8th Pay Commission: Fitment Factor 2.57 Raises Salaries

The 8th Central Pay Commission (8th CPC) is in its consultation stage now, with plans to interact with employee and pensioner associations, federations, unions of central government, UT employees and other stakeholders across the country.

The commission is examining changes that are desirable and feasible in the emoluments, including for pay (usually includes salary structure, fitment factor, pay matrix), allowances (usually include Dearness Allowance, Dearness Relief, HRA), and other facilities/benefits, in cash or kind (includes increment, promotions, etc.), having regard to rationalisation, contemporary functional requirements and specialised needs.

Its decisions are expected to benefit more than 1 crore individuals, including around 50 lakh central government employees and nearly 65 lakh pensioners, including defence and railway personnel and retirees. Notably, central government employees and armed forces personnel account for about 0.7% of India’s 60-crore workforce and nearly 9% of the country’s formal sector.

A number of employee and pensioner groups and stakeholders have expressed demand for higher fitment factor, ranging from 1.83 to 3.83. At this time, the 8th CPC has not made its official recommendations yet, and the Centre will also have to approve the same before it is implemented.

What is fitment factor? How is it calculated?

Fitment factor is a mathematical multiplier used by the pay commissions to convert an employee’s pre-revised basic salary (or retirees’ pension payout) into the new, revised basic salary structure. The primary formula used is as below:

• Current basic pay x fitment factor = New basic pay.

Thus, under the 7th CPC, where a fitment factor of 2.57 was implemented, basic pay rose from ₹7,000 to ₹18,000 as follows: ₹7,000 x 2.57 = ₹18,000.

How much can pay increase with another 2.57 fitment factor announcement?

Today, we calculate how much of a salary hike another 2.57 fitment factor could provide beneficiaries. Check calculations below:

Consultation stage: State visits, meetings ongoing

Chaired by former Supreme Court Justice Ranjana Prakash
Desai, the commission includes Pankaj Jain, a former IAS, as Member-Secretary, and Professor Pulak Ghosh, tenured Professor of Finance, Member of the Economic Advisory Council to the Prime Minister, as a Member of the Commission. Its official Terms of Reference (ToR) were released late last year.

Notably, since March, the commission has hosted multiple meetings with employee representative groups, unions and stakeholders to collect and analyse data before deciding on pay, allowances, and pension for employees and pensioners. For August and September, it announced visits to Chandigarh, Chennai, Jaipur and Puducherry.

Here’s how to claim EDLI — Stepwise guide

• The claimant must fill and submit the EDLI Form 5 IF with signature and certification of the employer.
• If there is no employer or the signature of the employer cannot be obtained, the form must be attested by either a bank manager (in whose branch the account was maintained), local MP or MLA, a Gazetted Officer, a Magistrate, a Member / Chairman / Secretary of Local Municipal Board, a Postmaster or Sub-Postmaster, a member of the regional committee of EPF or CBT.
• The claimant must submit all the documents along with the completed form to the regional EPF Commissioner’s Office for processing of the claim.
• The claimant can also submit Form 20 (for EPF withdrawal claim) as well as Form 10C /10D to claim all the benefits under the three schemes, EPF, EPS and EDLI).
• Once a claim has been made, the EPF commissioner must settle it within 30 days from date of receipt.
• In case of delay, the claimant is entitled to interest at 12% per annum till the date of actual disbursal.