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8th Pay Commission Family Unit Formula: Central government employees and pensioners have been waiting for a long time for an increase in their salaries and pensions. However, the increase in their income isn’t determined solely by the inflation rate (Dearness Allowance) or general statistics. Currently, there’s talk of a factor that, if implemented, could see an increase of up to 283% in employees’ basic salaries. This crucial factor is the change in the number of “family units.”

Until now, the government determined salaries by adding the expenses of only three members of an employee’s family (employee, spouse, and children). However, the new Pay Commission is demanding that the expenses of five family units be included, including dependent parents. Let’s explore how this formula will affect your salary and fitment factor.

What is a ‘family unit’?

The Pay Commission uses the 15th Indian Labour Conference (ILC) standards of 1957 to determine the basic salary of central government employees. The Seventh Pay Commission also adopted the three-family unit rule.

• Employee – 1 unit
• Spouse- 1 unit
• 2 children – 1 unit (0.5+0.5)
• Total = 3 units

On the basis of these 3 family units, the Seventh Pay Commission gave a fitment factor of 2.57 and the basic salary of central employees was fixed at Rs 18,000.

New family units proposal in the 8th Pay Commission

• Employee – 1 unit
• Spouse- 1 unit
• 2 children – 1.6 units (0.8+0.8)
• Dependent parents – 1.6 units (0.8+0.8)
• Total = 5.2 units (5 units in round figure)

How much will the salary increase with 5 family units?

For example, suppose the minimum monthly living cost per person of a family i.e. ration, clothing, electricity, house rent, children’s education and medical expenses comes to Rs 13,800 in today’s inflation.

Case-1: Under 3 family units

3 units x Rs 13,800 = Rs 41,400 (expected basic salary)

Case-2: Under 5 family units

5 units x Rs 13,800 = Rs 69,000 (expected basic salary)

The new formula makes a clear difference. Adding just two units of parental expenses could directly increase an employee’s basic salary by ₹27,600 per month.

How will the fitment factor increase?

The fitment factor is the multiplier used to multiply the old salary of central government employees to determine their new basic salary. The Seventh Pay Commission’s fitment factor was 2.57, which increased the basic salary from ₹7,000 to ₹18,000. The fitment factor for the new Pay Commission is expected to be 3.83 once the 5-unit scale is implemented.

How will the basic salary become Rs 69,000?

If the current basic salary of a central government employee (Level-1) is Rs 18,000, then-

• New Basic Salary = Existing Basic Salary x Fitment Factor
• New Basic Salary= 18,000 x3.83= 68,940 (≈₹69,000)

Once the potential 5-unit formula is implemented, your basic salary will increase directly from Rs 18,000 to Rs 69,000. In addition, dearness allowance, HRA, and other allowances will be added separately.

Legal arguments of workers’ unions

The National Council of JCM (NC-JCM), an organisation of central employees, has presented very strong grounds for implementing 5 units in its memorandum submitted to the Eighth Pay Commission:

Citing Senior Citizens Act: Under the Maintenance of Parents and Senior Citizens Act, it is the moral and legal responsibility of the employee to take care of his/her elderly parents.

Social Security Code 2020: The new labour codes also legally include dependent parents in the definition of an employee’s family.

Supreme Court Order: The Supreme Court (1991 and Bhupendra Nath Hazarika case) has also held that the government should pay its employees wages not just “living wages” but a “dignified life”.

The real game depends on the fitness factor

The key to the “fitment factor 3.83” discussed in the Eighth Pay Commission ‘s discussions lies in this “5 family units” rule. If the new Pay Commission adopts the 5 family units formula, taking parents’ expenses into account, it will result in the largest historical increase in salaries for millions of central government employees and pensioners across the country.