This article is written by Akshaya V, pursuing LLM from VIT School of Law. This article discusses the essential provisions of the long-awaited wage revision released by the Life Insurance Corporation of India in April 2021 for its officers and employees. This article will also discuss the benefits of wage revision for employees and the strong criticisms it encountered. 

It has been published by Rachit Garg.

Introduction

The new fiscal year of 2021-2022 began with a happy note for the employees of the Life Insurance Corporation, India as they finally received a well-deserved wage revision with over a twenty-five per cent hike in their pay packets. The Ministry of Finance released a notification on wage revision as published by the Central Office of Life Insurance Corporation of India for Class-I Officers, Class-III and Class IV employees in the Official Gazette on the 15th of April, 2021. The Secretary of the All India Insurance Employees Association (AIIEA), which is also the major union in LIC stated that the officers and employees deserve a good pay package as the management expense ratio is by far the lowest in the insurance industry and LIC is on a sound financial footing compared to public sector banks. The wage revision primarily includes a hike in the Dearness Allowance (DA) and a 0.08 per cent hike for every 4-point rise in the calculation of DA. This move has also brought in a special allowance ranging between Rs.1,500 to Rs.13,500 per month to calculate dearness allowance, making the wage bill of the corporation go approximately up to Rs. 2700 crore per year. In this article, the provisions of wage revision applicable to Class I Officers and Class III and IV Employees, the benefits of such wage revision and the disapprovals it has received will be discussed in detail.

Overview of working of the corporation 

Life Insurance Corporation is an Indian central public sector undertaking headquartered in Maharashtra. It was established on 1st September 1956, after the Parliament of India passed the Life Insurance of India Act,1938 by nationalising the insurance industry. LIC is a leading insurance company in India, having branches all over the country. The company has employees of different cadres and salary is given corresponding to the nature of their work. 

LIC has over a hundred divisional offices and extensive training facilities at all levels. The Management Development Institute, seven Zonal Training Centers, and thirty-five Sales Training Centers are at the pinnacle. LIC of India is one of India’s leading financial institutions, providing comprehensive financial solutions in all areas of life. The group provides financial services to individuals and corporations, ranging from commercial banking to stock brokerage to mutual funds to life insurance to investment banking. The LIC has a net worth of more than Rs. 1,800 crores. It has a presence in 82 cities in India and serves a customer base of over 20,000 people.At the industry level, it has collaborated with the government and the GIC to establish the National Insurance Academy. It currently transacts individual life insurance, group insurance, social security schemes, and pensions, grants housing loans through a subsidiary, and markets savings and investment products through a mutual fund. It pays out approximately Rs 6,000 crore per year to 5.6 million policyholders. It was founded with the goals of widely disseminating life insurance, particularly in rural areas, and meeting the various life insurance needs of the community that would arise in the changing social and economic environment.

Organisational Structure of LIC

The Central Government of India appoints 15 members to the LIC committee. The LIC Board of Directors currently consists of four Managing Directors, four members and three non-official directors. Furthermore, the responsibilities are divided into four levels of offices, as follows:

  1. Central Office – In Mumbai, there is only one central office. It takes up investment accountability and formulation of regulations. 
  1. Zonal Offices – There are eight Zonal offices located throughout the country. The central office policy is carried down to the branch offices by these divisional offices.
  1. Divisional Offices –There are 113 divisional offices to further penetrate India.
  1. Branch Offices These are responsible for all interactions between policyholders and the Life Insurance Corporation.
  1. Satellite Offices – It is the mini office established by the Life Insurance Corporation where there are no branch offices available in the nearby areas.

The salary package consists of allowances, perks, and benefits applicable to each group of employees according to the nature of their work. The percentage of increment also differs as per the workload. The salary and other monetary benefits provided to the employees of the corporation are listed below – 

  1. Basic Pay – This pay is confirmed with the employees before joining the corporation. It is subject to change as per the rules.
  2. Annual Increment – A certain sum will be added to fixed pay. 
  3. House Rent Allowance – This allowance will be fixed based on the employee’s residents, whether in metropolitan or non-metropolitan cities, and subject to change as per the company’s policy.
  4. Dearness Allowance – This allowance applies to all employees and is changed every three months. 
  5. Leave Travel Concession – This is given to the employees to meet their travel expenses when they are on leave from work. 
  6. Special Allowance – This allowance is given to the employees to meet certain requirements over and above the basic pay. 
  7. Gratuity – Gratuity is added to salary and will be disbursed to the employees at the time of completion of employment. 

