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3 rd PAY REVISION COMMITTEE FOR EXECUTIVES AND NON-UNIONISED SUPERVISORS OF CPSEs

1. Role of Government & Uniform Wage Policies in CPSEs

Sr. No. Question Answer1.1 The 2nd PRC in the preface to its

report stated that ‘Finally, we feel that time has come when we should no longer look at all these CPSEs spreading over a vast spectrum with a common approach’. A decade has passed since then and in the present scenario what in your view should be the role of the Government with reference to wage policies in CPSEs.

Considering the basic purpose of creating Public Sector Undertakings i.e to play a role model to Private enterprises for Goal achievement with due consideration to the welfare of employees and the Society, the Government has to play a key role with reference to wage policies.Seeing the Government framework and guidelines within which CPSEs have to work, Government has a vital role in deciding the wages which are comparative to the best players in the industry so as to retain its employees and have an edge over the Private.

1.2 Flowing from the above, should there be some uniformity of pay scales among CPSEs, or should these decisions be left to the best judgment of the respective administrative Ministries and Boards of their CPSEs?

The uniformity in pay scales of CPSEs is very much essential as there are various types of CPSEs in India, functioning in different types of sectors like Power, Energy, Telecommunication, Core Industry, Manufacturing, Service oriented and other Sector CPSEs spread over varied geographical and climatic conditions. Each sector are having different nature of work and business which cannot be compared due to their different types of opportunities and constraints, some set of CPSEs may earn profits and some may get losses so, there should be some uniformity of the pay scales and perks. Non-maintenance of uniformity of pay scales may indulge in lots of avoidable litigations.This is on the same lines as being followed in Central Pay revisions where all departments right from civil services:IAS;IPS etc; Railways;

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Sr. No. Question AnswerPost & telegraph; Water resources, etc. are governed by common pay scales irrespective of Sector, Turnover, or Financial viability of the department.Therefore, there must be common pay scales and perks in all the CPSEs, at least, across same ministry otherwise a lot of anomalies would be created in various CPSEs.

1.3 As part of Government Policy for granting greater autonomy to the Boards of the CPSEs under Manaharatna, Nav Ratna and Mini Ratna Schemes, should here be separate pay scales for ‘Ratna’ CPSEs?

The creation of Maharatna, Navratnas, Mini Ratnas etc. was basically for granting greater autonomy to the board of CPSEs and has no distinction vis-à-vis pay scales as these are mere adjectives/ adjuncts as far as pay scale is concerned. Since the responsibilities shared by the executives at various levels in different CPSEs are similar, parity in pay and perks needs to be maintained across various CPSEsDistinction in pay scales on the basis of Maharatna, Nav Ratna and Mini Ratna status will create discontent and race of migration amongst employees from one CPSE to other for higher stature and it would be difficult for CPSEs in attracting and retaining the talent / manpower.

1.4 (a) Is the present system of classifying the CPSEs on the basis of Schedule i.e. ‘A’, ‘B’, ‘C’ and ‘D’ is satisfactory? If not, please suggest alternative ways of classification of CPSEs with adequate justifications.

(b)Once a system of classification is agreed, should uniformity of pay scales within each of the category be maintained? If not,

(a)It is felt that the present system of classifying the CPSEs on the basis of Schedule i.e. ‘A’, ‘B’, ‘C’ and ‘D’ is satisfactory, hence no need for reclassification is felt at present.

(b)The present system of uniformity of pay scales amongst Schedule ‘A’, ‘B’, ‘C’ and ‘D’ CPSEs is appropriate, and no change thereon is proposed.

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Sr. No. Question Answerreasons thereof and also suggest suitable alternatives.

1.5 In the absence of some degree of uniformity, isn’t there a risk of migration of talent from financially weak CPSEs to financially better off CPSEs thereby further jeopardizing future of the weak CPSEs. Will it also not lead to unhealthy competition amongst CPSEs to attract/retain the talent, which in the long run may act to the detriment of the public sector?

