The big question on every central government employee’s mind is: what will happen to salaries and Dearness Allowance (DA) during the transition period?
Historical trends suggest that whenever a new Pay Commission comes into effect, the government typically pays arrears for the entire transition period. 8th Pay Commission: Key Details
- The central government reviews salaries, allowances, and pensions of employees and pensioners every 10 years.
- The 7th Pay Commission ended on 31 December 2025, and the 8th Pay Commission is considered effective from 1 January 2026.
- Although the government approved the Terms of Reference (ToR) for the 8th Pay Commission in November 2025, the commission may take around 18 months to submit its recommendations.
- Until the cabinet approves the new recommendations, employees will continue to receive salaries according to the 7th Pay Commission.
Transition Period: Salaries and DA
During this interim period, employees are concerned about the fate of their salary and DA. Previous experience shows:
- When a new Pay Commission is implemented, the government pays arrears covering the entire transition period.
- This includes enhanced basic pay, allowances, and retirement benefits, calculated according to the new fitment factor.
- Once the 8th Pay Commission is implemented, employees can expect a lump-sum arrear payment, which can be substantial.
DA (Dearness Allowance) Implications
- With a new Pay Commission, the existing DA is merged into the new basic pay, and DA calculations restart from zero.
- Currently, DA stands at 58% from 1 July 2025, with the next hike scheduled for 1 January 2026.
- Until the new Pay Commission is implemented, DA continues to increase every six months.
- After applying the new fitment factor, the total DA is merged into basic pay, and future DA will be calculated on the new basic.
Alternative Proposal by Employee Unions
The All India NPS Employees Federation, led by Manjit Singh Patel, has suggested:
- If DA reaches around 74% by January 2028, 50% of the DA should be merged into basic pay while the remaining 24% continues as DA.
- This would reduce the immediate financial burden on employees during high inflation.
- The federation also proposes:
- Fitment factor of 2.64
- Family unit for minimum wage calculation to increase from 3 to 5 members
It remains to be seen whether the government will follow the traditional formula or find a middle path that balances employee interests with fiscal prudence.
