8th Pay Commission: Why Pay Matrix replaced Pay Bands and Grade Pay for Central Govt Employees in 7th CPC

Central Government Employees expect that the 8th Central Pay Commission (CPC) will work out a "comprehensive revised pay packet" for them with effect from January 1, 2026.

The 7th CPC introduced the Pay Matrix to replace the running Pay Bands and Grade Pay recommended by the 6th Pay Commission.

In the lead-up to the 8th Pay Commission, this article looks at why the 7th CPC replaced the Pay Bands and Grade Pay with the Pay Matrix.

The problem with Pay Bands

The 6th Pay Commission had replaced Pay Scales recommended by the 5th Pay Commission with running Pay Bands and Grade Pay, which worked as the status determiner or the fitment factor.

The 6th CPC had announced that the Grade Pay of Central Government Employees would be equivalent to 40% of the maximum of the pre-revised scale. However, calculations revealed variations in salaries.

The 7th Pay Commission noted in its report that the difference in salaries "became more pronounced in Pay Band 4 as compared to the other three pay bands." This caused variation in fitment factors for various levels and promotional benefits.

A similar pattern was also seen in the fixation of pensions. Given these variations, the 7th CPC decided to replace the Pay Bands and Grade Pay-based pay structure with a new Pay matrix.

The solution

The 7th CPC removed the system of running Pay Bands and Grade Pay and proposed new functional levels by merging Grade Pay with the pay in the Pay Band. "All of the existing levels have been subsumed in the new structure; no new level has been introduced nor has any existing level been dispensed with," the 7th CPC said.

The 7th CPC highlighted two more issues with the Grade Pay and Pay Bands-based pay structure:

• First, the pay structure based on Pay Scales (existing before the 6th CPC) or Pay Bands indicated the "definite boundaries within which the pay of an individual could lie." However, it was difficult to be sure of the exact salary of an employee at any given point of time.

• Second, with the Grade Pay and Pay Bands-based system, it was also difficult to estimate how the career progression of an employee would fan out in terms of pay over a period of time. More so, because various cadres are designed differently and the relative pay progression also varies.

Therefore, 7th CPC said that the new pay structure in the form of Pay Matrix would provide complete transparency about pay progression.

"The Commission has designed the new pay matrix keeping in view the vast opportunities that have opened up outside government over the last three decades, generating greater competition for human resources and the need to attract and retain the best available talent in government services," it said.