In the present scenario, the new generation employees have a plethora of career options. It is imperative that a parity of pay scales/system of PRP be maintained between CPSEs and also with respect to Private Organizations, in order to retain/attract talent and prevent CPSEs from facing a situation of continuous talent drain.

1.6 Would you suggest any changes in the existing relationship between pay packages of workmen and executives /supervisors immediately above the level of workmen.

There should be proper distinction in the pay scales between highest grade of workmen and the Executive/Supervisor immediately above the level of that of the highest grade of workmen to maintain a systematic wage differential in the organization.Broad guidelines needs to be issued covering range of pay scale from workmen to Executives such that Executives in the lowest grade must get higher pay scale than that of Supervisors in the highest grade and supervisor in the lowest grade must get higher pay scale than the highest grade of workmen.

2. Emoluments structure including Pay, Allowances and other facilities/benefits

Sr. No. Question Answer2.1 Over the years, the Central Pay

Commissions especially the 6th CPC advocated reduction in the number of pay scales. In the 7th CPC recommendations, however,

It is felt that the number of pay scales as per the existing system is apt and needs no enhancement. Inclusion of more pay scales in the existing system shall lengthen the hierarchy and thereby

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Sr. No. Question Answerthere were no further reductions. Do you feel whether the existing number of pay scales in the CPSEs should be retained or modified? Please give your suggestions.

restrict faster movement of an executive to Board Level positions in CPSEs. However respective boards may be empowered to create intermediate pay scales.

2.2 What should be the minimum and the maximum pay in CPSEs? What should be the reasonable ratio between them?

Minimum basic pay Rs. 60,000/- and maximum pay Rs.7,20,000/- i.e. ratio of 1:12 is proposed for consideration.While Coining New Pay Scales it should be so ensured the minimum of the scale so fixed should not be less than the amount arrived at by adding Fitment amount on Pay + DA to avoid Pay loss to the new entrants.

2.3 What in your opinion is the desirable ratio of pay scale between top level and entry level?

1:12

2.4 What is the expected ratio of manpower cost to cost of production/sales turnover in your industry?

Cost of manpower to cost of production varies from industry to industry. In hydro power cost of generation is reduced in long run so it can’t be comparable & linked.The various establishments of HydroPower station like Dam, Power House, Intakes, Reservoirs, Gauging sites are scattered in a large distance ranging to 30-50 Kms thereby necessitating large manpower requirement and rendering the implementation of manpower cost to cost of production/sales turnover ratio unviable in this type of Industry.Moreover NHPC being a CPSE owned by the central govt has to carry out various social obligations of the govt without considering the cost factor particularly in disturbance / militancy area in J&K state,

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Sr. No. Question AnswerNE regions and remote & far flung locations on pan India basis. So it is difficult to fix any such ratio of manpower costs to sales turn over in the present set up.

2.5 What should be the method of fixing pay in the revised pay scales? Should there be a point-to-point fixation? If not, please suggest an alternate method with illustration by which it can be ensured that persons with longer service are suitably protected.

There should be point to point fixation in the revised pay scales. That will ensure that seniors are not at a disadvantage vis-à-vis their juniors and due weightage is given for the longer service rendered by the former.

2.6 What should be the pattern of pay scales of Board Level Executives?

The pay pattern of Board Level executives should be such that it could attract the best of the talents from Government Sector as well as the Corporate world.

3. Increments

Sr. no. Question Answer3.1 Should the rate of increment be

fixed as absolute value or based on percentage basis?

The rate of increment should be based on fixed percentage basis only.

3.2 What should be the rate of increments in respect of different scales of pay?

The rate of increment should be 6% across all the scales.

3.3 Should the present system of granting one stagnation increment after every 2 years, subject to a maximum of 3 such increments for those executives who reached the maximum of their scale be continued? Please give your views.

Increment should be continued every year/annually after attaining stagnation without any limit to the maximum number of increments to keep the employee constantly motivated.