Wage Revisions by the Chairman of LIC

The Life Insurance Corporation gave instructions to all the offices of the corporation for implementation of the Life Insurance Corporation of India Class-I Officers (Revision Terms and Conditions of Service) Amendment Rules, 2021 and Class-III and Class-IV Employees (Revision Terms and Conditions of Service) Amendment Rules, 2021 including the revision of  Life Insurance Corporation of India Class-III Employees (Special Allowance for Passing Examinations) Amendment Rules, 2021 and Life Insurance Corporation of India (Special Area Allowance) Amendment Rules, 2021. These rules were issued by the Chairman in the exercise of the powers conferred on him under Section 48 of the Life Insurance Corporation Act, 1956 and sub-rule(2) of Rule 51 read along with Rule 4 of the Life Insurance Corporation of India (Staff) Rules, 1960 to provide for the method of fixation in the new pay scale and other matter connected therewith and incidental thereto. 

Provisions of the wage revision

Class-I Officers

By exercising the powers conferred under Section 48 of the Life Insurance Corporation Act, 1956, the Central Government has made amendments to the Life Insurance Corporation of India Class I Officers’ (Revision of terms and conditions of Service) Rules, 1985, hereinafter called as the Life Insurance Corporation of India Class I Officers’ (Revision of terms and conditions of Service) Amendment Rules, 2021 by way of a notification in the Official Gazette. These rules shall be deemed to have come into force on the 1st day of August 2017. These rules shall apply to whole-time salaried Class I officers on or after 1st August 2017. However, if any officer gives notice to the corporation to be governed by this provision with effect from a date not earlier than 1st August 2017 and not later than the publication of the notification (15th April 2021), he shall be permitted to be governed by these rules and no arrears shall be for the period before the date so opted. Provided that if the resignation of the officer has been accepted or whose services have been terminated during the period from 1st August 2017 to the date of publication of this notification, such officer shall not be eligible for the arrears on account of revision.

Rule 6 – House Rent Allowance

The house rent allowance applicable to Class I Officers except those who have been allotted residential accommodation is specified in the table below:

S.No.Place of postingRate of House Rent Allowance
1Cities of Mumbai, Chennai, New Delhi, Noida, Faridabad, Ghaziabad, Gurugram, Kolkata, Hyderabad, Bengaluru and other cities with a population of forty-five lakh and above. 10% of Pay or a maximum of Rs. 7,840/- per month.
2Cities exceeding twelve lakh population but less than forty-five lakh 8% of Pay or a maximum of Rs.6,620/- per month.
3Other places7% of Pay or a maximum of Rs. 6,370/- per month.

Rule 7 – City Compensatory Allowance

The City Compensatory Allowance payable to Class I Officers is mentioned in the table below –

S.No.Place of postingRate of City Compensatory Allowance
1Cities of Mumbai, Chennai, New Delhi, Noida, Faridabad, Ghaziabad, Gurugram, Kolkata, Hyderabad, Bengaluru and other cities with a population of forty-five lakh and above. 3% of Pay or a maximum of Rs. 1,960/- per month.
2Cities exceeding twelve lakh population but less than forty-five lakh 2.5% of Pay or a maximum of Rs.1,865/- per month.
3Cities with a population of above five lakh but not exceeding twelve lakh and State capitals with a population not exceeding twelve lakh, ie., Chandigarh, Mohali, Puducherry, Port Blair and Panchkula.2% of Pay or a maximum of Rs. 1,445/- per month.

