The Health, Labor and Welfare Ministry has presented the outline for a plan to allow for a "digital payday," in which employees will be able to receive their salaries digitally through means such as payment settlements in smartphone apps.
The ministry submitted the plan on April 19 to a subcommittee of its Labor Policy Council, an advisory body to the health, labor and welfare minister comprised of representatives of labor and management.
The plan sets a precondition for opening this payment method that operators of fund transfer businesses, which provide the apps, must set up systems which can respond to bankruptcies or illicit cash withdrawals.
The Labor Standards Law stipulates that payments of salaries to employees must in principle be made in cash, with remittances into bank accounts or other financial institutions permitted as an exception.
To enable digital salary payments, it will be necessary to revise the regulation for enforcing the law.
The plan sets requirements that fund transfer businesses should fulfill -- the concluding of a contract with a private-sector guaranty company to be prepared for business failures and assure sufficient cash is available for payments; and providing full compensation in the case of illicit withdrawals through no fault of the user.
The labor minister will designate which business operators have cleared the criteria. In addition, the plan stipulates that companies must not force employees to accept digital payments of their salaries.
Meanwhile, at the Labor Policy Council meeting on April 19, one member from the labor side noted, "We should not proceed as if this is already a done deal," an indication of deep-rooted wariness about going down this path.
The ministry said it will proceed carefully with discussions using the outline as a springboard.
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