7th Central Pay Commission (CPC), constituted by Government for Central Government employees, has submitted its recommendations in respect of pay-structure and emoluments related issues that will come into effect from 1.1.2016 for Central Government employees. A gist of the 7th CPC report is as under:
1. Minimum Pay: Based on the Aykroyd formula, the minimum pay in Government is recommended to be set at Rs.18,000 per month.
2. Maximum Pay: Rs.2,25,000 per month for Apex Scale and Rs.2,50,000 per month for Cabinet Secretary.
3. New Pay Structure: Considering the issues raised regarding the Grade Pay structure and with a view to bring in greater transparency, the present system of pay bands and grade pay (which was the paystructure of 6th CPC) has been dispensed with and a new pay matrix has been designed. Grade Pay has been subsumed in the pay matrix.
The status of the employee, hitherto determined by grade pay, will now be determined by the level in the pay matrix.
4. Fitment: A fitment factor of 2.57 (on the Basic Pay and Grade Pay) is being proposed to be applied uniformly.
5. Annual Increment: The rate of annual increment has been retained at 3 percent.
6. Modified Assured Career Progression (MACP): Performance benchmarks for MACP have been made more stringent from “Good” to “Very Good”. The Commission has also proposed that annual increments not be granted in the case of those employees who are not able to meet the benchmark either for MACP or for a regular promotion in the first 20 years of their service.
7. Allowances: The Commission has recommended abolishing 52 allowances altogether. Another 36 allowances have been abolished as separate identities, but subsumed either in an existing allowance or in newly proposed allowances.
8. House Rent Allowance: Rate of HRA to be 24 percent, 16 percent and 8 percent of the new Basic Pay for Class X, Y and Z cities respectively. The Commission also recommended that the rate of HRA will be revised to 27 percent, 18 percent and 9 percent respectively when DA crosses 50 percent, and further revised to 30 percent, 20 percent and
10 percent when DA crosses 100 percent.
9. Gratuity: Enhancement in the ceiling of gratuity from the existing Rs.10 lakh to Rs.20 lakh. The ceiling on gratuity may be raised by 25 percent whenever DA rises by 50 percent.
10. Performance Related Pay: The Commission has recommended introduction of the Performance Related Pay (PRP) for all categories of Central Government employees, based on quality Results Framework Documents, reformed Annual Performance Appraisal Reports and some other broad Guidelines. The Commission has also recommended that the PRP should subsume the existing Bonus schemes.