8th Pay Commission Salary Calculator: How Is Salary of Government Employees Calculated in November?

The 8th Pay Commission is set to bring a major change in the salary structure of central government employees and pensioners. The government has approved the Terms of Reference (TOR) and appointed Justice Ranjana Prakash Desai, a former Supreme Court judge, as chairperson of the commission. The commission is expected to submit its report within 18 months, which will directly affect the revised salary and pension calculations through a mechanism called the fitment factor.

The fitment factor is essentially a multiplier applied to the basic pay and pensions of central government employees. Once approved by the Union Cabinet, it determines how much an employee’s salary or a pensioner’s pension will increase. For example, the 7th Pay Commission had a uniform fitment factor of 2.57. While the exact factor for the 8th Pay Commission is yet to be announced, it will play a crucial role in determining future salaries.

How the Fitment Factor Affects Salary

Manjeet Singh Patel, National President of the All India NPS Employees Federation, explains that an employee’s current basic pay is multiplied by the fitment factor to calculate the new basic pay. For instance, if an employee has a basic pay of Rs 35,000 and the new fitment factor is set at 2.11, the new basic pay would be Rs 73,850.

This increase in basic pay automatically affects allowances like House Rent Allowance (HRA), which are calculated as a percentage of basic pay. Fixed allowances, such as transport allowance, are reviewed separately and may see revisions a few months after the new pay scale is implemented.

Key Points:

• Basic Pay Multiplier: The new basic salary is derived by multiplying the old basic pay by the fitment factor.

• Allowance Revisions: HRA and other variable allowances increase automatically, while fixed allowances may be revised later.

Role of Dearness Allowance (DA)

While dearness allowance (DA) does not directly determine the fitment factor, it is an important component considered by the pay commission. The DA is calculated as a percentage of the basic pay and reflects inflation adjustments. For example, if the DA is currently 58% and rises by 12% by the time the 8th Pay Commission’s recommendations are implemented, it could reach 70%.

Other factors that influence the fitment factor include the growth factor (24% in the last commission) and the family unit multiplier. If the commission considers a higher family unit, say four instead of three, this may add another 13% to the calculations. Hence, the fitment factor is a combination of several considerations.

Can Salaries Double Due to Fitment Factor?

Patel notes that while the fitment factor directly impacts basic pay and HRA, the DA typically resets to zero in the new pay commission. Therefore, the overall increase in salary may range between 20% and 25%, rather than doubling entirely.

Is Fitment Uniform for All Employees?

In the previous 7th Pay Commission, a uniform fitment factor of 2.57 was applied across all pay levels. The government may continue this approach for simplicity, though a slightly higher factor for lower pay bands could be introduced to reduce wage disparities.

For higher-level employees, the chance of promotions is more frequent, whereas lower-level employees may benefit from a higher fitment factor. The commission may also merge some pay levels to streamline the pay matrix process. Currently, there are 18 pay levels for central government employees.

Example of Revised Salary

Let’s consider a central government employee earning a basic pay of Rs 50,000 under the 7th Pay Commission. If the 8th Pay Commission applies a fitment factor of 2.0, the new basic pay will be Rs 50,000 × 2.0 = Rs 1,00,000. The revised pay matrix will adjust the employee’s pay to the nearest higher cell. Other allowances like DA, HRA, and transport allowance will then be recalculated based on the new basic pay.

Conclusion

Pensioners also benefit from the fitment factor. A pensioner receiving Rs 30,000 would see their basic pension double to Rs 60,000 if the fitment factor is 2.0, subject to rounding and government approval. This ensures that retirees experience a proportionate increase in their income alongside active employees.

The 8th Pay Commission is expected to bring transparency and fairness in salary revisions while ensuring that employees and pensioners receive due adjustments in line with inflation and economic growth.