Revision of terms & conditions including pay fixation in respect of Board level executives of CPSEs

F. No.2
(34)/12-DPE-(WC)—GL-XX/12

Government of India

Ministry of Heavy
Industries & Public Enterprises

Department of Public
Enterprises

Public Enterprises
Bhawan
Block No.14, CGO Complex, Lodi Road
New Delhi, the 14th December, 2012

OFFICE MEMORANDUM

Subject- Finalization
of terms & conditions
including pay fixation in respect of Board level executives of CPSEs, revised procedure thereof.

The undersigned is directed to state that at
present the terms and conditions, including pay fixation, of Board level executives of CPSEs are finalized after
vetting by DPE. In this regard para
’15’ of DPE O.M. dated 25.06.1999 (Annex-I) for
1997 pay revision and para ‘2’ of DPE
O.M. dated 30.12.2009 (Annex-II) standard
terms & conditions for 2007 pay revision
may be referred to. As per present procedure, the concerned
Ministries/Departments propose the
terms & conditions, including pay, to be fixed for the Board level
executives of the CPSEs under their administrative control, with the approval
of their Integrated Finance Wing
(IFW), and refer the proposal to DPE. DPE while vetting the proposal ensures
that it is as per the extant policy
being followed uniformally in all CPSEs. Although the guidelines of DPE regarding terms & conditions, including
pay fixation, have been simplified and are available on DPE website, it is noticed that the entire process takes
considerable time in finalization. In
order to reduce the time taken in issuing terms & conditions of Board level
executives of CPSEs, the present
procedure has been reviewed, and after due consideration a need is felt
to revise it.

2.         In
CPSEs 96% (approx.) of the employees are on Industrial Dearness Allowance (IDA) pattern of pay scale and the remaining are on
Central Dearness Allowance (CDA) pattern
of pay scales. Almost all Board level appointees are on IDA pattern pay scale
and they are inducted on a fixed tenure basis.

3.         All
appointments in CPSEs are on a permanent absorption basis. In rare and exceptional cases employees are appointed on
deputation. Only in cases where a person from Government service, including Defence services, joins a CPSE on a
permanent absorption basis, there is
a need to protect his/her emoluments (Basic Pay + Grade Pay + DA). Pension, if any, drawn on account of service
rendered in Government is regulated as per DoPT orders. As per Annex-IV
(iv) referred to in para 12 of DPE O.M. dated 26.11.2008 (Annex-III), which relates to 2007 pay revision of IDA
employees, all deputationists shall have
to draw their parent cadre pay and allowances. All those who join a CPSE on
deputation after 26.11.2008 cannot
opt for CPSE pay scales, and have to draw their parent cadre pay and allowances, and are governed by the
provisions contained in DPE 0.M. dated 26.11.2008 and 08.06.2009 (Annex-IV). However, an exception has been
made in the case of CVOs and other officers
on deputation to the Vigilance Department of CPSEs who have been given the option to draw CPSE pay scale,
allowances and other benefits vide DPE O.M. dated 03.12.2010 (Annex-V).

The standard terms &
conditions for those joining on deputation may be seen at Annex-VI. Officers of the level of Joint Secretary and above
are not entitled for deputation duty allowance (Annex-VII).

4.        CPSEs
are following different IDA pay scales (i.e. as per pay revision in the years 1987, 1992, 1997 and 2007) based on their
affordability. Besides, CPSEs are also classified into A, B, C and D schedules. CPSEs placed in a
lower schedule may subsequently get upgraded
to a higher schedule. While the scale of pay for each grade for below Board
level executives is identical across
all CPSEs, the scales of pay in respect of Board level executives vary according to the schedule of the
CPSE. Board level executives of a CPSE in a higher schedule enjoy a higher pay scale. The scales of pay of Board
level executives in the 1987, 1992,
1997 and 2007 pay scales may be seen at (Annex-VIII). The terms & conditions of Board level executives are specific to the pay scales of
each CPSE depending on its schedule.
The standard terms & conditions in respect of 2007 pay revision are available on DPE website. While the scale of pay
of a Board level executive will depend upon
the schedule of the CPSE, the pay fixation could vary depending on the
following variations.

