HomeSeventh Pay CommissionBonus

Explanatory Notes on Charter of Demands submitted to Cabinet Secretary by Confederation


  1. Merger of DA with pay for all employees w.e.f. 01.01.2014 including Gramin Dak Sewaks and Pensioners.
  2. Grant of Interim Relief to all employees including Gramin Dak Sewaks and Pensioners.
  3. Inclusion of Gramin Dak Sewaks under the purview of 7th Central Pay Commission
  4. Scrap PFRDA Act and grant statutory defined pension to all including those appointed on or after 01.01.2004.
  5. Date of effect of 7th CPC recommendation should be 01.01.2014.
  6. Regularisation and Revision of wages of casual labourers and contract workers.
  7. Removal of 5% condition for compassionate appointment.
  8. Fill up all vacant post and creation of New Post wherever justified.
  9. Stop Downsizing, Outsourcing, Contractorisation and Privatisation of Government function.
  10. Grant productivity Linked Bonus to all without ceiling; Compute bonus as weighted average of PLB for those not covered by PLB agreement.
  11. Revise OTA and NDA and implement arbitration awards.
  12. Settle all pending anomalies of 5th and 6th Pay Commission.


Item No. 1, 2 and 5 – Merger of DA with pay and grant of interim relief and Date of effect of 7th CPC.

The wage revision of the Central Government employees had always been through the setting up of Pay Commissions. Since the wage revision exercise involves inquiring into various aspects of wage determination and service conditions of the Government employees the Government had been appointing Pay Commissions for it was considered a better suited system. Such inquiry through setting up of Commissions had been a time consuming process. The 3rd, 4th and 5th Central Pay Commissions had taken more than three years to submit their reports. The 6th CPC however, submitted its report in the time frame provided to it i.e. 18 months. Since the earlier Commissions had covered many aspects of the principles of wage determination and the periodicity of such revision had come down, the exercise might not now require a longer period of time as was the case earlier. Even then the Commission will have to be given a reasonable time frame to go into the matter judiciously, for the 6th CPC recommendations when implemented has given rise to large number of anomalies and cadre related grievances. The methodology adopted for compensating the erosion in the real value of wages in the interregnum period had always been through the mechanism of merger of a portion of DA. The 5th CPC had recommended that the DA must be merged with pay and treated as pay for computing all allowances as and when the percentage of Dearness compensation exceeds 50%. Accordingly even before the setting up of the 6th CPC the DA to the extent of 50% was merged
with pay. It is pertinent to mention that even this benefit was denied to the Gramin Dak Sewak (GDS) of the Postal Department. As on 1.1.2011, the Dearness compensation was 65%. The suggestion for merger of DA to partially compensate the erosion in the real wages was first mooted by the Gadgil Committee in the post 2nd Pay Commission period. The 3rd CPC had recommended such merger when the Cost of Living index crossed over 272 points i.e. 72 points over and above the base index adopted for the pay revision. In other words, the recommendation of the 3rd CPC was to merge the DA when it crossed 36%. The Government in the National Council JCM at the time of negotiation initially agreed to merge 60% DA and later the whole of the DA before the 4th CPC was set up. The 5th CPC merged 98% of DA with pay. The Staff Side of the National Council JCM in its meeting with the Secretary, Personnel convened for the purpose of finalising the terms of the reference of the 7th CPC did raise the issue of merger of DA with pay. Though it was assured that the Government would take a final decision in the matter, the matter was not referred to the 7th CPC, nor did they deem it fit to take an executive decision. Despite the absence of any reference to the 7th CPC, the staff side discussed the issue with the Chairman and other members in the Pay commission. On the basis of the said discussion, a separate memorandum detailing as to how the employees are entitled to the benefit of Interim Relief and Merger of DA was submitted to the Commission. The Staff Side was informed of the forwarding of the said memorandum by the Commission to the Government for a decision at their end. The Government is therefore duty bound to take a decision in the matter without further loss of time.  

