“Cash in hand” payment is allowed?

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The Ministry of Labour has announced that the Labour Act actually did not stipulate whether salary of the employee can be paid “by cash in hand” or it is the employer’s obligation to pay that salary to one’s current account.

Web portal Radnik.rs, which deals with violation of workers’ rights, has asked Ministry of Labour whether it is legal to pay salaries “by cash in hand”, bearing in mind that payment of salary in cash does not provide a trace i.e. proof of the amount of paid earnings.

When a salary is paid via account, employee has evidence of how much money is paid and such evidence he or she can use in court.

“We believe there are no obstacles for an employee to receive salary without taxes and contributions in the next amount “cash in hand”, after paying taxes and contributions for compulsory social insurance, and on that occasion payroll calculation should be delivered as well, i.e. paid leave benefits that represents writ of execution. When receiving salary “cash in hand” and payroll calculation and paid leave benefits, employee should sign a document so that employer has evidence that he or she made the payment, since that salary is not paid via current account,” Ministry of Labour replied in writing.

Reply also stipulates that employee has the right to challenge legality of the payroll calculation at the judicial court, regardless of the manner in which the payment was made. However, as it is stated on the web portal Radnik.rs, the problem is that, by enabling “cash in hand” payment of salary, an employee is deprived of evidence of the salary he or she received.

If the employer pays “cash in hand”, but salary is lower than minimum wage stipulated by the Labour Act, which is illegal, employee has no way of proving that with an appropriate documentation.

Source: N1

Photo: Pixabay

Writes: B.M.