(A) Appointment
from Board level to Board Level

Within the same CPSE (Appendix — example 1)

Between
different CPSEs (of the same schedule and with the same pay scales) (Appendix —
example 1)

Between different CPSEs (of different schedules but the
same pay scales) (Appendix — example 2)

Between different CPSEs (of the same schedule but in
different pay scales) (Appendix — example 3)

Between different CPSEs (of different schedules and in
different pay scales) (Appendix — example 4)

(B)
Appointment from Below Board level to Board Level

Within the same CPSE (Appendix — example 5)

Between
different CPSEs (of the same schedule and with the same pay scales) (Appendix —
example 5)

Between different CPSEs (of different schedules but the
same pay scales) (Appendix — example 6)

Between different CPSEs (of the same schedule but in
different pay scales) (Appendix — example 7)

Between
different CPSEs (of different schedules and in different pay scales) (Appendix
— example 8)

(C)     Employees
coming from Government service to CPSE at Board level on permanent
absorption, and other cases of dissimilar pay scales.

Dissimilar cases are
generally those where an executive moves from a higher pay scale to a lower pay scale. Cases of Government
employees joining CPSEs at Board level posts on permanent absorption basis, and cases of fixation of pay on posting in a
CPSE with lower (pre-revised) pay
scales are examples which fall in this category. DPE OM dated 05.03.2010 (Annex
IX), deals with protection of emoluments in such cases (Appendix, example
9).

5.         While fixing the pay of Board level
executives of CPSEs, the following points will have to be taken into consideration:-

    The last pay drawn by the incumbent should have been drawn as per DPE guidelines. If any stagnation increments were given to the executive, either in 1997 or in 2007 pay revision, the same should have been granted only after reaching the maximum of the prescribed scale and once in two years, with a maximum of three such stagnation increments only. It may be clarified that there was no such concept of stagnation increment in 1987 and 1992 pay revisions.

ii)       Any Personal Pay, Special Pay, additional increment(s), or any increase in pay granted in any pay scales are not to be taken into consideration for pay fixation as they are aberrations from DPE 0.Ms. Similarly, no such benefits can be extended after 2007 Pay Revision. No amount can be given as pay which is in contravention of the approved pay scales. However, protection of emoluments as specified in para 4 (C) above is permissible vide DPE O.M. dated 05.03.2010. Flexibility in grant of benefits is restricted to different forms of Perks & Allowances, Superannuation benefits, PRP, within the parameters laid down in DPE 0.Ms. dated 26.11.2008, 09.02.2009 and 02.04.2009.

iii)     Increment, if any, due on 01.01.2007 should be granted first in the pre-revised scale (1997 pay revision) and only thereafter should fitment be granted, and pay fixed in the revised scale as on 01.01.2007 (Appendix, example 10).

iv)     Stagnation increment will be permissible only after reaching the maximum of the scale. As there are no fixed stages of increment in 2007 pay scales, the last increment due in a scale before reaching the maximum of the scale, may be less than 3%. Stagnation increment will be provided once after every two years, and there can be a maximum of three stagnation increments in a grade (Appendix, example 11).

v)      On appointment to dissimilar pay scales, for example from 2007 to 1997). There would be no notional increment on pay fixation in such situations, but only protection of emoluments (refer Appendix, examples 3,4,7, 8 and 9).

vi)     As per the formula for fixation of pay in 2007 pay scales, the pay is fixed by adding one notional increment equal to the increment being drawn in the pay of the lower scale and pay fixed in the higher scale by rounding off the amount to the next 10 rupees. If the amount so arrived at is less than the minimum of the higher scale then the pay will be fixed at the minimum of the higher scale, and if the amount so arrived at is more than the maximum of the scale then the pay will be fixed at the maximum of the scale. (Appendix, example 12)

vii)   On promotion, the pay fixed should not exceed the maximum of the scale to which the employee is promoted.