Interim Relief and date of effect 

Most of the earlier Commissions with the exception of Ist and 6th Central Pay Commission had taken 2-3 years and sometimes more to finalise their recommendations. The 6th CPC failed to appreciate the erosion in the real value of wages that had taken place over the years due to inflation and rise in prices of essential commodities and the inability especially of the employees at the lower level to make the both ends meet with the available wages.
Every Pay Commission which had recommended Interim Relief had made it amply clear that it was intended to provide some relief to the employees pending a comprehensive determination of their salary structure and other benefits. The relief granted was treated as sui generis (one of its own kind, unique) and it was not taken into account for determining any allowance or benefit.
The Government did not initially refer the question of Interim Relief to the 5th CPC but when the Staff Side submitted their memorandum to the Commission on I.R., the Government had to amend the terms of reference and refer the issue to the Commission for their decision. 
The Commission’s recommendations in granting three installments of interim relief establish the need for a relief in view of the erosion in the real value of wages, the need to fill the widening gap in wages when compared to outside rates and the fact that final recommendations of the Pay Commission are bound to revise the wage structure and above all the need to provide some relief to the employees who would retire before the Commission’s recommendations are finally submitted to the Government and accepted by them.
The need based minimum wage computed on the basis of Dr Ackroyd formula as on 1.1.2014 will be around Rs. 26,000 bringing about a gap of almost 12,000 at the level of an MTS. As per the formula adopted by the 5th CPC, the minimum wage will work out to Rs. 22,857. 
From the above it is seen that Central Government employees presently have a very depressed salary structure. The final outcome of the deliberations of the 7th CPC will become available only by 2016. It is, therefore, needed that the employees have to be compensated in the form of Interim Relief. In our opinion the Commission may, as has been done by the various earlier Pay Commissions, recommend atleast 25% of Pay in Pay Band plus Grade Pay as Interim Relief subject to a minimum of Rs. 2000/-. Incidentally we may point out that the grant of interim relief will enable the Government to spread out the financial outlay on account of wage revision over a period of more than three years.
The need to revise the wages of Central Government employees every five years as is the case with the employees of the Public Sector Undertaking has been repeatedly raised by the employees organisations. The 5th CPC fixed the tenure at ten years. The 6th CPC kept a dignified silence on this vital question. As has been pointed out in the preceding paragraph, that over the five year period, normally the Dearness compensation crosses the 50% mark. This is indicative of the fact that the erosion in the real value of wages has become difficult for the employees to bear. The periodicity of wage revision has to be five years if not immediately, at least in phases. Since the Commission has come into existence in the year 2014, the recommendations of the Commission must be effective from 1.1.2014, which will reduce the periodicity of wage revision from 10 years to 8 years. We, therefore, demand that the 7th CPC must be asked to compute the wages on the basis of the consumer price index as is obtaining on 1.1.2014.

Item No. 3 – Inclusion of Grameen Dak Sewaks within the purview of the 7th CPC.

Grameen Dak Sewaks constitutes the single largest chunk of the postal workforce. Without them perhaps the rural postal system in the country will break down. The dedicated service of the Grameen Dak Sewaks keeps the postal department operational throughout the year. The system of Extra Departmental Agency was introduced by the colonial British rulers to reduce the running expenses of the postal system in the country. The exploitative system continued even after independence. By excluding the Gramin Dak Sewaks from the purview of inquiry of the Pay Commission, the Government wanted the system to continue as a means to reduce the running expenses of the Postal Department. The exclusion is sought to be made on the specious plea that the GDS are not Civil Servants. The Government’s contention on this score had been the subject matter of judicial scrutiny. The Honourable Supreme Court has held that the Extra Departmental Agents are holders of Civil post. The 4th Central Pay Commission also held the same view and asserted that their service conditions must be inquired into by the Pay Commission. However, when the 5th CPC is constituted, Government constituted a Committee under Justice Talwar to look into their case. The Government did not implement many of the recommendations of the Talwar Committee. It is in this context we plead that the Gramin Dak Sewaks must be brought within the purview of the 7th Central Pay Commission and justice rendered to them.