Rule 7A – Hill Allowance

The hill allowance payable to Class I Officers is mentioned in the table below – 

S.No.Place of postingRate of Hill Allowance
1Officers situated at the height of 1,500 meters or above the mean sea level2.5% of Basic Pay or a maximum of Rs. 1,245/- per month.
2Officers situated at a place situated at the height of 1,000 or above but less than 1,500 meters above the mean sea level, or at Mercara or a place declared as “hill station” by the Central or State Government concerned for their employees.2% of Basic Pay or a maximum of Rs.1,000/- per month.
3Officers situated at a height of not less than 750 meters or above sea level. 2% of Basic Pay or a maximum of Rs.1,000/- per month.

RULE 7G – Special Allowance 

The special allowance given to Class I Officers shall be specified in the table below – 

S.No.CategoryAllowance per month (Rs.)
1Zonal Manager (Selection)13,500/-
2Zonal Manager (Ordinary)12,000/-
3Senior Divisional Manager/Deputy Zonal Manager 10,500/-
4Divisional Manager 9,000/-
5Assistant Divisional Manager7,500/-
6Administrative Officer6,000/-
7Assistant Administrative Officer 4,500/-

Class I officers passing examinations 

The Central Government has made the following rules by exercising powers conferred by clause (cc) of sub-section (2) of Section 48 of the Life Insurance Corporation Act, 1956, which shall hereinafter be called as Life Insurance Corporation of India Class I Officers (Special Allowance for Passing Examinations of Insurance Institute of India) Rules, 2021. This rule shall be applicable to salaried whole-time and confirmed Officers of the Corporation. 

Rule 3 states that the special allowance shall be paid to an officer who passes the examination of the Insurance Institute of India, subject to the conditions enlisted in Rule 4.

Name of the Examination Special Allowance (Rs.)
Licentiate Diploma Rs. 650
Associateship DiplomaRs. 2,600
Fellowship Diploma Rs. 5,200

Rule 4 – Conditions 

  1. An officer who passes one or more examinations of the Insurance Institute of India before getting promoted as Class I Officer shall be eligible for the special allowance for passing such examinations.
  2. An officer who has passed all the examinations of the Insurance Institute of India before getting promoted to Class I Officer shall be eligible for the special allowance for passing all such examinations. However, if such an Officer whose pay is fixed at the minimum of the scale during the promotion to Class I shall be eligible shall be allowed half the amount of special allowance specified under Rule 3. 

Class III and IV Employees

The Chairman of the LIC has issued instructions to all the offices of the corporation in India to implement the Life Insurance Corporation of India Class III and Class IV Employees (Revision of Terms and Conditions of Service) Amendment Rules, 2021 and has provided the new method of fixing the new scales of pay. These instructions shall be hereinafter referred to as the Life Insurance Corporation of India Class III and Class IV Employees (Revision of Terms and Conditions of Service) Instructions, 2021. 

Definitions

  1. Date of notification means 15.04.2021.
  2. Existing employees means a whole-time salaried employee in the permanent establishment of the Corporation who was in the service on the date of notification. 
  3. Existing scales or pre-revised scales mean the scales which applied to the employees immediately before they were governed by the Amendment Revision Rules.
  4. New scales or revised scales mean the scales as revised by the Amended Revision Rules.
  5. Option under the Revision Rules means the option referred to in sub-rule(3), of Rule 1 of the Amended Revision Rules to be governed by the provisions of the Revision Rules from a date not earlier than the date on which the said Rules come into force. 

Eligibility 

  1. This instruction pertains to Class III & Class IV employees who were in the whole-time salaried service in the permanent establishment of the corporation as of 1.08.2017 and those who have joined after that date. Provided that if the resignation of the officer has been accepted or whose services have been terminated during the period from 1st August 2017 to the date of publication of this notification (both days inclusive), such officer shall not be eligible for the arrears on account of revision. 
  2. It has been clarified that this instruction does not apply to – 
  1. Temporary employees
  2. Badli workers
  3. Part-time employees 
  4. Work charged employees 
  5. Employees engaged on daily wages 
  6. Employees appointed on ad-hoc basis 
  7. Employees to whom the provisions of the Life Insurance Corporation of India (Staff) Rules, 1960 do not apply including actuarial apprentices, CBSE apprentices, etc., and 
  8. Employees whose services have been terminated under Rule 39 of the Life Insurance Corporation of India (Staff) Rules, 1960 on or before the date of notification. 