viii)  Unlike 1997 pay scales, which had fixed increment and defined stages, there are no pre-determined fixed stages of increment in the 2007 pay scales. (Appendix, example-13)

ix)     Benefit of bunching of increment would be provided in terms of para 2 (iii) of DPE O.M. dated 26.11.2008 read with para 3 (i) of DPE O.M. dated 24.09.2010 (Appendix, example 14), while benefit of stepping up of pay would be provided in those cases covered in DPE O.M. dated 27.11.2012 (Appendix, example 15).

x)      All perks and allowances admissible to executives, which have a Cost to the Company (CTC) would be within the ceiling of 50% of basic pay of individual executives. Only four specified allowances (para 10 of O.M. dated 26.11.08 refers) have been kept outside this ceiling. All other perks & allowances are to be kept within the limit of 50% (in this regard DPE 0.Ms. dated 02.04.2009, 01.06.2011 and 29.06.2012 also refer, Annex X, XI, XII).

7.            In case a person from a private
organization is appointed in a CPSE, his/her pay would be fixed at the
minimum of the prescribed pay scale without any pay protection.

8.         The following DPE O.Ms. are also annexed for ready reference, which are
self-explanatory:-

9.         The
pay fixation principles, which apply in respect of Board level executives of CPSEs would also be applicable mutatis mutandis in
respect of below Board level executives and non-unionized supervisors of CPSEs. However, the date of accrual of
next increment in respect of Board
level executives of CPSEs, who are contractual appointees and appointed on fixed tenure basis, will be the anniversary date
of their appointment as already provided in DPE model terms and conditions pertaining to them. The date of annual
increment in respect of below Board
level executives of CPSEs would be as per rules and regulations of the respective
CPSEs.

10.       As
required vide DPE O.Ms. dated 15.05.2008 and 08.08.2012 (Annex-XVII &
XVIII), the CPSE shall secure a Bond from the incumbent
for an appropriate sum of money payable
by him/her as damages for any violation of the restrictions imposed on him/her regarding his/her joining private commercial
undertakings after retirement. Standard terms & conditions would
stand modified to include the requirement of this Bond.

11.       DPE
does not vet/finalize the terms & conditions of CVOs in CPSEs. This
practice would continue.

12.       It
is observed that IFW of concerned administrative Ministry/Department invariably
examines and approves the terms & conditions including pay fixation case of
a Board level executive, before
sending it to DPE for vetting. As stated in para 1 above, there is a need to review the present procedure in order to minimize
the time taken in finalization of the terms & conditions, including pay fixation cases of Board level executives
of CPSEs. It is, therefore, decided
that henceforth, the practice of sending the proposals for pay fixation and terms & conditions of appointment of Board
level executives of CPSEs for vetting by DPE will be
discontinued. All proposals for framing the terms & conditions, including pay
fixation, of Board level executives
of all CPSEs, will be finalized by their respective administrative
Ministries/Departments with the concurrence of their IFW. Consequently, Para 3
of Standard Terms & Conditions for 2007 Pay Scales in respect of board
level executives of CPSEs circulated vide DPE O.M. dated 30.12.2009 (Annex II)
and Para 2 of Annex-V1 regarding Standard Terms & Conditions for those
joining on deputation and similar clauses under 1987, 1992 and 1997 stand
modified accordingly.

13.          In case of any difficulty, or need for
clarification, in the implementation of the above provisions, reference may be
made to DPE along with all relevant documents through the administrative
Ministry/Department, with the approval of an officer not below in the rank of Joint
Secretary and with the concurrence of the IFW.

14.          This mechanism of finalization of
Terms & Conditions including pay fixation in respect of Board level
executives by respective administrative Ministry/Department as provided in para
12 above will be reviewed by DPE after one year.

This issues with the approval of Minister (HI & PE).

Encl.
As above

Sd/-

(P.J. Michael)

Under Secretary to the
Government of India

Appendix

Examples

1.         Appointment from a Board level post to
another Board level post (like appointment from Director’s post to CMD) within the same CPSE, or a different CPSE,
but within the same schedule and same
pay scales of same pay revision. [Para
4 (A) (i), and (ii) refer].