Item No.4: Scrap the New Pension Scheme

The defined benefit scheme of pension was introduced replacing the then existing contributory system decades back. The Government decided to reconvert the same into a contributory scheme on the specious plea that the outflow on pension had been increasing year by year and is likely to cross the wage bill. By making it contributory, the Government expenditure on this score is not likely to get reduced for the next four decades because of the reason that as per the announced scheme, the Government is to contribute the same amount to the fund as the employees make. Coupled with this stipulation the Government is also duty bound to make payment for the existing pensioners and for all Central Government employees who were in service prior to 1.1.2004. The contribution collected from the employees who are recruited after 1.1.2004 is to be managed by a mutual fund operator for investment in the stock market.
It is the vagaries of the stock market which will then determine the quantum of pension or in other words annuity, which would not be cost indexed. Before the introduction of the new scheme and the PFRDA bill, the Government had set up a committee under the chairmanship of Shri Bhattacharya, the then Chief Secretary of the State of Karnataka. The bill was unfortunately drafted and presented to the Parliament disregarding even the recommendation of the said committee to the effect that the Govt. should consider introducing a hybrid system by which the employees will have either a defined benefit pension or opt for a higher return through stock exchange investments. Despite the non-passage of the bill and the consequent absence of a valid law to support the Pension Regulatory authority, the Govt. converted the existing pension scheme into a contributory one through executive fiat and invested a percentage of the fund so generated from the employees’ contribution in the Stock market. India is a young country and the expenditure on statutory pension has remained over a long period not more than 5% of GDP which the country/Government can afford to spend. The withdrawal of PFRDA bill is required for the following solid reasons:
(a) The new pension scheme is going to make social security in old age uncertain and dependent on market forces.
(b) The scheme has been compulsorily imposed on a section of employees and hence it is discriminatory.
(c) Such scheme had been a failure in many countries including Chile, UK and even USA. In USA entire pension wealth has been wiped out leaving pensioners with no pension. In Argentina the contributory scheme which was introduced at the instance of IMF was replaced with the defined benefit pension scheme.
(d) The PFRDA Bill has provisions empowering the Govt. and the Authority to cover employees now left out and to amend the existing entitlements of pension benefits.
(e) In majority of the countries, “pay as you go” is the system of pension.
(f) The contributory scheme does not give any guarantee for a minimum pension of 50% of the pay drawn at the time of retirement of the employee. Nor does it provide for the protection of his family members in the form of family pension in the event of death.
The Supreme Court had declared pension as one of the fundamental rights. The government should therefore retrace from its avowed position, which is detrimental to the interest of the employees and ensure that the employees recruited after 1.1.2004 is covered by the existing statutory defined benefit scheme and rescind the PFRDA Act.
The recent decision of the Cabinet to allow FDI in pension fund operations has made the real intent of the PFRDA Act unambiguously clear. The FDI will facilitate the mutual fund operators to invest the funds outside India thereby making Indian Savings available for development of a foreign country. It is now clear that the decision behind the contributory pension scheme was the pressure imposed by imperialist powers and more specifically IMF. It has, therefore, to be opposed at all cost and with vehemence. The Govt. should not go ahead with its intention of induction of FDI in pension fund companies.

Item No. 6 – Regularisation Of Casual/Contingent/Daily Rated/Contract Workers

Due to the ban on creation of posts and recruitment of personnel that continued for a very long period and the consequent strain on the existing workers, many Departmental heads had to recruit personnel on daily rated basis or as casual workers. Thus, almost 25% of the present work force in Governmental organisations are casual workers deployed to do the permanent and perennial nature of jobs, contrary to the prohibition of such unfair labour practices by the law of the land. In Fifties and Sixties, even the casual workers who had been employed to do the casual and non perennial jobs used to get priority for regular employment as and when vacancy for such permanent recruitment arises. Thousands of persons are now recruited as casual workers and kept as such for years together. They are paid pittance of a salary with no benefits like provident fund, dearness allowance, other compensatory allowances etc. In order to ensure that they do not get the benefit of regularisation, these workers are technically discharged for a few days to be employed afresh again. The modus operandi differs from one department to another.
While in some organisations, they are recruited through employment exchanges in others the functions are contracted out. Not only the quality of work suffers but it is also an inhuman exploitation of the workers given the serious situation of unemployment that exists in the country. While the permanent solution is to sanction the necessary posts and resort to regular recruitment, the Government should evolve a scheme by which these casual/contingent/daily rated/contract workers are made regular workers with all the concomitant benefits available for regular Government employees. Pending finalisation of such a scheme for regularisation, the non regular employees recruited for meeting the exigencies of work must be paid pro-rata salary on par with the similarly placed regular employees on the principle of equal pay for equal work.

Item No. 7 – Compassionate appointment

On the plea of a Supreme Court directive, Govt. introduced a 5% ceiling on the compassionate appointments. When the matter was taken up by the Staff Side in the National Council the Government was unable to produce any such direction of the Supreme Court. Despite that, the official side refused to withdraw the said instructions limiting the appointments to 5% of the available vacancies. In one of the National Council meetings, presided over by the Cabinet Secretary solemn assurance was given to the Staff Side that the issue will be revisited in the light of the discussion, but nothing happened thereafter. It is pertinent to mention in this connection that the compassionate appointments in the Railways continue to be operated without any such ceiling. In the Department of Posts hundreds of candidates selected by Selection Committee were denied jobs. The list of selected candidates was scrapped. These candidates approached the Court and obtained a favourable order. But the Court directive was made applicable to only those who approached the Court. The standing Committee on Department of Personnel in one of their report has termed the scheme of Compassionate ground appointments as a sacred assurance to a fresh entrant that if he dies in harness, his family shall not be left in lurch. Such an assurance is being breached by the provisions of limiting such appointments to 5% of vacancies. This condition, therefore, must be done away with.

