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Notional pay fixation

Notional pay fixation deems pay fixed at a higher stage from a back date for pension, seniority and increments, without paying arrears for the notional period.

Updated 17 July 2026 · Reviewed by Salary-Calculator.in

Notional pay fixation is the fixing of an employee’s or a pensioner’s pay on paper, at a higher stage or in a revised scale, from an earlier date, without the money for that back period being paid. The higher pay is deemed to exist for the limited purpose of computing a later entitlement, most often a pension , the date of an increment, seniority or a terminal benefit. It stands in contrast to actual, or monetary, fixation, where the pay is real and the arrears for the past period are paid in cash. The whole device exists to separate the computation of a benefit from the cash outflow on it.

The concept runs through a great deal of pay and pension administration, and it is easy to misread an order that grants only a notional benefit as though it granted arrears. This article explains what notional fixation is, how it differs from actual fixation, its main uses, the way the pension of pre-2016 pensioners is revised on notional pay, the important point that notional seniority does not by itself carry notional pay, and the general limitation of arrears.

What notional fixation means

To fix pay notionally is to record, for calculation only, that the pay stood at a particular figure from a particular date, without actually paying that figure for the intervening period. The employee or pensioner does not receive the difference as arrears for the notional period. What they receive is the effect of the higher figure on whatever is being computed: a higher pension, an earlier date of next increment , a place in a seniority list, or a larger terminal benefit.

Because the higher pay is only deemed, a notional fixation is a paper exercise. It changes the base on which the future entitlement is worked out, but it does not, of itself, put money in the hand for the past.

Notional versus actual fixation

The distinction is between two kinds of benefit:

  • Actual, or monetary, fixation. The pay is really drawn from the effective date, and any arrears for the period from that date are paid in cash. This is the ordinary pay fixation an employee gets on promotion or on a pay commission.
  • Notional fixation. The pay is only deemed fixed, for the purpose of a later calculation, and no arrears are paid for the notional period.

A very common pattern combines the two: pay is fixed notionally from an earlier date, so that pension and increments are worked out on the higher figure, while the actual money flows only from a later cut-off date set by the order or the court. Reading which of the two an order grants is the single most important thing about it.

The main uses

Revision of pension of pre-2016 pensioners

The largest use of notional fixation is in pension. Under the 7th CPC, the pension of everyone who retired before 1 January 2016 is revised by notionally fixing their pay in the 7th CPC pay matrix , in the level corresponding to the pay scale, pay band and grade pay at which they retired. The notional pay is stepped forward through each intervening pay commission, from the 4th to the 5th, the 5th to the 6th and the 6th to the 7th, using the fitment formula of each. The revised pension is 50 per cent of that notional pay, and the family pension is 30 per cent, with effect from 1 January 2016.

This method comes from the Department of Pension and Pensioners’ Welfare Office Memorandum No. 38/37/2016-P&PW(A) dated 12 May 2017, which adopted what the 7th CPC had called Option 1 for pre-2016 pensioners. Because stepping the pay through several pay commissions by hand is laborious, the Department issued concordance tables, numbered 1 to 58, by an order of even number dated 6 July 2017. A concordance table gives the notional pay directly from the basic pay drawn at retirement. Where a table conflicts with the underlying rules, the rules prevail, and the notional pay is then fixed under the fixation rules of the intervening pay commissions. This entire exercise underpins the revision of pre-2016 pensioners’ pension .

Court-ordered and ante-dated cases

Notional fixation is the standard relief in service litigation where a benefit is due from a back date but full arrears are not intended. A reinstated employee, or one wrongly superseded for promotion, is often granted notional fixation of pay and increments from the earlier date so that the higher pay counts for terminal benefits, while the arrears are limited or withheld. Similarly, on an ante-dated promotion, where a departmental promotion committee acts late, the pay may be fixed notionally from the date a junior was promoted, with actual pay from the actual date of joining the higher post. The notional increment on superannuation granted to those retiring on 30 June or 31 December is itself a notional fixation of exactly this kind, added only to raise the pension.

Notional seniority does not carry notional pay

A point that is frequently misunderstood is that notional seniority and notional pay fixation are separate. A person may be granted notional seniority from an earlier date without any notional fixation of pay, and the grant of notional seniority does not automatically carry a notional fixation of pay from the date of that seniority. Equally, a notional pay fixation may be granted without arrears. What exactly is granted, notional seniority, notional pay, arrears, or some combination, turns entirely on the words of the order or judgment, which is why those words must be read with care.

The limitation on arrears

Even where a claim is good, the money for the whole past period is rarely payable. The courts treat a wrong fixation as a continuing wrong, so a claim is not shut out by delay, but they restrict the arrears to a limited period, generally about three years before the claim was made, and grant the rest of the relief only notionally. This is why so many orders fix pay notionally from a distant date but pay actual arrears only for a recent window. The principle keeps the pay of the claimant correct for the future and for pension, without opening the exchequer to decades of back pay.