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3.4 Should the date of increment be uniform for the employees of CPSEs as in the case of Central Government employees?

Yes it should remain uniform for all employees.

3.5 What should be the increment on promotion?

To demarcate the Annual Increment from the Promotion, which is a stage of elevation for , shouldering more responsibility, on promotion the Executive should be entitled to minimum of Three increments.

4. Compensation of the Emoluments package

Sr. No. Question Answer4.1 Is it preferable that the

compensation package includes pay and perks or clubs them into a consolidated remuneration?

It should always be pay plus allowances and

perk.

4.2 Is the present system of ‘Cafeteria Approach’ of choosing from a set of perks and allowances within the overall ceiling of 50% of Basic Pay Satisfactory? If not, kindly give your suggestions for further improvement?

Perks are essential in boosting the performance of employee and some perks should be made essential for all CPSUs. Cafeteria ceiling for minimum of 50% of basic plus dearness allowance be considered.

4.3 Do you have any comments/suggestions with reference to the following: Classification of Cities and

rates of HRA for different class of cities

DA neutralization for those who are on IDA pattern of scales

Company leased accommodation

The classification of cities may done as per Government instructions issued from time to time. The rates of HRA may be based as Percentage of BP + DA, keeping in view the basic standard of living in metro cities.

The existing system of 100% DA neutralization may continue.

Company leased accommodation facility should continue as self

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Sr. No. Question Answer

Monetisation of facilities availed from the infrastructure like schools, colleges, hospitals, clubs/recreation facilities etc. created by CPSE.

Allowances to be kept outside the ceiling of 50% or whatever rate to be decided

Hardship allowance and criteria for defining hardship.

lease/Third party lease with due rate enhancement in accordance with the inflation / prevalent market.

NHPC have to develop bare minimum facilities for basic education and primary health in the remotely located project areas. These facilities are very basic in nature and are also as a part of social responsibility and widely used by the locals. So monetization of these primary amenities is not justified.Infrastructure facilities being provided contribute towards the socio economic development of the area, upliftment of the vulnerable sections of the area and therefore this cost is not just borne for the employees but for the local society as a whole. Therefore, monetising of such facilities being provided,would create a barrier and become a disincentive for spending on the development of the local area.

Canteen allowance; Transport allowance; LTC allowance should be kept outside the ceiling of 50% allowances.Further, LTC for overseas holidays may also be considered for motivation of the employees and their families

Following parameters may be considered to draw hardship index and based on hardship index, hardship allowance may be decided Distance from Rail head Elevation of the location

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Sr. No. Question Answer Population density Extreme Climatic conditions Law and order situation in the area Infrastructure facilities viz

health,education, entertainment etc.Existing local hardship allowance needs to be enhanced to minimum 20% against at present 10%.

5. Variable Pay/Performance Related Pay

Sr. No. Question Answer5.1 Should there be fixed salary and

a variable component which is related to the performance of the individual. If so, what should be the amount/proportion?

There should be fixed salary, however the variable component in the form of PRP should continue with the proposed revised variable component.In PRP 80% component should be fixed and 20% component should be variable.20% variation may be decided based on performance of individual.

5.2 What in your opinion should be the basis/criteria for granting performance related pay?

The PRP formula should be ADDITIVE type instead of Multiplicative type with fixed and variable component as above.

5.3 Whether performance related payment be allowed on the basis of distributable profit of the Enterprise? Section 8 companies under the Companies Act, 2013 by definition are not for profit companies and if PRP is linked to distributable profit, their employees are denied performance incentives. How to reward the performance in Section 8 companies?

Sometimes due to some uncontrollable circumstances incremental profit of the company is affected where employee of the company doesn’t have any role. So PRP should only be linked with total profit of the company.i.e. minimum 10% of the PBT be considered.

