8th Pay Commission: What A Higher Fitment Factor Could Mean For Employees

If you're a central government employee, or you have family who is one, you've likely come across the term "fitment factor" in news around the 8th Pay Commission. It's simply the number used to work out an employee's new basic pay when a Pay Commission brings in a new pay structure.

The existing basic pay is multiplied by this number, and the result decides where the employee lands on the new salary chart. The 7th Pay Commission is a good example of how this plays out. It used a fitment factor of 2.57 for all employees when it came into effect on January 1, 2016.

The number itself isn't fixed across Pay Commissions either, the 6th Pay Commission before it had used a lower factor of 1.86. For employees at the lowest pay level, the minimum basic pay went from Rs 7,000/month under the 6th Pay Commission to Rs 18,000/month under the 7th.

This came from multiplying the old basic pay by 2.57, the fitment factor used at the time. Take an employee whose basic pay under the 6th Pay Commission was Rs 18,100, multiplying that by 2.57 gives Rs 46,517, and since that exact figure doesn't fall on a specific step in the new pay chart, it gets matched to the nearest one, Rs 46,200.

So the fitment factor isn't the final salary figure itself but the tool used to arrive at it. Also Read : Indian Car Buyers Are Moving Beyond Petrol: CNG, Hybrids And EVs Overtake Petrol In August The fitment factor decides the new basic pay, not the total change in an employee's take-home salary.

Under the 7th Pay Commission, pay, allowances and pensions all changed together, and allowances and pensions actually rose by more than basic pay did. This has a knock-on effect on parts of the salary linked to basic pay too.

House Rent Allowance is a good example. The fitment factor doesn't apply to HRA directly, it revises the basic pay first, and HRA is then worked out as a percentage of that new basic pay. Also Read : Dalal Street Continues To Trade In Red: Sensex Bleeds Over 300 Points, Nifty Tests 23,700 The fitment factor is simply the number used to revise basic pay, and a change in that number has a ripple effect on allowances like HRA too.

Rather than trying to guess the eventual figure, it's worth tracking when the Commission submits its report and what the government finally approves of it. That's what will actually decide any change in take-home pay. (The author is Senior Manager, Communications, BankBazaar.com.

This article has been published as part of a special arrangement with BankBazaar) It's the number used to calculate an employee's new basic pay under a new pay structure. The existing basic pay is multiplied by this number to determine their new salary chart position.

The 7th Pay Commission used a fitment factor of 2.57 for all employees. This factor came into effect on January 1, 2016, to revise basic pay. No, the fitment factor only determines the new basic pay, not the entire take-home salary.

Allowances and pensions also change, and they often rose by more than basic pay did. No, the fitment factor for the 8th Pay Commission is not yet confirmed. It will only be known once the Commission submits its recommendations and the government decides on them.