HRA should be paid @ 35, 25 and 15% of pay – BPMS

REF: BPMS/Cir/17th TC/ 11

Dated: 02.11.2016

To,

The President/General Secretary

Unions Affiliated to the Federation

& Office Bearers & Executive Committee Members

BPMS

Subject: Agitational Programme to be held from 05.12.2016 to 09.12.2016.

Dear Brothers and Sisters,

It is hoped that all of you are well and busy in accelerating trade union activities. Under the banner of Government Employees National Confederation, we continuously demanded for removal of anomalies related to pay fixation, bonus, income tax, recommendations of Pay Commissions but the Governments did not pay any heed to our genuine demands and it is leading discontentment amongst the employees. Therefore, Government Employees National Confederation has decided that all the constituent Federation of GENC will observe an agitation programme throughout the country from 05.12.2016 to 09.12.2016.

Being a constituent of GENC, this federation BPMS has decided that all the affiliated unions will organize agitation programme from 05.12.2016 to 09.12.2016 like Gate Meeting, Slogan Shouting, Dharna etc. On 09.12.2016 a memorandum should be submitted to their respective Heads of the establishment addressed to Hon’ble Prime Minister of India mentioning the following demands:

1. Minimum Pay should be fixed Rs 24,000/- and fitment formula should be 3.42 in place of 2.57.

2. Under MACP Scheme, 05 financial upgradation should be granted in promotional hierarchy in the service of 30 years.

3. Annual Increment should be @ 5% in place of 3%.

4. The Benchmark ‘very good’ should be abolished for granting of promotion, financial upgradation and annual increment.

5. The Grade pay of Group ‘C’ Rs 1900/- and Rs 2000/- should be merged and upgraded to Rs 2400/-.

6. HRA should be paid @ 35, 25 and 15% of pay.

7. New Pension Scheme should be scraped.

8. FDI should be scraped in Defence and Railway.

9. Bonus should be calculated on Rs 18,000/- in place of 7,000/- because minimum pay has been enhanced from 7,000/- to 18,000/-.

10. Income tax exemption limit (tax free income) should be extended to Rs 8,00,000/-.

11. The wards of employees died in harness should be guaranteed with 100% compassionate ground appointments.

Thanking you

Sincerely yours

(M P SINGH)

General Secretary

Copy to:

1- The General Secretary BMS, New Delhi

2- Shri K.N.Sharma, I/C BPMS, Lucknow For information

3- The Secretary General, GENC, Kanpur

Source: http://bpms.org.in/documents/circular-11-k2dn.pdf

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Non Payment of HRA as per the Rates Recommended by 7th Pay Commission – A Great Disappointment

Non Payment of HRA as per the Rates Recommended by 7th Pay Commission – A Great Disappointment

The Seventh Pay Commission submitted its report to the Central Government in November 2015. Among the most eagerly-anticipated topics was the recommendations regarding the House Rent Allowances. Typically, an employee spends more than a third of his/her salary on house rent. Keeping in mind this huge and unavoidable expense for Central Government employees living in major cities, the Sixth Pay Commission had recommended that 10, 20 and 30 percent of the Basic Pay be given as HRA.

The various Central Government employee unions and Federations requested the Seventh Pay Commission to recommend to the government that the percentage of HRA be increased. To everybody’s surprise, the Seventh Pay Commission recommended that the government reduce the HRA to 8, 16, and 24 percent. Although many reasons were given for this recommendation, the employees were hugely disappointed. Since the recommendations will be applied for the next ten years, there was a strong demand for the previous HRA levels to continue. As a consequence, all the Central Govt Employee’s Federations began to put pressure on the Central Government to increase the percentage of HRA. This also became one of their most important demands.

The Central Government, meanwhile, bought time for itself by announcing the formation of an Empowered Committee to look into the recommendations of the Seventh Pay Commission. There is no news about the Empowered Committee report, as of this date.

On June 29, the central cabinet gave its approval to the recommendations of the Seventh Pay Commission. It was announced that a committee would be constituted under the leadership of the Finance Secretary, to look into the issue of various allowances, including the HRA. The committee would be advised to present its report in four months. Until then, HRA will be issued as per the pre-revised pay and rates.

During the negotiations that were held to prevent a nationwide indefinite strike(July 11), this issue was discussed in detail. The government agreed to constitute a high-level committee. It was said that the government had “indirectly accepted” the recommendations made by the high-level committee regarding the HRA.

On July 25, the government confirmed the implementation of the Seventh Pay Commission by publishing it in the official Notification & Gazette. There was no change regarding the HRA.

