8th Pay Commission: Central govt to merge pay scales for Level 1-6 employees? Here’s what the new proposal says

  After the government last month gave it approval for setting up the 8th Pay Commission, the Department of Personnel and Training (DoPT) has recently invited suggestions from the Staff Side of the National Council JCM for finalising the 8th Central Pay Commission ToR.

8th Pay Commission: The National Council of Joint Consultative Machinery (JCM) Staff Side has submitted its recommendations for the Terms of Reference (ToR) for the 8th Central Pay Commission (CPC), advocating significant changes in pay structure, allowances and benefits for government employees. Among the key points of ToR is the proposal for merger of certain pay scales to streamline salary structures and address anomalies in career progression.

In the JCM system, the “National Council Staff Side” refers to the representatives of various employee unions and associations who participate in discussions with the government at the national level, while the “National Council Official Side” represents the government officials from different ministries and departments who engage with the staff side on various matters concerning employees. The National Council JCM is headed by the Union Cabinet Secretary.

After the government last month gave it approval for setting up the 8th Pay Commission, the Department of Personnel and Training (DoPT) has recently invited suggestions from the Staff Side of the National Council JCM for finalising the 8th Central Pay Commission ToR.

In response, Shiv Gopal Mishra, Secretary, NC-JCM Staff Side, has submitted a detailed proposal outlining key areas that need attention. One of the major recommendations of the Staff Side is merging pay scales for government employees under 1-6 pay levels.

The pay scale structure has as many as 18 levels, starting from level 1 and going up to level 18. After the 7th Pay Commission, the minimum pay at level 1 was fixed Rs 18,000 per month, while the maximum pay at level 18 was fixed at Rs 2,50,000 per month.

Proposal to merge pay scales:

One of the key suggestions put forward by the Staff Side is the merger of lower pay scales to ensure fairer compensation and smoother career progression. The recommendation includes merging:

Level 1 with Level 2

Level 3 with Level 4

Level 5 with Level 6

How will these mergers impact salary of employees under Level 1-6?

The Level 1 employee currently gets Rs 18,000 per month as basic pay while Level 2 receives Rs 19,900. If both these levels are merge into one it will benefit Level 1 employee more as the revised pay structure then will start from one. If we calculate the hike in pay after 8th pay commission based on expected fitment factor of up to 2.86, the revised basic would go up to Rs 51,480.

Similarly if the Level 3 and Level 4 are merged, the revised salary for employees under the merged pay level would be Rs 72,930.

For Level 5 and 6, the salary may go up to Rs 1,01, 244 for employees based on 2.86 fitment factor.

This move aims to eliminate disparities in pay progression and provide a more structured salary hierarchy. The proposal highlights that such a merger will benefit employees by reducing stagnation and ensuring better financial growth over time.

Demand for DA/DR merger:

Apart from the pay scale merger, the Staff Side has strongly advocated for the immediate merger of Dearness Allowance (DA) and Dearness Relief (DR) with basic pay and pension. The proposal suggests that a certain percentage of DA/DR should be integrated into the pay structure to enhance take-home salaries and pensions, reducing the impact of inflation on government employees and pensioners.

Interim relief for employees:

Another crucial demand is the sanctioning of Interim Relief to Central Government employees and pensioners before the final implementation of the 8th CPC recommendations. This is intended to provide immediate financial support, addressing the rising cost of living while the commission deliberates on long-term pay revisions.

Revision of retirement benefits:

The Staff Side has also urged the government to improve retirement benefits, including:ncreasing the pension restoration period from 15 years to 12 years.

Implementing the Parliamentary Standing Committee’s recommendation for pension enhancement every five years.

Ensuring parity between past and future pensioners:

Additionally, there is a strong push for the restoration of the Defined Benefit Pension Scheme under the Central Civil Services (Pension) Rules, 1972 (now 2021), for employees recruited after 2004, replacing the existing contributory pension system.

What’s next?

