Thanks,
Manjunatha

Dear Manjun,

Yours is a tricky situation. Call a meeting of all workers and convey to them that hereafter salaries cannot be paid in cash due to a government regulation. If the workers remain uncooperative, you may seek assistance from the Labour Commissioner. If a Labour Officer visits the site and explains the benefits of payment through a bank, it might help resolve the situation.

Thanks,
Dinesh Divekar

Thank you, sir, for the suggestion. I am still not clear about the "Right to Strike" being invoked by laborers for non-payment of wages due to their own issues and asking for payment for the period of the strike period as well.

Thanks,
Manjunatha

Dear Manjun Sir,

During the discussion with the workers, I suggest that you reach out to a bank and request the bank authority to visit your site and open accounts for all the employees simultaneously. You can also negotiate with the bank regarding the total time required to activate the bank accounts, considering the large number of accounts. I believe this approach may provide a permanent solution to your issue and facilitate smoother salary releases.

Understanding Laborers' Bank Account Requirements

If you consider labor laws, you cannot mandate that laborers must have a bank account. If you insist that all should have bank accounts and that their compensation will be disbursed through banks, they might question, "Where is it mentioned that every individual should have a bank account?" Do you have a service rule stating that employees' wages will be disbursed through a bank only? If yes, why did you appoint workers who do not have a bank account? Therefore, you cannot absolve your liability by saying that the workers don't have a bank account. At the same time, if due to any administrative requirements, you must pay wages through banks, you should take the initiative and facilitate it for them.

Even when we have a bank account fully mandated by KYC, etc., we are not always in a position to withdraw funds. When I visited a bank recently, I heard a lady asking the banker very politely, "What is my eligibility?" The banker proudly "announced" that her eligibility is Rs 24,000 per week, including ATM withdrawals. What a pathetic question and what a stupid answer. Eligibility means the amount standing to the credit of my account and not less than that. I intervened and asked, if I present a check and my account is short by just 1 rupee, don't you dishonor it stating "INSUFFICIENT FUNDS" and make a mockery of it? Since anyone who questions is perceived as having black money, I did not say anything more. When this is the situation, why blame the poor workers?

Regards, Madhu.T.K

Payment Methods and Labor Compliance

Making payments by check might be in the interest of the workers too, as often for cash payments, there are no third-party records of their employment. However, in the case of a check, it could serve as proof. Have you covered all the labor under ESIC & PF? Though this is in their interest, invariably there will be objections, as their share of contributions gets deducted from their take-home pay. There has been a cash crunch across the economy, which we all know is not everlasting.

Regards

Addressing Payment Issues for Construction Workers

At the outset, you should have discussed this with someone knowledgeable. You can't remit workers' wages into someone else's account. What if that person denies paying the amount to your worker?

You have just mentioned a construction site, which can be in a very remote area. If there is no branch in proximity, where will you open accounts, and how will the workers withdraw amounts periodically? If you have a bank branch nearby, follow the actions suggested herein.

Check your state rules for the mode of payment of wages. If it is by cheque or RTGS and you have a branch nearby, you have to patiently inform workers through a displayed notice about the need to open a bank account. After a while, you may take stringent action. If possible, discuss the situation with the labor office in your area.

Regards

Payment of Wages Ordinance and Industrial Establishments

The Payment of Wages (Amendment) Ordinance 2016 states that all wages shall be paid in current coin or currency notes, by cheque, or by crediting the wages to the bank account of the employee. The appropriate Government may, by notification in the official gazette, specify the industrial or other establishments where the employer must pay wages only by cheque or by crediting them to the employee's bank account.

Industrial and other establishments are defined as tramway services, motor transport services engaged in carrying passengers or goods by road for hire or reward, air transport services (excluding those belonging to or exclusively employed in the military, naval, or air force of the Union or the Civil Aviation Department of the Government of India), docks, wharves, jetties, inland vessels, mechanically propelled mines, quarries, oilfields, plantations, workshops, or other establishments where articles are produced, adapted, or manufactured for use, transport, or sale. This also includes establishments involved in the construction, development, or maintenance of buildings, roads, bridges, or canals, or operations related to navigation, irrigation, water supply, or the generation, transmission, or distribution of electricity or any other form of power.

Verification of Karnataka Rules and Contract Laborers

You need to verify the Karnataka Rules, and if they are contract laborers, any notification in this regard must be examined.

Handling Illegal Strikes and Payment Issues

The strike indulged in by the laborers is illegal, though it may not be unjustified. Similarly, the act of obstructing willing workers is unwarranted and illegal. If they are contract laborers, you can ask the contractor to terminate the errant workmen. Regarding the payment of wages for the strike period, the principle of "no work, no pay" will apply. They can approach the appropriate machinery for claiming the same. Since demonetization is a reason beyond the control of the employer, despite all instructions, if the accounts were not opened, the employer cannot be blamed for non-payment.

Regards, Manjunatha

Employer Responsibility and Worker Rights

Should an employer who takes advantage of this situation be praised? Many employers take this as an opportunity to delay the payment of wages. Workers are demanding wages for the days they have already worked. It is the responsibility of the employer to make arrangements for the disbursement of wages. Do not think that workers work only for their living; consider that they are employed for the benefit of the employer as well. It is a wrong perception that workers are slaves and come to work just because they do not have any other livelihood. Consider that the employer makes a profit because these workers have worked. Here comes the significance of the Marxian Surplus Value theory of wages.

Do not think that workers' strikes are always illegal and lockouts by employers are always legal. That will destroy the dignity of HR.

Regards, Madhu.T.K

Impact of Demonetization on Unorganized Labor

The impact of the negative effects of the demonetization process is highly tricky for everyone. Particularly, the plight of industries that engage mostly unorganized labor is even more challenging and can pose dangerous financial repercussions in the future. The compulsion for transparency in financial matters has become inevitable. Apart from facing unanswerable questions from tax authorities, such employers are in a difficult situation when it comes to paying minimum wages and enrolling their workforce under EPFO and ESIC schemes. A significant portion of the labor force was previously hidden from enforcement agencies or managed in collaboration with them.

If I am not mistaken, the sudden strike mentioned in the thread might be a result of such circumstances. As Dinesh rightly pointed out, it is unfair for employers to suddenly require the opening of bank accounts. Not every illegal strike can be considered unjustified in terms of being deprived of wages, as Madhu aptly indicated. Instead of solely considering immediate legal remedies, management should engage in lateral thinking to explore alternatives that can promptly address the day-to-day challenges faced by unorganized wage-earners.