Cabinet greenlights Terms of Reference for 8th Central Pay Commission

THEBUSINESSBYTES BUREAU

NEW DELHI, OCTOBER 28, 2025

The Union Cabinet, under the leadership of Prime Minister Narendra Modi, has officially approved the Terms of Reference for the 8th Central Pay Commission, marking a significant milestone in the ongoing efforts to review and reform the salary structures of Central Government employees.

The newly formed 8th Central Pay Commission will operate as a temporary body, tasked with examining the salaries, benefits, and service conditions of government employees. It will be headed by a Chairperson, with a part-time Member and a Member-Secretary. The Commission is expected to deliver its final recommendations within 18 months of its formation, though interim reports may be issued on specific issues as needed.

Key factors guiding the Commission’s work will include the economic health of the nation, fiscal responsibility, and the ability to allocate sufficient funds for development and welfare programs. Additionally, the Commission will take into account the financial impact on state governments, who often adopt the Commission’s recommendations with certain modifications. Other considerations will include the working conditions and benefits offered by Central Public Sector Undertakings and the private sector, providing a holistic approach to the restructuring of pay and benefits.

This marks the latest phase in a long-standing tradition, where the Central Pay Commission is periodically appointed to review and recommend changes to the pay, pension, and retirement benefits of government employees. Following a decade-long gap since the last review, the 8th Commission’s recommendations are anticipated to take effect from January 1, 2026, continuing the trend of reforms typically introduced every ten years.

The formation of the 8th Central Pay Commission was first announced in January 2025, with the goal of addressing the evolving needs of Central Government employees and adapting their compensation to meet contemporary economic realities.