Central Govt.employees in India are gifted every year with some additional cash by the Ministries and Departments for their contributions to increase productivity in different fields. Sixth Central Pay Commission has recommended few changes in the existing system of bonus payment to Central Govt. employees. To give a broad idea about these recommendations, major changes suggested by the pay commission are short-listed below.

Broad recommendations:

• PRIS should replace the existing schemes of bonus, whether productivity linked (PLB) or ad-hoc.

• The Commission, accordingly, recommends that all Departments should ultimately replace the existing productivity linked bonus schemes with Performance Related Incentive Scheme (PRIS).

• The ad-hoc bonus schemes should cease immediately and be replaced with PRIS.

• In places where PLB is applicable and it is not found feasible to implement PRIS immediately, the existing productivity linked bonus schemes may be continued in a modified manner.

• In the meantime, PRIS can be tried out on pilot basis for some selected areas of work.

1. Department of Posts:

• The extant formula for computing PLB in Department of Posts does not give the correct picture about the actual productivity of the employees of the department.
• The formula needs to be completely overhauled.

• Far better and accurate way to compute the total revenue take the actual net revenue generated from sale of stamps/stationary/other items. The base figure could then be drawn with reference to the average net revenue generated in the last 3 years.

• The ratio of these figures as adjusted to neutralize the effect of increase in the prices of various products and infusion of new technology would give a very good indication of the increase in productivity and be utilized to give PLB to the employees concerned.

• The Commission recommends that the extant formula for computing PLB in Department of Posts be examined and revised to incorporate the above aspects till the scheme of PRIS is introduced.

2. PLB scheme in Ministry of Railways

• The existing formula is based purely on physical parameters without any reference to the financial viability
• The existing formula does not take into account the capital investments made by the Railways in areas other than the Rolling Stock. This means that capital investments made by Ministry of Railways are not taken into account for purposes of computing the PLB.

• A new formula for computing PLB that is based on financial parameters and where profit is computed as per the established principles of commercial accounting, wages with appropriate adjustments for increases, the impact of capital investment; element of subsidy, etc. would, therefore, need to be devised in case the PRIS is not implemented immediately in Ministry of Railways.

• The Commission recommends accordingly. As an illustration, keeping in view the existing methods of accounting, a formula for computing PLB in Railways is given in Annex 4.4.1 of the Report for reference of the administrative ministry.

PLB scheme in Ordnance factories

• Concluding The Commission would like to observe that the extant remarks formulae of paying PLB in none of the 3 major ministries/departments are geared towards rewarding an actual increase in productivity/efficiency.

• The introduction of PRIS will ensure that actual performance of each employee or group of employees is measured using objective criteria and incentive given based on performance rather than uniformly across the organisation.

• The concerned Ministries should, therefore, seriously consider devising an appropriate PRIS. The Government, as a policy, should also consider replacing all form of bonus schemes by that of PRIS.

• It is also clarified that in the revised scheme of emoluments being recommended by the Commission, all increase in productivity/profitability should reflect in form of PRIS.
• The ad-hoc bonus schemes should cease immediately and be replaced with PRIS.

• Payment of Bonus with the modified formula in PLB schemes shall be continued only till the time a scheme for implementing PRIS is formulated.

• This should be done within the time period of three years, after which all incentives presently being paid in form of bonus, etc. shall be allowed only in form of PRIS.

• The Government may also implement the scheme of variable increments for all groups of employees to reward individual performances.

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Current updates:

To help pay fixation in new revised pay bands, instructions to fix pay has been issued by the Govt. and tables for each pay band has been released. Viewers can find these tables here.

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