Indian Railways Clarifies Notional Increment Policy for Retired Employees

In a recent urgent communication, the Railway Board has issued clarification on the grant of notional increment for pensionary benefits to employees who retired on June 30 or December 31 before receiving their increment. This clarification follows a recent Supreme Court directive concerning multiple cases filed by retirees regarding notional increment benefits.

Key Highlights

Background on the Clarification

The clarification addresses the Railway Board’s letter (No. PC-VI/2023/Misc./03-Vol.II) dated August 27, 2024, which provided preliminary guidance on handling cases related to notional increments. Following this, the Ministry of Railways has sought further direction in light of a recent Supreme Court hearing on September 6, 2024, which tackled the complex issue of notional increments for pension calculation.

Supreme Court’s Interim Directions

The Supreme Court, in its interim order, made important observations to prevent future litigation and issued directives regarding the treatment of cases related to notional increments. These are the key directives:

1. Applicability of Judgment:
   • The April 11, 2023 judgment is effective from May 1, 2023, meaning that any enhanced pension benefits based on a notional increment apply only to retirees from this date forward.
2. Handling of Successful Petitions:
   • For retirees who won their cases, the Court stated that the enhanced pension, based on one increment, must be paid as per the earlier judgment, provided the case was resolved in favor of the petitioner.
3. Exclusions:
   • The directions from the April judgment do not apply to cases still under appeal or where the final decision is pending.
4. Pending Applications:
   • If any retirees have applications pending, they will only be eligible for enhanced pension benefits in the month of the application, and not retroactively.

These directions are intended to standardize the approach for handling pension calculations involving notional increments, which has been a contentious issue.

Ministry Review and Next Steps

The nodal Ministry is currently reviewing these directives in consultation with the Department of Personnel and Training (DoP&T), Ministry of Law, and Ministry of Finance. The Ministry of Railways will adopt the guidelines once a policy clarification is issued by the nodal Ministry.

Until a final policy is established, the Railway Board has advised all Zonal Railways and Production Units to adhere to the following procedures:

Scenario 1: New Petitions

• In cases with new petitions, affidavits must be filed to highlight that the issue of notional increments is under review. Petitioners are advised to await final decisions before taking further action.

Scenario 2: Approved Benefits for Petitioners

• For cases where notional increment benefits were approved, review petitions may be filed to ensure compliance with the Supreme Court’s directive.

The Executive Director of the Pay Commission, Mr. Sundeep Pal, stressed the importance of complying with these guidelines, stating that “this matter is of top priority,” and has advised Zonal Railways to act accordingly.

Moving Forward

The Ministry of Railways and Zonal Railways will continue to monitor developments closely. Employees with pending cases or appeals are encouraged to stay updated through official channels as the final decision is anticipated in the coming months.