The Staff Side has requested the government to hold a Standing Committee Meeting to discuss these recommendations before finalizing the Terms of Reference for the 8th CPC. If accepted, these changes could bring significant financial relief and structural reforms for millions of government employees and pensioners across various sectors.

What’s the latest development on 8th Pay Commission front?

The government is expected to appoint a 3-member 8th pay panel, to be headed by a chairman, this month. The pay commission will submit its report to the government in about 12 months time. The government will decide on the revision of pension and salary for over 1.2 crore central government employees and pensioners based on the panel’s recommendations.

8th Pay Commission may begin work in April FY25-26, reveals Expenditure Secretary Manoj Govil

Expenditure Secretary Manoj Govil has revealed to CNBC-TV18 that the 8th Pay Commission will likely start their work in the month of April for FY 2025-26. The report said that the Union cabinet will have to give its nod to terms of reference (ToR). The Commission will ask Ministry of Department of Personnel & Training and the Ministry of Defence’s views on the matter. Govil also said that the 8th Pay Commission will have no financial effect on financial year 2026, according to the report<

The report further quoted Govil saying that the Union budget for next year will include funds to cover the financial impact of the 8th Pay Commission. The scheme is likely to affect India’s Unified Pension Scheme (UPS).

What is the 8th Pay Commission?

The Centre is working on setting up the 8th Pay Commission to review and update the salaries and pensions for all the central government employees and the ones who have retired. This revision will involve increase in salary, Dearness Allowance adjustments so that it matches India’s inflation rate.

However, the government has not provided specific details on the percentage of salary hikes for employees and retirees yet. A report by Business Today had said that the minimum basic salary may likely increase from Rs 18,000 to Rs 51,480.

According to a Mint report, the 8th Pay Commission is likely to benefit around 50 lakh government employees, which also includes defence personnel.

This Commission is created every 10 years to discuss and decide on the revision of salaries and pensions. The government has established 7 pay commissions since 1946 and is now working on setting up the 8th Pay Commission this year.

8th Pay Commission Terms of Reference: Commuted pension restoration after 12 years, pension revision every 5 years among key proposals

 8th Pay Commission: Among several proposals, the proposed ToR focuses on revising pay structures, allowances, and retirement benefits for various categories of central government employees.

8th Pay Commission Terms of Reference: Over 1 crore central government employees and pensioners are eagerly awaiting the appointment of the chairman and two members, as announced by the Centre last month, under the 8th Central Pay Commission (CPC). The government is expected to announce the names soon.

Meanwhile, all eyes are on the Terms of Reference (ToR), which is still to be firmed up and may be finalised by April.

In response to a letter from the Department of Personnel & Training (DoPT), the National Council – Joint Consultative Machinery (NC-JCM) Staff Side submitted the proposed ToR for the upcoming 8th pay panel.

Shiva Gopal Mishra, Secretary, NC-JCM (Staff Side), in a letter earlier, emphasised the need for a Standing Committee Meeting to deliberate on the details before finalisation of ToR. Among several proposals, the proposed ToR focuses on revising pay structures, allowances, and retirement benefits for various categories of central government employees. It also talks about demands like restoration of the commuted portion of pension after 12 years instead of 15 years and implementation of Parliamentary Standing Committee recommendations for enhancement of pension after every 5 years.

NC-JCM Staff Side met with the DoPT Secretary on February 12, 2025 to discuss the ToR

The key points included in the proposed ToR are:

1. Pay and allowances restructuring:

The ToR proposes review of pay structure for all categories of central government employees, including All India Services, Defence Forces, Para-Military Forces, Postal Employees (Gramin Dak Sevaks), and Union Territories personnel. It also seeks merging non-viable pay scales to improve career progression.

The ToR from Staff Side focuses on addressing anomalies in the MACP (Modified Assured Career Progression) Scheme and recommend at least five promotions in service.

2. Minimum Wage & National Pay Policy

The ToR wants the panel to determine a decent and dignified minimum wage based on the Aykroyd formula and the 15th Indian Labour Conference recommendations. It recommends changes in cost of living and family consumption patterns while formulating the pay structure.

