Inflation, fitment factor or dearness allowance (DA) are not the only factors that will impact the salaries of central government employees under the 8th pay commission. A key but lesser-known element in pay calculations is the “family unit” formula – that estimate how much money an employee needs to support a household.
Now, during the ongoing 8th Pay Commission meetings, different employee bodies are recommending changes for existing family unit formula noting that it no longer reflect the realities of modern Indian families amid the concerns like rising food prices, education and medical inflation.
What is family unit formula?
Under pay commission, family unit represents an employee and their dependents, and based on that it tries estimate how much money a typical employee’s household needs to maintain a minimum standard of living.
The formula used for this is based on the Aykroyd formula, which estimates the minimum salary required to cover basic living expenses such as food, clothing and housing.
What is the current family unit formula under the Pay Commission?
The present system of treating a family as three units.
What changes the employee body recommends?
Employee unions have proposed that a family should be counted as five units for salary calculations. Under this formula, the employee and spouse would count as one unit each, two children as 0.8 units each, and parents as 0.8 units together — taking the total to 5.2 units, which has been rounded off to 5 units.
National Council of Joint Consultative Machinery (NC-JCM), during a recent meeting with the pay commission, cited legal obligations under the Maintenance and Welfare of Parents and Senior Citizens Act and the Social Security Code, 2020, which define ‘family’ to include dependent parents, and female employees can also include their parents-in-law as part of their family.
“The minimum pay computed by the Staff Side National Council (JCM) is ₹69,000 for a 5 unit family. Accordingly, the fitment formula for the existing employees and pensioners will be 3.833,” the JC-NCM memorandum said.
How it will impact salaries?
If the Pay Commission estimates that households are spending more on essentials such as food, rent, healthcare, transport and education, the minimum expenditure benchmark increases. As a result, salaries will also go up.
If the commission agrees to revise the assumptions around household spending, it could affect:
- minimum basic pay,
- fitment factor,
- allowances,
- pensions,
- and total compensation calculations.
The 8th Pay Commission is expected to affect more than 1.1 crore beneficiaries, including central government employees and pensioners, as well as their families.
So far, India has witnessed seven pay commissions. The First Pay Commission was established in January 1946, and since then, a new pay commission has generally been constituted every 10 years. The 8th Pay Commission was constituted on 3 November 2025.