7th Pay Commission recommendations on Bonus Schemes

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7th Pay Commission recommendations on Bonus Schemes

Bonus Schemes and Performance Related Pay

Bonus Schemes in the Central Government : Apart from DAE/DoS, there are bonus payments to Group `B’ (non-gazetted) and Group `C’ Central Government employees. The bulk of these employees are covered under the Productivity Linked Bonus (PLB) Scheme, which is implemented in Railways, Posts and Telecommunications, production units under the Ministry of Defence and other establishments

The system of Performance Linked Bonus (PLB) and Ad hoc Bonus have been prevalent in the Central Government for a fairly long time. Therefore, for the replacement of the existing bonus schemes with any other incentive scheme, prior consultation with the stakeholders was considered essential.


The Commission notes that since PRIS could not be implemented, it could not supplant the existing system of Performance Linked and Adhoc Bonus Schemes.

The Commission also recommends that the PRP should subsume the existing Bonus schemes. The Commission notes that there could be a time lag in implementing the Performance Related Pay by different departments. Till such time, the existing Bonus Schemes should be reviewed and linked with increased profitability/productivity under well-defined financial parameters

The Commission feels that there is strong need to create a culture of performance in government – from establishing standards of performance, to measuring, and promoting people based on performance. To emphasize on the culture of performance, the Commission has recommended that all the non-performers in the system should be phased out after 20 years.

The Commission has recommended that Performance Related Pay should be introduced in the government and that all Bonus payments should necessarily be linked with productivity.
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