The employees meanwhile recollect, with surprise, the four months’ time that was given to the special committee for discussing the HRA issue. The announcement that the Sixth Pay Commission recommendations will be followed until the committee announces its decision, is considered to be the biggest disappointment of them all.

HRA plays the most important role in salary increment. The employees feel that as per the percentages recommended by the Seventh Pay Commission, the HRA should be given from this month’s salary onwards. Some feel that the arrears in the HRA could have been paid later.

Why is the government hesitating to implement it?

Source:http://7thcpctools.in/7th-central-pay-commission/non-payment-of-hra-as-per-the-rates-recommended-by-7th-pay-commission-a-great-disappointment/

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Analysis and Recommendations of 7th Pay Commission on House Rent Allowance

Analysis and Recommendations of 7th Pay Commission on House Rent Allowance

Allowances related to Housing : House Rent Allowance (HRA) : Presently, HRA is payable at the following rates:

There are a large number of demands for paying HRA as a percentage of (Basic Pay + DA), instead of as a percentage of Basic Pay alone, as at present. Representations have also been received regarding enhancement of percentage rates and having only two classifications of Metros and Non-metros (instead of the present classification of X, Y and Z cities).

PBORs of uniformed forces have vehemently argued for doing away with the concept of Authorized Married Establishment and the requirement of a minimum age of 25 years for grant of Compensation in Lieu of Quarters (CILQ).

Analysis and Recommendations: Compensation towards the housing needs of Central Government employees is covered in three ways:

1. As a component of Basic Pay when it is initially fixed (based upon the Aykroyd formula)

2. As a constituent of Dearness Allowance [the AICPI(IW), on which the DA is currently based includes a weight of 15.27% towards housing], and

3. In the form of House Rent Allowance

In view of the fact that the DA calculation methodology that is being followed does include a certain weightage for housing, the demand to pay HRA as a percentage of Basic Pay + DA is not justified.

To arrive at the appropriate rates of HRA, the Commission used a two-fold approach: (i) It compared the rise in housing compensation with the cost of housing in major X, Y and Z category cities over the period 2006 to 2013, and (ii) It compared, de novo, the HRA after the rise in Basic Pay proposed with representative house rents in major X, Y and Z category cities.

For (i) above, the table of comparison (for a hypothetical employee whose Basic Pay was ?1000 in 2006) is given below:

As is clear from the above table, compensation for housing in 2013 was 1.79 times that in 2006 for Class X cities, 2.07 times for Class Y cities and 2.92 times for Class Z cities.

During the same period, the weighted (by population of cities) average rise 31 in housing index for Class X cities was 1.69 times, for thirty most populated Class Y cities it was 2.10 times, and for twenty-five most populated Class Z cities it was also 2.10 times.

Thus, it can be safely concluded that the rise in housing compensation has largely kept pace with the rise in rental values in all categories of cities.

However, if a zero-based comparison of HRA with house rents is carried out the Commission observed that today there are websites that give a good idea of the prevalent house rents in various cities. From the information available on the websites, it was observed that with the increase in Basic Pay proposed (and consequent rise in HRA with the rationalized percentages), most of the employees will be able to afford a rented house as per their

entitlement.

Considering all these factors, and in line with our general policy of rationalizing the percentage based allowances by a factor of 0.8, the Commission recommends that HRA should be rationalized to 24 percent, 16 percent and 8 percent of the Basic Pay for Class X, Y and Z cities respectively.

However, the Commission also recognizes that with the current formulation, once the new pay levels are implemented, the compensation towards HRA will remain unchanged until such time as the pay and allowances are next revised. Going by the historical trend this event is likely to be a decade away. Some representations have been received stating that towards the later part of the ten year period the HRA compensation falls considerably short of the requirement. Having regard to this, the Commission also recommends that the rate of HRA will be revised to 27 percent, 18 percent and 9 percent when DA crosses 50 percent, and further revised to 30 percent, 20 percent and 10 percent when DA crosses 100 percent.

Currently, in the case of those drawing either NPA or MSP or both, HRA is being paid as a percentage of Basic Pay+NPA or Basic Pay+MSP or Basic Pay+NPA+MSP respectively. HRA is a compensation for expenses in connection with the rent of the residential accommodation to be hired/leased by the employee and is graded based on the level of the employee, and therefore should be calculated as a percentage of Basic Pay only. Add-ons like NPA, MSP, etc. should not be included while working out HRA.

The Commission also took note of the link between increase in HRA and increase in house rent. There was a sharp rise in the index from the first half of 2009, immediately following VI CPC recommendations. The All India House Rent Index32 chart given below demonstrates this:

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