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5.4 How do you rate the present system of PRP in vogue? Give your comments/suggestions in respect of each of the following: Rates i.e. % of Basic Pay

payable as PRP at different grades in different schedules of CPSEs

Weightage for different MoU ratings

Proportion and ceiling of PRP to be given out of current PBT and incremental PBT of a CPSE

Performance Management System

It should be varying between 100% to 400% of Basic pay +D.A

Yes due weightage must be given for various MOU ratings.

The proportion and ceiling of PRP to be given out of Current PBT .

Forced rating should be abolished. Bell curve approach to be removed.

5.5 What are your views on Bell Curve approach being followed currently under the PMS? Give your suggestions for improving the PMS.

In the recent years, the Bell Curve approach is being abandoned by many MNCs, both in India and abroad, being a method of forced ranking system which cannot evaluate the true performance of the professionals. Continuous evaluation throughout the year should be done to ascertain the performance of the employees.

5.6 Any suggestions to incentivize performance and to have a more equitable system.

Nil

6. Recruitment, Promotion, Attrition

Sr. No. Question Answer6.1 What is the number of executives

leaving in each category during the last 5 years and its percentage to the total strength in the concerned category? Is it comparable with other CPSEs and Private companies operating in

As per HR data.

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the same sector? What could be the main reasons for their leaving your CPSE?

6.2 What is the system of recruitment of management trainees or equivalent levels in your organization?

In line with Government /Corporation

6.3 Are you recruiting management trainees through campus recruitment? If so, please indicate the names of institutions from which such campus recruitments have been made and criteria for identifying the institution.

As per HR data.

6.4 What is the current promotion policy in your CPSE and there any changes in the offing?

Presently promotions are done considering the vacancies available at the year end only, however, same should be done considering bi-annually the vacancies created during the course of time so as to minimize the duration of any vacant position, and facilitate to achieve unhindered progress.

6.5 Does your CPSE have a ‘Succession Planning’ in place? If so, please mention important points.

The succession plan of NHPC is not in place, presently. However, it must be planned for effective management.

7. Relativity with Government/Private sector/Multinational Corporations

Sr. No. Question Answer7.1 Should the new compensation

packages in CPSEs w.e.f. 01.01.2017 onwards be based on the packages as they now exist, with some percentage increase, or would you suggest any other method?

CPSE’s are competing with MNC’s and private sectors so pay package of CPSE’s must be higher than that of government employee and comparable with private sector.

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7. Relativity with Government/Private sector/Multinational Corporations

Sr. No. Question Answer7.2 Should CPSE pay scales and

allowances have any linkage to the pay scales and allowances in the Government? If so, what are your suggestions?

Yes, To some extent. While the CPSE having pay scales and allowances on IDA pattern should have some definite linkage to the pay scales and allowances in the government (as the pension is the liability of government in NHPC), the growing Private Sector and the competition of CPSEs with this sector has also to be kept in view to keep the attrition from CPSEs at the lowest.

7.3 How do the current compensation package in CPSEs compare with their competitors in private sector or multinationals?

Not attractive at all, It needs to match with the packages of multinationals to attract high level talent from the market.

Compensation package for Board level executives shall be kept at par with CEO’s of private sector to get the best talent available in the competitive market.

7.4 Taking into account the advantages other than pay, derived by employees in CPSEs vis-à-vis the private sector like security of tenure, promotional avenues, retirement packages, housing and other invisibles, can there be any fair comparison between the salaries of public and private Sector?

All the facilities given in CPSEs can be quantified and it can be seen that even these benefits do not make up with that of the higher emoluments; cash benefits; and non-monetary benefits etc received by the Private Sector employees.

7.5 If parity of emoluments for CPSEs with that of private sector is recommended, what changes in CPSEs in terms of performance targets, evaluation, accountability and other conditions of service etc., shall be insisted?

CPSE’s are competing with MNC’s and private sectors within the framework of rules and guidelines of government and also work as a social sector, so pay package of CPSE’s must be higher than that of private sector.