Why it matters

For a serving employee, a notional fixation can still be valuable, because the higher pay it deems feeds into the date of next increment , into stepping up comparisons, and above all into the pension, which is worked out on the pay at retirement. For a pensioner, the notional-pay method is the very basis of the revised pension. The one thing a notional fixation usually does not do is pay for the past, so an employee or pensioner should read any such order to see precisely which benefit, notional or actual, it confers, and from which date the money, if any, actually runs.

Frequently Asked Questions (FAQs)

What is notional pay fixation?
Notional pay fixation is the fixing of an employee’s or pensioner’s pay on paper, at a higher stage or in a revised scale, from an earlier date, but without paying the money for that back period. The higher pay is deemed to exist for the limited purpose of working out later entitlements such as pension, seniority, the date of next increment or terminal benefits. It is contrasted with actual or monetary fixation, where the pay is real and arrears are paid for the period from the effective date.
What is the difference between notional and actual pay fixation?
Actual, or monetary, fixation means the pay is really drawn and any arrears for the past period are paid in cash. Notional fixation means the pay is only deemed to have been fixed for calculation purposes, and no arrears are paid for the notional period. A common pattern is that pay is fixed notionally from an earlier date so that pension and increments are worked out on the higher figure, while the actual money flows only from a later cut-off date fixed by the order or the court.
How is notional pay used to revise pension of pre-2016 pensioners?
Under the 7th CPC, the pension of those who retired before 1 January 2016 is revised by notionally fixing their pay in the 7th CPC pay matrix, in the level corresponding to the pay scale, pay band and grade pay at which they retired, stepping the notional pay through each intervening pay commission using the fitment formula. The revised pension is 50 per cent of that notional pay and the family pension is 30 per cent, with effect from 1 January 2016. This method is set out in the Department of Pension OM of 12 May 2017, with concordance tables to ease the calculation.
Are arrears paid on notional pay fixation?
Usually not for the notional period. The whole point of a notional fixation is that the higher pay is counted for pension, seniority or increments without the cash for the past period being paid. Where arrears are payable at all, they are generally paid only from a later date fixed by the order, and in service claims of a continuing wrong the courts have restricted arrears to about three years before the claim was made, granting the rest of the relief only notionally.
Does notional seniority mean notional pay fixation?
No. The two are separate. A person may be granted notional seniority from an earlier date without any notional fixation of pay, and the grant of notional seniority does not by itself carry a notional fixation of pay from the date of that seniority. Whether pay is also fixed notionally, and whether any arrears follow, depends on the specific terms of the order or judgment, which must be read carefully to see exactly what benefit is granted.
When is notional pay fixation used?
It is used when a benefit has to be given from a back date but the government does not intend to pay for the whole intervening period. The main cases are the revision of pension of pre-2016 pensioners by notionally fixing pay in the 7th CPC matrix, court-ordered fixation for reinstated or wrongly superseded employees where the higher pay counts for terminal benefits but not for full arrears, ante-dated promotions where pay is fixed notionally from the date a junior was promoted, and the notional increment granted to those retiring on 30 June or 31 December.
Do concordance tables give the notional pay?
Yes, for pre-2016 pensioners the Department of Pension issued concordance tables, numbered 1 to 58, by the order of 6 July 2017, which give the notional pay in the 7th CPC pay matrix directly from the basic pay drawn at retirement, so the pension sanctioning authority does not have to step the pay through each pay commission by hand. If a table conflicts with the underlying rules, the rules prevail, and the notional pay is then fixed under the fixation rules of the intervening pay commissions.

External references

References

  1. Department of Pension and Pensioners’ Welfare, Office Memorandum No. 38/37/2016-P&PW(A) dated 12 May 2017: revision of pension and family pension of pre-2016 central civil pensioners with effect from 1 January 2016 by notionally fixing pay in the 7th CPC pay matrix in the level corresponding to the pay scale, pay band and grade pay at retirement, stepped through each intervening pay commission, with pension at 50 per cent and family pension at 30 per cent of the notional pay (Option 1).
  2. Department of Pension and Pensioners’ Welfare, Office Memorandum No. 38/37/2016-P&PW(A) of even number dated 6 July 2017: concordance tables numbered 1 to 58 giving the notional pay and revised pension from the basic pay drawn at retirement, with the direction that where a table is inconsistent with the rules, the notional pay is fixed in accordance with the fixation rules of the intervening pay commission periods.
  3. Central Civil Services (Revised Pay) Rules, 2016, and the fitment tables of the Department of Expenditure, under which pay is fixed, actually or notionally, in the pay matrix.
  4. Union of India v. Tarsem Singh, Supreme Court of India (2008), on the treatment of a wrong fixation or denial of a monetary benefit as a continuing wrong and the restriction of arrears to a limited period of about three years before the claim, with the balance of the relief granted notionally.
  5. Fundamental Rule 22 and the fixation of pay on appointment to a higher post, applied notionally in ante-dated promotions and in court-ordered fixation for reinstated or superseded employees where the higher pay counts for terminal benefits.