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News18
08-08-2025
- Business
- News18
8th Pay Commission ToR Delayed: What Is 'Terms Of Reference', Why Is It Important?
Last Updated: With over 203 days passed since the announcement, the 8th CPC's official ToR is now facing unusual delay. 8th Pay Commission News: More than 1 crore central government employees and pensioners are awaiting the much-anticipated 8th Central Pay Commission's (CPC) official notification, even after nearly seven months of its announcement. The delay, according to reports, is primarily because the government is yet to finalise and issue the Terms of Reference (ToR), a critical procedural requirement before any pay commission can begin its work. The 8th Pay Commission was announced in January 2025. 8th Pay Commission: What Is Terms of Reference (ToR)? The 'Terms of Reference' is essentially the blueprint that guides a Pay Commission's functioning. It outlines the scope of work and the specific areas where the commission is expected to make recommendations, ranging from basic pay structure, allowances, and pension revisions, to retirement benefits and service conditions. Without the ToR, the Commission has no formal direction or legal mandate to operate. In effect, no chairman or members can be appointed, and the commission is considered non-existent on paper. 8th Pay Commission: Why Is ToR So Crucial? The ToR acts as the foundation document of any pay commission. It not only defines the agenda but also sets timelines and expectations. In the absence of ToR, the commission cannot initiate data collection, interact with stakeholders, or analyse economic parameters. This delay thus not only stalls internal administrative planning but also dampens the hopes of employees awaiting timely implementation of revised pay structures. How Delayed Is The 8th Pay Commission? Historically, there has been some gap between the announcement of a pay commission and its official notification with ToR. But, the current delay is the second-longest in India's pay commission history, only behind the 5th CPC, which took over 7 months to be notified after being announced in September 1993. With over 203 days passed since the announcement, the 8th CPC's official ToR is now facing unusual delay. 8th Pay Commission: When Will It Be Implemented? While the new pay structure is scheduled to take effect from January 1, 2026, employees had hoped that early notification would help ensure implementation by early 2027. But this now appears unlikely. Typically, a pay commission takes 18 to 24 months to complete its report. After submission, it takes another 6 months for the government to review and implement the recommendations. If the delay in issuing the ToR persists, the entire cycle may get pushed further, potentially delaying the new pay regime by 2 years or more. Such uncertainty is a source of concern for both serving employees and retired pensioners, especially in the face of rising inflation and cost-of-living pressures. According to a report by Kotak Institutional Equities, the 8th CPC is unlikely to be implemented before late 2026 or early 2027. The 6th and 7th CPCs took roughly 1.5 years to prepare their reports after being set up, followed by a 3-9 month implementation window after the Cabinet approval. tags : 8th Pay Commission view comments Location : New Delhi, India, India First Published: August 08, 2025, 13:35 IST News business » economy 8th Pay Commission ToR Delayed: What Is 'Terms Of Reference', Why Is It Important? Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
News18
11-06-2025
- Business
- News18
8th Pay Commission: Grade Pay Vs Pay Bands Vs Pay Matrix, What Are These? How Fitment Factor Changed Under Them
Last Updated: The 8th Pay Commission will revise salaries, pensions, and allowances, directly benefiting over 50 lakh central government employees and over 65 lakh pensioners. As discussions grow louder about the 8th Central Pay Commission (CPC), over one crore central government employees and pensioners face a familiar question: How will my basic pay be reshuffled this time? The answer might lie in three decades of structural experiments – Grade Pay, Pay Bands, and the Pay Matrix – each revolutionising how the central government calculates salaries. Here's what are these, and why the fitment factor is important. The 8th Pay Commission will revise salaries, pensions, and allowances, directly benefiting over 50 lakh central government employees and over 65 lakh pensioners. The Three Eras of Salary Calculation Pre-6th CPC Era: Chaos Before the 6th Pay Commission in 2006, a large number of pay scales existed with no standardisation. Fitment factor was also non-existent. Before the 5th CPC, salary revisions relied on individual pay scale adjustments and merger of DA rather than a uniform multiplier. The fitment factor was introduced under the 5th Pay Commission. The Grade Pay Revolution (6th CPC, 2006) Pre-2006, India had over 4,000 disparate pay scales across roles. An undersecretary earned Rs 10,000, while a section officer made Rs 12,000 – with no logic linking hierarchies. The 6th CPC collapsed scales into 4 Pay Bands (e.g., PB-1: Rs 5,200–20,200) + Grade Pay (GP). GP determined seniority within bands (e.g., Rs 2,400 for clerk, Rs 4,800 for under secretary). A uniform 1.86x multiplier on 'Basic Pay + DA" placed employees in new bands. For example, Old Salary: Rs 50,000 (Rs 45,000 Basic + Rs 5,000 DA) → Revised: Rs 50,000 × 1.86 = Rs 93,000 (placed in PB-3 + GP Rs 6,600). Pay Bands + GP created anomalies. Senior promotions often landed employees below juniors due to overlapping bands. The pay bands were abolished. The 7th Pay Commission created a 24-level Pay Matrix where each cell represented a unique salary (e.g., Level 10: Rs 56,100–Rs 1,77,500). Vertical movement would include promotion, while horizontal movement would comprise annual increments. Under the 7th CPC, the government announced a fitment factor of 2.57x on 'Basic Pay + Grade Pay'. For example, pre-revised salary of Rs 25,400 (Rs 20,000 basic pay and Rs 5,400 grade pay) was revised to Rs 65,278 (Level 6) (Rs 25,400 × 2.57). Fitment Factors Under 5th, 6th, 7th, 8th CPCs 5th CPC (1997): First formal fitment (1.38x) but applied only after merging full DA with basic pay. 6th CPC (2006): Fitment factor was fixed at 1.86x. 7th CPC (2016): 2.57x aimed to offset inflation since 2006 – but employees demanded 3.68x. 8th CPC (Expected 2026): Expectations are of a fitment factor of 2.5x-2.8x, which might increase the employee salaries between Rs 40,000 and Rs 45,000. With the Pay Matrix likely staying, the real battle is over the fitment factor and allowance reforms. Key watchpoints: Will defense/get special fitment? (7th CPC gave them 2.67x). Will HRA, travel allowances be subsumed into basic pay? Can states afford matching revisions? (Kerala's 7th CPC fitment: 2.29x). When Will the 8th Pay Commission Be Formed And Implemented? The 8th Pay Commission was announced by the central government in January this year. However, it is yet to be constituted. Its members, chairman, and terms of reference (ToR) have not been announced yet. According to an ET report citing senior officials, the implementation of the 8th CPC might stretch 'well beyond the expected January 1, 2026, timeline". It said even if the Commission if formed by the end of this year, it will likely require 18-24 months before the recommendations are ready for implementation. The previous 7th Pay Commission was constituted two years before its implementation. Stay updated with all the latest business news, including market trends, stock updates, tax, IPO, banking finance, real estate, savings and investments. Get in-depth analysis, expert opinions, and real-time updates—only on News18. Also Download the News18 App to stay updated! tags : 8th Pay Commission Location : New Delhi, India, India First Published: June 11, 2025, 14:29 IST News business 8th Pay Commission: Grade Pay Vs Pay Bands Vs Pay Matrix, What Are These? How Fitment Factor Changed Under Them
