Cash payments to employees could soon be outlawed

Senate standing committee passes bill to ensure salaries are paid through banks

ISLAMABAD: Pakistan is looking to make a move towards ensuring labour rights and regulating wages as a law is on the anvil to bind all employers that have more than 15 people on the payroll to pay workers through the banking system.

The country suffers due to the size of its undocumented economy, which includes labour force statistics and is a hub of tax evasion. Employers, especially those involved in the construction business, tend to pay workers through cash, enabling them to stay out of the formal system as well as absolving them of meeting labour rights.

However, in a bid to regulate the system, the Senate Standing Committee on Interior passed the Payment of Wages (Amendment) Bill 2017, which, once enacted, would bar employers from paying workers in cash.



The bill was moved by Senator Muhammad Javed Abbasi and binds all employers who have more than 15 persons on their payroll to pay salaries either through cheques or account transfer.

Briefing the Senate committee on Friday, Abbasi said payment through banks would enable employees to take legal action if their rights are violated. He said paying cash was a method used by the private sector to avoid leaving a trail.

Committee Chairperson Senator Rehman Malik proposed that employers should also be made responsible for opening employees’ bank accounts.

“Opening a bank account is not an easy task for an ordinary labourer like those working at brick kilns,” said Malik. “I propose that employers also be bound to arrange for opening bank accounts of their employees.”

The committee adopted the chairman’s addition and passed the law with consensus.  The draft law now will be tabled in the Senate, and, if passed, would then be presented before the National Assembly before becoming a law.

While the proposed bill will be applicable at the federal level, the committee chairperson directed the Law Division to send a recommendation to all provinces to enact similar laws as well.

Published in The Express Tribune, November 5^th, 2017.

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