The Central Government has approved the Terms of Reference (ToR) for the 8th Pay Commission, paving the way for major revisions in salaries, pensions and allowances of around 55 lakh serving central government employees and 69 lakh pensioners. The Commission has been given 18 months to submit its recommendations.

What is the fitment factor?

The fitment factor is a key multiplier used to revise the basic pay of central government employees and pensioners. It directly determines the new salary structure after pay commission revisions.

Under the 7th Pay Commission, a fitment factor of 2.57 was applied from 2016. For example, a basic pay of Rs 15,000 increased to Rs 38,550 after implementation.

Demands from employee unions

Employee unions and associations are demanding a higher fitment factor along with a significant increase in minimum basic pay under the 8th Pay Commission.

Some unions have suggested raising the fitment factor in the range of 3 to 5 or even higher. However, pension and finance experts believe such expectations may be difficult to implement due to fiscal constraints.

Experts also suggest that the Commission may revise the method used to calculate minimum wages, including increasing family consumption units from three to five and considering a fitment factor of around 2.64.

Possible impact on salary hike

The final salary increase will depend on the Commission’s recommendations and government approval. The expected impact can be understood through examples:

• Example 1 (60 percent DA scenario):
  If an employee’s basic pay is Rs 100 and they receive 60 percent Dearness Allowance, the total becomes Rs 160. If the basic pay doubles to Rs 200 after revision, the overall increase compared to the current Rs 160 would be around 25 percent.
• Example 2 (fitment factor 3.0):
  If the fitment factor is increased from 2.57 to 3.0, entry-level salaries may rise by 15 to 20 percent. In this case, a basic pay of Rs 15,000 could increase to Rs 45,000.

Experts note that even a lower-than-expected fitment factor would still lead to a significant rise in government expenditure, along with a noticeable increase in employee salaries.

When will 8th Pay Commission be implemented?

The government approved the ToR for the 8th Pay Commission in October 2025 and has given it 18 months to submit its report.

Although it is expected to be implemented from January 1, 2026, replacing the 7th Pay Commission, the panel is likely to complete its recommendations only after the review period.

The deadline for submitting memoranda has been extended to June 15, 2026. After this, all stakeholder suggestions will be examined before final recommendations are prepared.