Item No. 8 – Remove the ban on recruitment and creation of posts

In 1993, the Government of India introduced a total and blanket ban on creation of posts. This was with a view to reduce the manpower in the Governmental establishments, for on implementation of the neo liberal economic policies, the Government will be required to close down some of its activities and some others to be shifted to the private domain. In 2001, the GOI issued an executive instruction modifying the complete ban on recruitment that was in vogue whereby various departments, if they so desire, resort to recruit personnel to fill up the existing vacancies, provided they abolish 2/3rd of such vacancies. In other words, the concerned heads of Departments will be permitted to fill up 1/3rd of the vacancies provided they abolish the 2/3rd vacancies permanently. Since it was impossible to carry on the functions assigned to the Departments with large number of vacant posts, they had to implement the above cited directive of the Department of personnel, which was meant to arbitrarily reduce the manpower especially in Group C and D segments. Though the directive was to be applied uniformly to all cadres where direct entry is one of the mode of recruitment, not a single Group A. post was abolished as most of the departments offered to do away with Group C and D posts only. Since direct recruitment is seldom resorted to in Group B cadres, the brunt of the burden of the above cited instruction had to be borne by the Group C and D cadres in each department. The said directive remained operative for nearly a decade i.e. upto 2010. Such abnormal and arbitrary abolition of posts affected very adversely the functioning of many departments consequent upon which the public at large suffered immeasurably, besides accentuating the unemployment situation to alarming proportion. To cope up with the genuine complaints of the public, most of the heads of Departments had to resort to either outsourcing of the functions or engaging contract workers. The Govt. encouraged this endeavour by providing unlimited funds. In the circumstances, it is imperative that the sanctioned Strength as on 1.01.2001 is restored and the consequent vacancies filled up by a special drive for recruitment.
The Government has a time tested and scientific system of assessing the workload and measuring the manpower requirement. This seems to have been presently abandoned and the vacancies barring in a few cases are not being filled up. Even though there had been phenomenal increase in the workload in each department no new posts are created to cope up with the situation. The 6th CPC dealing with the subject has recommended that such ban on creation of posts for a long period is not desirable and the Departments should be empowered to create the need based posts for its effective functioning. The commensurate posts that are needed to cope up with the increasing workload must be sanctioned and recruitment of personnel resorted to so that the assigned functions of each department could be carried out effectively and efficiently.

Item No. 9 – Downsizing, Outsourcing, Contractorisation etc.

To overcome the difficulties emanated from the total ban on recruitment and creation of posts and more specifically impacted by the 2001 executive fiat of the Govt. of India in the matter, many departments had to resort to outsourcing of its functions. Some were virtually closed down and a few others were privatised or contractorised. The large scale outsourcing and contractorisation of functions had a telling effect on the efficacy of the Government departments. The delivery system was adversely affected and the public at large suffered due to the inordinate delay it caused in getting the requisite service. The financial outlay for outsourcing of functions of each department increased enormously over the years. The quality of work suffered. In order to ensure that the people do get a better and efficient service from the Government departments and to raise the image of the Government employees in the eyes of the common people, it is necessary that the present scheme of outsourcing and contractorization of essential functions of the Government must be abandoned. The practice of outsourcing and contractorisation is nothing but a cruel exploitation of the alarming situation of unemployment. The system of outsourcing of the functions seeks to informalise the workforce. The contract/casual workers get not even one third of the salary of the regular work force. They have no social security benefits like pension, provident fund gratuity etc. The C.G. employees fought against the temporary service rules which was in vogue in sixties and ensured that the recruitment to Government service is permanent and the civil servants are not allowed to be fired at the whim and fancy of their bosses. The outsourcing and contractorisation has paved way for large scale entry of casual workers and has resulted in the reversal of what all achieved in this direction through struggles in the past two decades.