3. Dearness Allowance (DA) & Interim Relief

It suggests merging DA with basic pay and pension to ensure better financial security for employees and pensioners. The ToR also recommends interim relief for central government employees until the implementation of the 8th CPC recommendations.

4. Retirement Benefits & Pension Reforms

The Staff Side of NC-JCM also sought in ToR revise pension, gratuity, and family pension benefits. It also talks about restoration of the defined pension scheme (CCS Pension Rules 1972) for employees recruited after January 1, 2004. The ToR also recommends restoration of commuted portion of pension after 12 years instead of 15 years and implementation of Parliamentary Standing Committee recommendations for enhancement of pension after every 5 years.

5. Medical & Welfare Benefits

Another key point in the ToR is the demand for improvement in CGHS (Central Government Health Scheme) facilities, ensuring cashless and hassle-free medical services for employees and pensioners, including postal pensioners.

The ToR also recommends enhancements to Children’s Education Allowance and hostel subsidy up to post-graduation level.

8th Pay Commission: Single fitment factor for all pay levels in demand; why is this not allowed now?

If the government accepts the demand for a common fitment factor in 8th Pay Commission, then then the percentage of pay hikes would be the same for all employees as a single multiplier would be used to compute revised salaries and allowances at all levels.

The Central Government Employee's representative in the National Council of Joint Consultative Machinery (NC-JCM) has demanded that there should be a common fitment factor across all pay levels in the 8th Central Pay Commission (CPC), according to a report by NDTV Profit.

The report quoted Shiv Gopal Mishra, secretary, NC-JCM (Staff Side) as saying that the fitment factor should be same across all pay levels or pay bands. This may help reduce the widening gap between minimum and maximum salaries offered to central government employees.

If the government accepts the demand for a common fitment factor in 8th pay commission, then then the percentage of pay hikes would be the same for all employees as a single multiplier would be used to compute revised salaries and allowances at all levels.

Why common fitment factor is not available now

The 7th pay commission had taken a different approach on fitment factor for all employees. For employees in Pay Band 1, it had recommended a fitment factor of 2.57. But for employees in higher pay bands, it had taken recommended different multipliers by taking into account the index of rationalisation.

For instance, the multipliers used in Pay Band 2 with Grade Pay ₹4200 and Pay Band 3 with Grade Pay 5400 were 2.62 and 2.67 respectively. But the multiplier used in Pay Band 1 with Grade Pay 1800 was 2.57.

The 7th CPC was of the belief that the role, responsibility and accountability increases as an employee moves up in the hierarchy.

“Rationalisation has been done to ensure that the quantum of jump, in financial terms, between these pay bands is reasonable. This has been achieved by applying ‘index of rationalisation’ from PB-2 onwards on the premise that with enhancement of levels from Pay Band 1 to 2, 2 to 3 and onwards, the role, responsibility and accountability increases at each step in the hierarchy,” the 7th CPC said.

“The proposed pay structure reflects the same principle. Hence, the existing entry pay at each level corresponding to successive grades pay in each pay band, from PB-2 onwards, has been enhanced by an ‘index of rationalisation’,” it added.

Work in progress

While the government announced the decision to set up the 8th Pay Commission recently, it is yet to be officially established.

It is, however, expected that the the commission would be set up timely and it would have enough time to prepare and submit its report by next year.

The NC-JCM Staff Side recently submitted its suggestions for the Terms of Reference of the 8th pay commission.

A meeting of the Staff Side and government officials to discuss the Terms of Reference suggestions was also held recently.

MSP CASE DISMISSED BY SUPREME COURT AS WITHDRAWN

OFFICIAL ANOUNCEMENT OF 8TH CPC

Briefing to media persons, Union Minister Ashwini Vaishnaw said, the union Cbinet has approved to constitute the 8th Central Pay Commission.

Briefing to media persons, Union Minister Ashwini Vaishnaw said, “Prime Minister has approved the 8th Central Pay Commission for all employees of Central Government."

