By Admin 
Eighth Pay Commission: After a long wait of about 10 months, the Term of Reference (ToR) of the Eighth Pay Commission was approved in the Union Cabinet meeting chaired by Prime Minister Narendra Modi on Tuesday. This decision has brought great relief to about 50 lakh central employees and 69 lakh pensioners. Earlier, at the beginning of the year, the government had announced the formation of the Eighth Pay Commission and proposed amendments in the salaries and allowances of central employees and pensioners.
The Eighth Pay Commission will be headed by former Supreme Court judge Ranjana Prakash Desai. Along with him, Professor Pulak Ghosh of IIM Bangalore and Pankaj Jain, Secretary, Ministry of Petroleum and Natural Gas have been included as members.
The government has directed the commission to submit its recommendations within 18 months. During this period, the Commission will prepare its report after consulting various stakeholders. Information and Broadcasting Minister Ashwini Vaishnav said that the date of implementation will be decided only after the interim report of the Pay Commission, although it is likely to be effective from January 1, 2026.
What is Term of Reference (ToR)?
The term of reference is actually a framework document of the Pay Commission, in which guidelines and parameters are given for preparing the report. It contains all the terms and conditions on the basis of which the Commission prepares its recommendations.
Its draft is prepared by the Joint Consultative Machinery (JCM), which works under the Finance Ministry. The Union Cabinet gives final approval to the draft. The JCM consists of representatives from several ministries, of which 12 members are selected from the Standing Committee. These members finalize the ToR after discussing it with secretary level officials.
What is the formula for increasing salary – Fitment Factor?
The amount of increase in the salary of the employees completely depends on the fitment factor. This is a coefficient by which the old basic pay is multiplied to arrive at the new basic pay.
For example, the fitment factor in the Seventh Pay Commission was 2.57. That is, if the old basic pay of an employee was Rs 10,000, then the new basic pay became Rs 25,700 (10,000 × 2.57).
Formula:
New Basic Pay = Old Basic Pay × Fitment Factor
How much can the salary increase?
It is believed that in the Eighth Pay Commission, the fitment factor can be fixed between 1.83 to 2.86. If this happens, then it is possible to increase the salaries of central employees by 100 to 180 percent.
The 2.57 fitment factor implemented in the Seventh Pay Commission resulted in a 157 percent increase in pay, increasing the basic pay from Rs 7,000 to Rs 18,000. However, before making the recommendations of the new commission, the government will also consider factors like inflation rate, fiscal deficit and economic situation.
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