The government has notified TOR under the 8th Pay Commission.
The Cabinet chaired by Prime Minister Narendra Modi has approved the Term of Reference (TOR) for the 8th Central Pay Commission (CPC). After which, the wait of more than 1 crore government employees and pensioners is now over. The Commission is expected to submit its recommendations within 18 months from the date of its constitution.
Central Pay Commissions are constituted from time to time to review various aspects of the salary and pension framework, retirement benefits and other service conditions of Central Government employees and pensioners and make recommendations on necessary changes. Generally, the recommendations of each Pay Commission are implemented at an interval of about ten years.
Although the Cabinet had approved the formation of the 8th Pay Commission in January this year, the delay in finalizing the ToR had created concern and uncertainty among central government employees and pensioners. Many people now have only one question in their mind: What are the Terms of Reference i.e. TORs, why are they important, and most importantly, when will the new salary structure be implemented?
What are ToR?
The ‘Term of Reference’ is basically a blueprint for the functioning of the Pay Commission. It outlines the scope of work and the specific areas where the Commission is expected to make recommendations, ranging from basic salary structure, allowances and pension revisions to retirement benefits and service conditions. Without TOR, the Commission has no formal instructions or legal mandate to function. In reality, no Chairman or Members can be appointed, and on paper the Commission is considered non-existent.
The Term of Reference serves as the basic document of any pay commission. It not only sets the agenda, but also deadlines and expectations. In the absence of TOR, the Commission cannot collect data, interact with stakeholders, or analyze economic parameters. Thus, this delay not only disrupts internal administrative planning but also dashes the expectations of the employees waiting for timely implementation of the revised salary structures.
When will the new pay commission be implemented?
Since the ToR for the Eighth Central Pay Commission has been notified today (October 28, 2025), the panel is expected to submit its report within 18 months, i.e. by April 2027. After the review is submitted, the government usually takes about 6 months to review and implement the recommendations. This means that the revised salary structure may actually come into effect by the end of 2027 or early 2028, although it will be effective retrospectively from January 1, 2026.
While making recommendations the Commission will keep in mind the following points:
- The economic condition of the country and the need for fiscal prudence.
- The need to provide adequate resources for development expenditure and welfare measures.
- Unfunded cost of non-contributory pension schemes.
- The potential impact of the recommendations on the finances of state governments, which generally adopt the recommendations with some modifications.
- Prevailing salary structure, benefits and working conditions available to employees of Central Public Sector Undertakings and Private Sector.