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8. Issue of resource constraint and Pay revision in Sick/BIFR referred CPSEs

Sr. No. Question Answer8.1 Given the problem of resource

constraints and the existing ‘Affordability’ clause in adopting revised pay packages, is there a way of bringing improvements in emoluments so as to attract and retain talent in CPSEs?

For Sick/BIFR CPSEs

8.2 In case of non-affordability, can the enhanced package be deferred and linked to the future performance of the CPSEs? How can the employees be rewarded without a direct or immediate burden on the organization? Schemes like stock option provide an appreciation in the value of the holdings of the employees through the capital market mechanism – what other schemes of this nature can be suggested?

8.3 What should be the pay revision policy for sick / incipient sick / weak CPSEs?

9. Long term Incentives and Superannuation benefits

Sr. No. Question Answer9.1 Based on the earlier PRC, it was

prescribed that 10-25 % of the PRP shall be given as ESOP. Has your company implemented this? Please give details and suggestions for improvement.

No, NHPC Ltd has not implemented the system of distributing of certain percentage of PRP as ESOP.

Present PRP system in form of cash payment should continue.

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9.2 Can the ESOP be an option for deferred implementation / payment of revised package?

No, not at all.

9.3 Do you think that any change is required in the existing policy of granting 30% Basic Pay plus DA as superannuation benefits? If so give detailed comments /suggestions.

Minimum 40% of Basic plus DA should be made mandatory and Upper Ceiling should be removed and it should be ensured the implementation of these recommendations from all CPSEs as it is related with social security of the employees.

9.4 What should be the gratuity ceiling?

No ceiling should be kept.

9.5 What should be the policy regarding leave encashment at the time of retirement on superannuation?

The existing system of leave encashment upto a maximum ceiling of 300 (Earned leave and Half pay leave combined) at the time of retirement on reaching the age of superannuation needs reform. All types of leaves accumulated at the time of retirement on superannuation may be quantified and made encashable.

10.Voluntary Retirement Scheme

Sr. No. Question Answer10.1 In addition to the VRS, would you

like to suggest any other ways to rationalize manpower?

Allowing of Pre-mature retirement on completion of 20 years of service should be considered.Employees may be allowed to avail deputation services to other Govt./ Pvt. Sectors On Lien may also be permitted for exploring Start-up business as being promoted by the Government.

10.2 Whether VRS scheme issued by DPE and amended from time to time should continue or VRS package should be modified? If yes, indicate the suggestions?

No comments

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11.Specific Proposals

Sr. No. Question Answer11.1 How the functioning of CPSEs can

be improved so as to make them more professional, citizen-friendly and delivery oriented?

More liberty to take decisions at the level of Board of Directors irrespective of category of CPSE. Resources should be made available collective responsibility should be fixed. Citizen Charter should be made compulsory for all service providers.

11.2 11.2 Please outline specific proposals, which could result in:

(a) Reduction and redeployment of staff

(b) Reduction of paper work(c) Better work environment(d) Economy in expenditure(e) Professionalization of

services(f) Effective grievance

redressal mechanism(g) Reduction in litigation and

grievances on service matters

(h) Better delivery of services/product by CPSEs to their users

(a) Pre mature retirement on completion of 20 years of service may be allowed.

Deputation & Lien services at various level may be allowed.

For better coordination among PSUs, in same as well as different Sector/Govt., and for attracting Knowledge & Skill etc, 5% pool of vacancy for E3 and above should be kept for sharing, as being done in Civil Services etc.

(b) Optimum use of ERP system, recognition of e-mail and other net based applications be emphasized upon.(c) Performance and target oriented culture with variable time frame according to industry requirement may be adopted.(d) The expenditure can be curtailed by

11.3 The concepts of contractual appointment, part-time work, flexible job description, flexi time etc. are expected to change the environment, provide more jobs and impart flexibility to the working conditions of employees? Share your experiences.

To have a check on accountability, contractual appointment may be avoided in core competency areas. Only support services may be utilized on contract basis.

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