New 7th Pay Commission Pay Structure, Pay fixation method and fitment Formula

New 7th Pay Commission Pay Structure, Pay fixation method and fitment Formula – Grade Pay system dispensed with and new pay model by merging the existing grade pay inroduced

7th Pay Commission has evolved a new pay structure by merging the existing grade pay with pay in pay band. Therefore Grade Pay systema and pay band Structure is dispensed with.

7th pay commission also mentioned that since grade pay computation by 6th CPC varied greatly it is dispensed with.

New functional level pay model have been proposed by merging the grade pay with the pay in the pay band. All of the existing levels have been subsumed in the new structure; no new level has been introduced nor has any existing level been dispensed with.

The Commission has designed the new pay matrix keeping in view the vast opportunities that have opened up outside government over the last three decades, generating greater competition for human resources and the need to attract and retain the best available talent in government services. The nomenclature being used in the new pay matrix assigns levels in place of erstwhile grade pay and Table 3 below brings out the new dispensation for various grades pay pertaining to Civil, Defence and MNS.

7th Pay Commission has formulated fitment formula as far as existing employees are concerned as 2.57. For instance, 7CPC pay of the employees who are presently in the pay band of 5200 – 20200 with grade pay of Rs. 1800, will be calculated by multiplying the factor of 2.57 with their existing basic pay (pay in pay band + grade pay)

Grade pay and pay band wise fitment formula is as follows

The pay matrix comprises two dimensions. It has a “horizontal range” in which each level corresponds to a ‘functional role in the hierarchy’ and has been assigned the numbers 1, 2, and 3 and so on till 18.

The “vertical range” for each level denotes ‘pay progression’ within that level. These indicate the steps of annual financial progression of three percent within each level. The starting point of the matrix is the minimum pay which has been arrived based on 15th ILC norms or the Aykroyd formula. This has already been explained in Chapter
4.2 of the 7th Pay Commission report.

On recruitment, an employee joins at a particular level and progresses within the level as per the vertical range. The movement is usually on an annual basis, based on annual increments till the time of their next promotion.

When the employee receives a promotion or a non-functional financial upgrade, he/she progresses one level ahead on the horizontal range.

The pay matrix will help chart out the likely path of pay progression along the career ladder of any employee. For example, it can be clearly made out that an employee who does not have any promotional prospects in his cadre will be able to traverse through at least three levels solely by means of assured financial progression or MACP, assuming a career span of 30 years or more.

The new pay matrix for civilian employees is brought out in Table 5 of the pay commission report.

Minimum Pay

The JCM-Staff Side, in their memorandum, have proposed that the minimum salary, at the lowest level, should be determined using a need based approach. They have proposed that the minimum wage for a single worker be based on the norms set by the 15th Indian Labour Conference,  with  certain  additions  to  the  same.  The  minimum  pay as  suggested  in  the memorandum is ₹26,000, which is around 3.7 times the existing minimum salary of ₹7,000. While the broad approach is similar, the specifics do vary and the Commission has, based on need-based minimum wage for a single worker with family as defined in the Aykroyd formula, computed the minimum pay at ₹18,000. Details on the computation of minimum pay have been brought out in Chapter 4.2.

Fitment

The starting point for the first level of the matrix has been set at  ₹18,000. This corresponds to the starting pay of ₹7,000, which is the beginning of PB-1 viz., ₹5,200 + GP 1800, which prevailed on 01.01.2006, the date of implementation of the VI CPC recommendations. Hence the starting point now proposed is 2.57 times of what was prevailing on 01.01.2006.

This fitment factor of 2.57 is being proposed to be applied uniformly for all employees. It includes a factor of 2.25 on account of DA neutralisation, assuming that the rate of Dearness Allowance would be 125 percent at the time of implementation of the new pay. Accordingly, the actual raise/fitment being recommended is 14.29 percent.

Pay Fixation in the New Pay Structure

The fitment of each employee in the new pay matrix is proposed to be done by multiplying his/her basic pay on the date of implementation by a factor of 2.57.

The figure so arrived at is to be located in the new pay matrix, in the level that corresponds to the employee’s grade pay on the date of implementation, except in cases where the Commission has recommended a change in the existing grade pay.

If the identical figure is not available in the given level, the next higher figure closest to it would be the new pay of the concerned employee. A couple of examples are detailed below to make the process amply clear.

The pay in the new pay matrix is to be fixed in the following manner:
Step 1: Identify Basic Pay (Pay in the pay band plus Grade Pay) drawn by an employee as on the date of implementation. This figure is ‘A’.

Step 2: Multiply ‘A’ with 2.57, round-off to the nearest rupee, and obtain result ‘B’.

Step 3: The figure so arrived at, i.e., ‘B’ or the next higher figure closest to it in the Level assigned to his/her grade pay, will be the new pay in the new pay matrix. In case the value of‘B’ is less than the starting pay of the Level, then the pay will be equal to the starting pay of that level.

Checkout following links to get more information on the Recommendations of 7th Pay Commission

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Source: 7th Pay Commission report