Issues To Be Considered By The Empowered Committee

7th Pay Commission Report – Areas which require Revision / Modification by Empowered Committee 

After 7th Pay Commission formed in February 2014, staff side JCM consisting of members who are also office bearers of various staff organisations had submitted detailed memorandum to the Commission and suggested the quantum of Minimum Pay, Fitment Formula, Annual Rate of Increment, Date of Effect, Ratio between Minimum Pay and Maximum Pay, Fixation of Pay on Promotion etc., for taking in consideration by 7th Pay Commission in its recommendations.

Many of the demands of the staff side were, however, considered unfavourably by the 7th Pay Commission in its recommendations.

Now, Staff Side have been impressing upon Empowered Committee, the need for rectification / modification / revision of many of retrograde recommendations of 7th Pay Commission.

We provide here a brief of the areas with respect to which Staff Side members will have to demand for revision / modification of the recommendations of 7th Pay Commission.

1. Minimum 7th Pay Commission Pay and Ratio between Minimum and Maximum Pay:

7th Pay Commission has proposed a basic pay of Rs. 18000 as minimum entry pay in Central Government Service (Pay of MTS). However, Staff Side JCM is of the view that as per approved methods such as Dr.Aykroyd Formula, minimum pay in Central Government Service should be Rs. 26,000.

2. Date of Effect and Fitment Formula:

Staff Side JCM had put forth before 7th Pay Commission that uniform fitment formula / multiplication factor of 3.7 to be applied while fixing the basic pay of existing employees.

With regard to Date of effect of 7th Pay Commission pay and allowances, members representing staff side submitted before 7th CPC that Central Government Employees are due for pay revision every ten years and that in order to rectify the delay in implementation of pay commission award in the past, the present pay commission award has to be given effect from 1st January 2014.

Contrary to Staff Side JCM’s suggestions, 7th Pay Commission has fixed the fitment formula / multiplication factor as 2.57. While mere merger of DA with existing pay in pay band and Grade pay would require a multiplication factor of 2.25, 7CPC proposed fitment formula / multiplication factor of 2.57 would result in increase in basic pay to an extent of 14.22% only.

Hence, convincing 7th CPC empowered committee for a higher multiplication factor / fitment formula would be the foremost concern of Staff Side JCM.

As far as date of effect of 7th Pay Commission award is concerned, the commission has not accepted the suggestion of Staff Side. It has observed that since the previous pay commission was given effect from 1st January 2006, the present pay commission award will have to be made effect only from 1st January 2016.

3. Annual Rate of Increment and Date of Increment:

Staff JCM in its memorandum before 7th Pay Commission suggested that since most of the PSUs including the banking industries provide the incremental rate at 5% and over a period of time it raised the salary level of the personnel, rate of annual increment for Central Government Employees will have to be fixed at 5%.

Further, uniform date of increment prescribed by the 6th CPC resulted in many anomalies, Staff Side JCM submitted that two specific dates as increment dates, Viz. 1st January and 1st July will have to be introduced. Those recruited/appointed/promoted during the period between 1st January and 30th June will have their increment date on 1st January and those recruited/appointed/promoted between 1st July and 31st December will have it on 1st July next year.

Also, staff side required that those who retire on 30th June or 31st December are granted one increment on the last day of their service, since they serve the entire one year of service required for an increment as on the date of retirement.

Recommendation of 7th Pay Commission on the rate of increment:

In spite of valid argument of staff side for recommending annual increment rate of 5%, 7th Pay Commission has not made revision in annual increment and Promotional increment which have been recommended at the rate of 3% of basic pay.

4. Scrapping of NPS:

Staff Side JCM is of the view that New Pension system (NPS) has to be scrapped and all the employees who have joined in Govt Service on or after 01.01.2004, are to be brought to defined pension scheme.

However, 7th Pay Commission observed that the NPS will have to be continued; that Govt should frame necessary law / Policy for proper investment of NPS fund in Equity and that a strong grievance redressel will have to be formed to serve NPS employees.

5. Transport Allowance:

With regard to Transport Allowance, Staff Side JCM presented the demand that if at all Transport allowance is meant to defray transport charges then low paid employees ought to have been paid higher transport allowance then higher level officers as they only travel from long distances to reach office. Hence, it was suggested by Staff Side that uniform transport allowance be paid irrespective of level of the cadre

Pay Range	X class cities	other places
Up to Rs.75,000	Rs. 7500 plus DA	Rs. 3750 plus DA

However, 7th Pay Commission has not modified the structure of Transport allowance on the basis of pay level. The existing DA on Transport Allowance has been proposed to be merged. The new rates of Transport Allowance suggested are as follows:

Pay Level	Higher TPTA Cities (Rs. pm)	Other Places (Rs. pm)
9 and above	7200+DA	3600+DA
3 to 8	3600+DA	1800+DA
1 and 2	1350+DA	900+DA

 

6. MACP:

It has been demanded by Staff Side JCM that five hierarchical promotions to be granted under MACP. Presently only 3 financial upgradations either in the form of promotion or time bound financial upgradation to next grade pay are being ensured under MACP.

