Over 1.2 crore central government employees and pensioners have reason to cheer as the Cabinet has approved the Terms of Reference (ToR), officially kick-starting the process for the 8th Pay Commission. With the commission now in place, employees have begun calculating the potential arrears they may receive. The big question remains — how many months’ salary will they get?
How many months’ arrears were paid under the 7th Pay Commission?
8th pay commission: The 7th Pay Commission’s revised salaries and pensions were rolled out from July 2016. However, the employees and pensioners were paid six-month arrears for the period starting from January 2016. It always didn’t matter, when the pay commission is approved by the central government. Generally after the approval, the arrears will be paid according to the standard pay out.
8th pay commission: How much Arrears will they get?
8th pay commission: Generally, when the commission is implemented, its effect should be considered from January 1, 2026 as per the precedent set by previous pay panels. If in this case if the report is implemented in July 2027, then the employees could receive 17 months’ arrears. Government employees and the pensioners will be getting a salary increase with effect from July 2027, plus 17 months’ arrears. The process is likely to take time. The commission will hold deliberations with the stakeholders and then submit its recommendations. Then it will be approved by the government. Irrespective of the delay, the effective date of salary hike must be Jan. 1, 2026.
8th Pay commission and the Fitment factor
Justice (retired) Ranjana Desai, who will head the 8th Pay Commission, had earlier led the Uniform Civil Code committees in Uttarakhand and Gujarat. Under her leadership, the new pay panel will discuss with various stakeholders before deciding on the fitment factor and other rules for salary revision.
The last pay panel — the 7th Pay Commission — had set a fitment factor of 2.57. This meant that the basic salary and pension were multiplied by 2.57, or increased by 157%. However, the actual hike was around 23.5% because the dearness allowance (DA) and dearness relief (DR) were reset to zero.
Similarly, in the 8th Pay Commission, the DA and DR will likely be reset to zero once the new salaries and pensions are implemented. At present, these allowances make up about 58% of the basic pay.
Implementing the 8th Pay Commission’s recommendations will have a huge financial impact on the government. According to a July report by Kotak Institutional Equities, it could cost the exchequer between Rs 2.4 lakh crore and Rs 3.2 lakh crore.