The names for the head and members of the 8th Pay panel will be announced soon, the minister added.

While Central Govt employees have been waiting to hear this good news from Modi govt in 2024 budget, as the Central govt employee union has demanded setting up of 8th Pay commission during 2024 budget discussion meeting with FM Nirmal Sitharaman, the FM didn’t announce the same in her budgest speech.

With Delhi elections due in Feb, the announcement of setting up of 8th Pay Commission will have a profound impact on the upcoming Delhi polls as they form a sizeable chunk in certain constituencies.

Moreover, as the implementation year will be Jan 1 , 2026, when the two significant polls – West Bengal Assembly elections in June 2026 and UP assembly polls in April 2027 are due– the 8th Pay commission may play a key role in the poll outcomes.

CENTRAL GOVT EMPLOYEE SIZE

As on date, the size of central govt employee and pensioners nationally stood at 3.5million and 5.2mn respectively, as stated in the Budget 2024-25..

WHY 8th PAY COMMISSION KEY TO POLLS? 

The main reason for the pay commission assuming a big role in polls lies in the significant hike in minimum salary of Central Govt employees, which will cast a cascading effect on the state government employees in all states, as they will also see salary hikes in accordance with 8th Pay Commission pay matrix. A State govt can deny 8th pay commission benefits to its employees on its own peril only.

WHAT WILL BE MINIMUM SALARY UNDER 8th PAY COMMISSION?

As per a Central Govt employee Union, the minimum pay scale under 8th Pay Commision will rise to a whopping Rs 41,000 vis-à-vis Rs 18,000 under 7th pay commission. 

They have presented the following calculation to arrive at the minimum salary in 8th pay commission. The CGEU report says the following. It elaborates:

• 7th Pay Commission has described how it arrived Minimum Pay
• To estimate the minimum pay in the government,
• the VI CPC used the norms set by the 15th Indian Labor Conference (ILC) in 1957 to determine the need-based minimum wage for a single industrial worker.

The norms set by the ILC are as below:

• A need-based minimum wage for a single worker should cover all the needs of a worker’s family.
• The normative family is taken to consist of a spouse and two children below the age of 14.
• With the husband assigned 1 unit, wife, 0.8 unit and two children, 0.6 units each,
• the minimum wage needs to address 3 consumption units
• The specifications were derived from the recommendations of Dr. Wallace Aykroyd, the noted nutritionist, which stated that an average Indian adult engaged in moderate activity should, on a daily basis, consume 2,700 calories comprising 65 grams of protein and around 45-60 grams of fat.
• Dr Aykroyd had further pointed out that animal proteins, such as milk, eggs, fish, liver and meat, are biologically more efficient than vegetable proteins and suggested that they should form at least one-fifth of the total protein intake
• The clothing requirements should be based on per capita consumption of 18 yards per annum, which gives 72 yards per annum (5.5 meters per month) for the average worker’s family.
• For housing, the rent corresponding to the minimum area provided under the government’s industrial housing schemes is to be taken. 
• The 15th ILC kept it at 7.5 percent of the total minimum wage
• Fuel, lighting and other items of expenditure should constitute an additional 20 percent of the total minimum wage

After considering all relevant factors the Commission has recommended for keeping the minimum pay in government at Rs 18,000 per month, w.e.f. 01.01.2016.

As per their calculations, based on current inflation rate, the minimum salary of a central govt employee comes out at Rs 40,798.

The CGEU report predicts, “Based on the current inflation rates and consumer price index, the 8th CPC Minimum Pay will be set at Rs.41000. And for pensioners, the minum pension will be approximately around Rs 18000. Consequently, this will lead to a Fitment factor of 2.28."

The 7th Pay Commission had a fitment factor of 2.57.

WHAT IS FITMENT FACTOR: This is term first used by the 7th Pay Commission. It means a multiplication value that when multiplied with the basic pay of 6th Pay Commission will result into a new basic pay.