SC issues notice on plea for e-payment of minimum wages in Kerala

Kerala high court had claimed that maintenance of digital records by companies is mandated under the Information Technology Act and there was no fault if the state insisted on the same

The Supreme Court on Friday agreed to consider an appeal filed by the Kerala government insisting on payment of minimum wages directly into the bank account of the employees.

Supreme Court, New Delhi. (HT file)

By a decision in July 2015, the state had replaced cash payment of minimum wages with a Wage Payment System to streamline payment of minimum wages to employees. Under this system, all employers had to directly deposit the wages into the bank account of the employees. They also had to maintain a digital record of employees and wages paid with the state department.

This system was challenged in the Kerala high court . On January 23 this year, the Kerala high court upheld the maintenance of digital records but held that the state cannot insist on employers to transfer wages through the Wage Payment System. The court was of the view that the state did not have power to make such a rule, particularly when the Kerala Minimum Wages Act specifically provided in Section 11 that the payment should be in cash.

The apex court noticed that along with the appeal by the state, even Tata Consultancy Services (TCS) had approached the court in appeal, challenging the high court direction to maintain digital records. TCS claimed that uploading such information would infringe privacy of employees.

Finding both sides aggrieved, the bench of justices SK Kaul, Dinesh Maheshwari and Hrishikesh Roy said, “If both sides are unhappy, justice seems to have been done (by high court).” The HC had claimed that maintenance of digital records by companies is mandated under the Information Technology Act and there was no fault if the state insisted on the same. As regards infringement of privacy, the high court had noted that the data could always be protected or encrypted with password.

More than 270 companies in the state had adopted the Wage Payment System. The high court did not disturb this arrangement and left it open for companies to voluntarily follow the new system. Interestingly, a similar provision was introduced by the Centre in February 2017 by amending the Minimum Wages Act. By this, minimum wage was to be credited directly into the beneficiary’s bank account or paid by way of cheque. The high court observed that Kerala government could have amended the Act rather than changing the rules accompanying the Act.