2.         Appointment
from a Board level post to a Board level post in a different CPSE in different
schedule but same pay scales of same pay revision. [Para 4 (A) (iii) refer]

3.         Appointment
from a Board level post to a Board level post in a different CPSE in different pay scales of different pay revisions but
same schedule. [Para 4 (A) (iv)
and (C) refer]

4.         Appointment
from a Board level post to a Board level post in different CPSE in different pay scales of different pay revisions
and in different schedule. Para 4
(A) (v) and (C) refer].

5.         Appointment
from a below Board level post to a Board level post within the same CPSE or different CPSE but within the same
schedule and same pay scales of same pay revision. [Para 4 (B) (i)
and (ii) refer]

6.         Appointment
from a below Board level post to a Board level post in different CPSE in
different schedules but same pay scales of same pay revision. [Para 4 (B)
(iii) refer]

7.         Appointment
from a below Board level post to a Board level post in different CPSE in different pay scales of different pay revisions
but same schedule. [Para 4 (B)
(iv) and (C) refer]

8. Appointment from
a below Board level to a Board level post in different CPSE in different pay scales of different pay revisions
and in different schedule. [Para
4 (B) (v) and (C) refer]

9.         Employees coming from Government, for
example if a Joint Secretary is appointed as CMD of a schedule `B’ CPSE on permanent absorption. [Para 4 (C) refers]

10.       Pay
fixation on 2007 pay revision if increment
date is 01.01.2007 [para 5 (iii) refers]

11.          Increment
can be an amount less than 3% of basic pay, and stagnation increment to
be drawn once in two years after reaching maximum, and maximum three stagnation
increments [para 5 (iv) refers]

12.       Pay
fixation if the amount arrived at after providing a notional increment is more
than the maximum of the scale. [para 5 (vi) refers]

13.          In
the scale of pay Rs.12600-32500 (E0 grade — 2007 pay scales), there are no
stages like Rs.12980, 13370 etc.
Therefore, while fixing the pay in the 2007 pay scales, the aggregate amount calculated as per Para 2(i) of
O.M. dated 26.11.2008 would be rounded off to the next ten rupees and pay fixed in the corresponding revised pay
scale. [para 5 (viii) refers].

14.       Benefit
of bunching of increments on 2007 pay revision on pay fixation for revised 1997 scale to 2007 riay scale. The benefit of bunching, as
per DPE O.M. dated 26.11.2008 read
with O.M. dated 24.09.2010, will be admissible only if two executives in the same grade in same CPSE were at different stages in
the 1997 pay scales as on 01.01.2007 and
on pay fixation in the 2007 pay scales get fixed at the same stage (minimum of
scale). In such a case for every two
stage difference in 1997 scale, the senior would get one bunching increment
[para 5 (ix) and Annex XIV refer] as under:-

15.       No benefit of bunching of increments in
case of CMD/MD of a CPSE from 1997 to 2007
but stepping up in specified cases: CMD/MD is a stand-alone post in a CPSE, therefore, no comparison for the purpose of benefit of bunching of
increments can be made in that CPSE.
However, there may be some rare cases of stepping up of pay of CMD/MD in a CPSE. To illustrate, if the Director ‘X’ of ‘Z’
CPSE who was junior to a CMD/MD of ‘Z’ CPSE,
and Director ‘X’ was drawing a lower basic pay in 1997 pay scale (as on
01.01.2007) draws higher basic pay
than his CMD/MD on 2007 pay revision as on 01.01.2007, (because of the
reasons of getting the benefit of bunching), the pay of a CMD/MD of a ‘Z’
CPSE may be stepped up [para 5 (ix)
and Annex XVI refer] to the level of that Director ‘X’ as on 01.01.2007
as under:-

Souce: Click here to see full order [http://www.dpe.nic.in/sites/upload_files/dpe/files/finalization_17022012.pdf]