Highlights of Pay Commission recommendations approved

1. The present system of Pay Bands and Grade Pay has been dispensed with and a new Pay Matrix as recommended by the Commission has been approved. The status of the employee, hitherto determined by grade pay, will now be determined by the level in the Pay Matrix.

2. The minimum pay has been increased from Rs 7,000 to 18,000 per month. Starting salary of a newly recruited employee at the lowest level will now be Rs 18,000 whereas for a freshly recruited Class I officer, it will be Rs 56,100. This reflects a compression ratio of 1:3.12 signifying that the pay of a Class I officer on direct recruitment will be three times the pay of an entrant at the lowest level.

3. For the purpose of revision of pay and pension, a fitment factor of 2.57 will be applied across all Levels in the Pay Matrices. After taking into account the DA at prevailing rate, the salary/pension of all government employees/pensioners will be raised by at least 14.29 % as on 01.01.2016.

4. Rate of increment has been retained at 3%. This will benefit the employees in future on account of higher basic pay as the annual increments that they earn in future will be 2.57 times than at present.

5. Some other decisions impacting the employees including Defence & Combined Armed Police Forces (CAPF) personnel include :

— Gratuity ceiling enhanced from Rs10 to 20 lakh. The ceiling on gratuity will increase by 25 % whenever DA rises by 50%.

— A common regime for payment of Ex-gratia lump sum compensation for civil and defence forces personnel payable to Next of Kin with the existing rates enhanced from Rs 10-20 lakh to Rs 25-45 lakh for different categories.

— Hospital Leave, Special Disability Leave and Sick Leave subsumed into a composite new Leave named ‘Work Related Illness and Injury Leave’ (WRIIL). Full pay and allowances will be granted to all employees during the entire period of hospitalization on account of WRIIL.

6. The Cabinet also approved the recommendation of the Commission to enhance the ceiling of House Building Advance from Rs 7.50 lakh to 25 lakh. In order to ensure that no hardship is caused to employees, four interest-free advances namely Advances for Medical Treatment, TA on tour/transfer, TA for family of deceased employees and LTC have been retained. All other interest-free advances have been abolished.

7. The Cabinet also decided not to accept the steep hike in monthly contribution towards Central Government Employees Group Insurance Scheme (CGEGIS) recommended by the Commission. The existing rates of monthly contribution will continue. This will increase the take home salary of employees at lower levels by Rs 1,470.

8. The Commission examined a total of 196 existing Allowances and, by way of rationalization, recommended abolition of 51 Allowances and subsuming of 37 Allowances. Given the significant changes in the existing provisions for Allowances which may have wide-ranging implications, the Cabinet decided to constitute a Committee headed by Finance Secretary for further examination of the recommendations of 7th CPC on Allowances. The Committee will complete its work in a time bound manner and submit its reports within a period of 4 months. Till a final decision, all existing Allowances will continue to be paid at the existing rates.

9. The Cabinet also decided to constitute two separate Committees (i) to suggest measures for streamlining the implementation of National Pension System (NPS) and (ii) to look into anomalies likely to arise out of implementation of the Commission’s Report.

10. As estimated by the 7th CPC, the additional financial impact on account of implementation of all its recommendations in 2016-17 will be Rs 1,02,100 crore. There will be an additional implication of Rs 12,133 crore on account of payments of arrears of pay and pension for two months of 2015-16.