Item No. 10 – Introduction of PLB and removal of ceiling limit

Barring the Railways, Defence production units and Postal Department, Bonus is paid to the Central Government employees on adhoc basis. The 30 days adhoc bonus is the maximum that is provided to them. The 4th and 5th Central Pay Commissions had recommended the introduction of productivity linked bonus scheme to all Departments as is presently the case in the three Departments mentioned above. Even the scheme of PLB is not uniform in as much as the Postal Department introduced an artificial ceiling of 60 days on the entitled number of days of bonus whereas no such ceiling exist either in the Railways or in the Defence Production organisations. The Government is yet to implement the above recommendations of 4th & 5th CPCs even though several rounds of discussions on the subject were held. There is no reason whatsoever, as to why this recommendation could not be implemented. There had been no rise in the adhoc bonus for past a decade even though there had been considerable amount of increase in the case of PLB over the years. The Department of Personnel and Expenditure may be advised to finalise the PLB scheme without further delay for those who are in receipt of adhoc bonus.
Even though Bonus Act is said to have no application or relevance to the Productivity linked Bonus or adhoc bonus, the provisions of the said Act is employed to deny the entitled bonus to the Government employees on the basis of their emoluments. The bonus entitlement in both the cases is restricted to the computation based on the notional emoluments of Rs. 3500.
Presently even a casual worker is entitled to get a monthly wage of more than Rs. 3500. The minimum wage as on 1.1.2006 determined by the 6th CPC in respect of Central Government employees is Rs. 7000. By artificially linking the restriction of emoluments stipulated by the Bonus Act, the employees are denied their legitimate entitlement of Bonus. The Bonus entitlement must be computed on the basis of the actual emoluments of an employee.

Item No. 11 – Revising OTA and Night Duty allowance rates and Implementation of arbitration awards:

Overtime allowance is seldom given to the Government employees. In case of emergency and in the contingency in which the work cannot be postponed, like that happens in the RMS division of Postal Department, in the Atomic Energy Commission offices or when the Parliament is in session in other administrative offices, employees are asked to do work beyond the stipulated working hours. The Night duty allowance is provided to the employees who are asked to work in the night shifts with certain stipulated conditions. The 4th CPC recommended that since there had been considerable misuse of the provisions relating to the grant of OTA, the Government should find alternative methods to compensate the employees who are asked to work on over time and pending such a scheme being evolved recommended not to revise the rates. However, the Govt. did not bring in any new scheme but issued the directive that the OTA and Night duty allowance will be paid to the employees who are called upon to do overtime or night duty on the basis of the 4th CPC pay structure. This directive is still in vogue.
On quite a number of occasions, the Staff Side pointed out the irrationality of the directive of the Government in as much as a person engaged for managing the excess work from outside gets better emoluments than the over time allowance granted to the regular employees. The Government refused to reach an agreement in the National Council on this issue. When the Staff side pressed, the Government came forward to record disagreement and referred the matter to the Board of Arbitration under the JCM Scheme. The Board of Arbitration having found the unreasonable position taken by the Government gave out the award in favour of the staff and directed the Government to revise the order whereby the allowance will be linked to the actual pay of the Government employees. The Govt. did not accept this award and has approached the Parliament for the rejection of the same. The matter has not yet been placed in the form of a resolution in the Parliament. Despite the fact that the employees had been abiding by the directive of their superiors to be on overtime/night duty, and despite having won the case before the Board of Arbitration they continue to be compensated on the basis of the Notional pay as in 1986. There could not have been a much bigger injustice meted out to the employees. The Government must accept the award of the Board and issue instructions linking the allowance to the actual pay of the employee. Similarly Government should come forward to implement about 15 other arbitration awards which are sending implementation for the last many years.

Item No. 12 – Settle all anomaly items pending at the National Council JCM

The 6th CPC made a retrograde change in the pay structure of the Central Government employees. It introduced the concept of Grade Pay and Pay Bands. There had been no consultation with the employees while finalizing the said recommendations. The system created enormous anomalies which had to be addressed by the Government later. The Government on the plea of the Staff Side of the National Council set up a joint committee to go into these anomalies. The Committee met several times but could not resolve any issue through deliberations. These issues are still pending unresolved. On a similar situation, the 6th CPC itself has gone on record to state that it would not be possible for them to go into the anomalies within the 18months provided to them to make recommendations. No different is the case with the 7th CPC and the 7th CPC may also come up with the above arguments for non settlement of anomaly. Moreover, none of them has also been officially referred to the 7th CPC. It is, therefore, necessary that the Government must look into the matter with a sense of urgency and ensure that the anomalies are resolved urgently.


Stay connected with us via Facebook, Google+ or Email Subscription.

Subscribe to Central Government Employee News & Tools by Email [Click Here]
Follow us: Twitter [click here] | Facebook [click here] Google+ [click here]