Annual Increment on Salary of Government Employees and Its Effects

What is Increment: Increment means increase in size, volume and structure. Anything gained may be termed as increment.

For a salaried person, an increment usually represents a portion of what the employee earns per year. Employers use increments to increase or decrease base salaries or to award bonuses. Employees use them as a benchmark to either negotiate a pay increase or a starting salary with a new employee.

It's important to give employees raise on a regular basis because it shows that you value them and their contributions to the company. A simple pay raise can boost morale, increase employee satisfaction, and encourage hard work. Raises are important.

In Government sector, there are fixed increments for employees as per prescribed pay scales. These increments gradually increase from Basic Pay Scale 01 to 22.

Stages of Increment

Annual increments have prescribed stages for BS-01 to BS-16 there are 30 stages, for BS-17 to BS-19 there are 20 stages and for BS-21 to BS-22 there are 14 stages. Stage means number of increment one employee may get in one basic pay scale.

Who is Entitled for Annual Increment

All the employees who are in job or join it on or before 30 May every year are entitled for annual increment which is added in pay scale on 1^st December every year. Those who join job on or after 1^st June are not entitled for annual increment. They have to wait for one year to enjoy the benefit. Sometimes, Government may award special increment as a goodwill gesture.

Upon promotion of a government employee, pay is adjusted in next pay scale in next higher stage with respect to basic pay which is also considered as increment.

Effect of Annual Increment in Service Employees

We all know that Basic Pay is the base of the salary of a government employee and all incentives which are known as Allowances are based on the strength of the Basic pay. In other words, it may be said that higher is the basic pay more is the result of increase on the allowances which are directly varied with basic pay such as adhoc relief allowance, social security allowance and other allowances of such types.

For example, if an employee is getting Basic Pay Rs.34000 and is eligible for increment on 1^st December the effect of increase of increment on his pay may be calculated as under:

Basic Pay: 34000
Increment: 2500 (supposed value)
Basic Pay: 36500 (after increment)

Let suppose he is getting Adhoc Relief Allowances 2017, 2018 and 2019 @ 10% of running basic pay then his adhoc allowances shall also increase in following manner:

Before increment:
Basic Pay: 34000
Adhoc Allowance 2017: 3400
Adhoc Allowance 2018: 3400
Adhoc Allowance 2019: 3400

After increment:
Basic Pay: 36500
Adhoc Allowance 2017: 3650
Adhoc Allowance 2018: 3650
Adhoc Allowance 2019: 3650

Net increase: 5250

All such allowances which are on running basic pay shall also increase on grant annual increment such as 30% social security allowance, judicial allowance, secretariat allowance etc.

Effect of Annual Increment for Retiring Employees

If a government employee is planning his retirement, he always keeps in mind the grant of Annual Increment before retirement as it has long and everlasting effect of what he will get after retirement.

Here we shall try to understand the effect of annual increment on pension calculations:

Before increment
For example, if an employee is getting Basic Pay Rs.34000 and is eligible for increment on 1^st December the effect but he opts for retirement before grant of increment then his pension shall be:

Basic Pay: 34000
Pension: 22100 (minimum) per month

After increment
Basic Pay: 36500
Pension: 23725 (minimum) per month

Net Difference per month: 1625 minimum