7th Pay Commission has not made any proposal for revising the number of upgradations under MACP which is three at present.

With regard to the benchmark for performance appraisal for MACP as well as for regular promotion, 7th Pay Commission has recommended that in the interest of improving performance level, the same has to be enhanced from ‘Good’ to ‘Very Good.’

7th Pay Commission has also noted that introduction of more stringent criteria such as clearing of departmental examinations or mandatory training before grant of MACP can also be considered by the government.

Withholding Annual Increments of Non-performers:

7th Pay Commission has proposed that employees who do not meet the laid down performance criterion should not be allowed to earn future annual increments.

The Commission has proposed for withholding of annual increments in the case of those employees who are not able to meet the benchmark either for MACP or a regular promotion within the first 20 years of their service.

7. House Building Advance:

Staff Side JCM had demanded for increasing the advance to 50 times of the Salary and fixing the rate of interest not more than 5%.

As per 7th Pay Commission’s recommendations, 34 times of Basic Pay OR Rs.25 lakh OR anticipated price of house, whichever is least can be availed as House Building Advance.

The requirement of minimum 10 years of continuous service to avail of HBA has been proposed to be reduced to 5 years.

If both spouses are government servants, 7CPC has proposed that HBA should be admissible to both separately. Existing employees who have already taken Home Loans from banks and other financial institutions would be allowed to migrate to this scheme, as recommended by 7CPC.

8. Children Education Allowance:

Suggestions of Staff Side:

Presently the allowance is admissible for two children, for studying in a recognised school up to XII standard. The maximum ceiling is stipulated at Rs.18000/- since this allowance had been hiked by 50% because of the DA component in salary having been crossed 100% on 1.1.2014. It is suggested that doubling of this allowance and increasing the same by 50 % whenever the DA crosses over by 50%.

Further, it has been suggested that the CEA scheme may be extended to cover children studying for Graduate/Post Graduate and Professional courses.

7th Pay Commission’s recommendations on Children Education Allowance:

CEA (Rs. pm)	1500×1.5 = 2250	Whenever DA increases by 50%, CEA shall increase by 25%
Hostel Subsidy (Rs. pm)	4500 x 1.5 = 6750 (ceiling)	Whenever DA increases by 50%, Hostel Subsidy shall increase by 25%

7th Pay Commission has not accepted the Staff Side’s demand that CEA to be applicable for children beyond class 12.

9. HRA:

House Rent Allowance suggested by Staff Side JCM

X classified cities	60%
Y classified towns	40%
Z classified/unclassified places	20%

House Rent Allowance recommended by 7th Pay Commission 

Population of Cities/Towns	Class of Cities/Towns	HRA rates as % of Basic Pay (including MSP and NPA)
50 lakh and above	X	24
50–5 lakh	Y	16
Below 5 lakh	Z	8

HRA when DA crosses 50% 

Population of  Cities/Towns	Class of Cities/Towns	HRA rates as % of Basic Pay  (including MSP and NPA)
50 lakh and above	X	27
50–5 lakh	Y	18
Below 5 lakh	Z	9

HRA when crosses 100% 

Population of Cities/Towns	Class of Cities/Towns	HRA rates as % of Basic Pay  (including MSP and NPA)
50 lakh and above	X	30
50–5 lakh	Y	20
Below 5 lakh	Z	10

10. LTC:

Staff Side JCM demanded the following as far as Leave Travel Concession applicable to Central Government Employees is concerned

1. Permission for air journey for all categories of employees to and from NE Region.

2. Permission for personnel posted in NE Region for a journey within NE Region.

3. To increase the periodicity of the LTC once in two years.

4. Explore the possibility of allowing an employer to undertake tour outside India once in a service career in lieu of the LTC.

7th Pay Commission Report on LTC:

It could be found that suggestions of Staff Side JCM such as increasing the frequency of All India LTC, permission for air travel for all categories of employees in respect of NE Region etc., were not discussed in the report of 7th Pay Commission.

The proposal to split hometown LTC has been considered and it is recommended that splitting of hometown LTC should be allowed in case of employees posted in North East, Ladakh and Island territories of Andaman, Nicobar and Lakshadweep.

Also, it is obsered by 7th Pay Commission that LTC to foreign countries is not in the ambit of this Commission.

11. Gratuity:

Suggestions of Staff Side JCM:

Staff Side JCM suggested that in respect of gratuity payable to employees ceiling of 16.5 times and the quantum limit of Rs. 10 lakhs should also be removed. It was pointed out that in the banking industry there is no such ceiling of 16.5 months‟ salary but the retiring bank employees are getting at the rate of ½ a month salary for every year of service even over and above 33 years of service. Hence, in respect of Central Government Employees also for a service span exceeding 33 years, the gratuity should be higher and the above ceiling be withdrawn.

7th Pay Commission’s recommendations on Gratuity:

It has been recommended by 7th Pay Commission that ceiling of gratuity is to be raised from the existing Rs.10 lakh to Rs. 20 lakh from 01.01.2016. Further, as per Commission’s recommendations, Gratuity is to be partially indexed to Dearness Allowance. It is proposed that the ceiling on gratuity may increase by 25% whenever DA rises by 50 percent.