Method of fixation of scales of pay

  1. From 1.08.2017 to the date of notification – The scales of pay prescribed in the amended rules shall take effect from 01.08.2017 with reference to the basic pay as of 01.08.2017 or on the date of appointment of the employee as per the Fitment Chart (as in Appendix II of the 2021 Instructions) in the equivalent existing scale. In case of any changes in the pre-revised basic pay due to increment, promotion, or release of NGI, the revised basic pay shall be fixed in accordance with the pre-revised basic pay every period where there is a change in the basic pay of the pre-revised scale. 
  2. After the date of notification – There is no need to refer to the pre-revised scales. Any changes after the date of notification shall be effected in the revised scales of pay.
  3. The pay fixed in the pre-revised scales need not to be re-opened for Ex-servicemen who have been re-appointed in the service on or after 1st August 2017. Their basic pay shall be fixed in the same way as for other employees appointed to the corporation. 
  4. The Amended Rules, 2021 gives an option to the employees to be governed by the said rules after 1.08.2017 and not later than the date of the notification published in the Official Gazette. This option shall be exercised by the employees in pro forma stipulated in Appendix – III of the 2021 instructions. For those employees who have exercised this option, fitment of their salary shall be done with immediate effect and shall not be eligible for the arrears till the end of the opted period. 
  5. Fitment on promotion – Any employee promoted to Class III or Class IV on or after 1.08.2017 and to which position the pre-revised scale of pay is applicable, may re-exercise the option under sub-rule (2) of Rule 52 of Life Insurance Corporation of India (Staff) Rules, 1960 and the salary so fixed shall be final. 

The scales of pay

Rule 4 states that for Class III employees, the scales of pay are as specified in the table below –

Class III employee postsScale of pay
Higher Grade Assistants Rs. 35,310-2,370(3)-42,420-2,645(15)-82,095
StenographersRs.29,530-1,690(4)-36,290-1,960(2)-40,210-2,390(3)-47,380-2,480(2)-52,340-2,645(8)-73,500
Assistants, Assistants appointed as receiving and paying cashiers, projectionists and microprocessor operators Rs.23,465-1,1,375(1)-24,840-1500(2)-27,840-1690(5)-36,290-1960(2)-40,210-2390(3)-47,380-2,480 (2)-52340-2,645(5)-65,565
Record ClerksRs.21,740-775(4)-24,840-1,220(3)-28,500-1,375(2)-31,250-1,390(6),39,590-1,500(6)-48,590

Special Allowance 

The following categories of employees shall receive a special allowance in addition to the scales of pay to the extent specified below –

  1. Higher Grade Assistants appointed as Internal Audit Assistants:
  1. Rs. 1525/- per month for the first five years
  2. Rs. 1740/- per month for the next five years
  3. Rs. 1880/- per month for subsequent years

The said special allowance shall not be reckoned for calculating dearness allowance, provident funds, house rent allowance, pension, encashment of privilege leave, gratuity, and fixation of pay upon promotion.

Functional Allowance

  1. Xerox Machine Operators in the scale of Pay of Record Clerks – Rs. 215/- per month.
  2. Microprocessor Operators in the scale of assistants – Rs. 405/- per month.
  3. Programmers in the scale of pay of Higher Grade Assistant – Rs. 1,270/- per month.

Rule 6 states that for the Class IV subordinate employees, the scales of pay is as specified below – 

Class III employee postsScale of pay
DriversRs. 21,740-980(6) -27620-1,015(1)-28,635-1,220(12)-43,275
Sepoys, Liftmen and WatchmenRs.18,930-775(5)-22,805-825(8)-29,405-980(1)-30,385-1,015(2)-32,415-1,220(3)-36,075
Sweepers and CleanersRs.17,950-775(5)-21,825-8259(8)-28,425-980(6)-34,305

The Class IV subordinate employees mentioned in sub-rule (1), in addition to the scales of pay, shall receive a special allowance which is counted as basic pay to the extent specified of Rs. 1,620/- per month and machine operators in the scale of Sepoy will be paid a functional allowance of Rs. 170/- per month. 

Rule 5 – Dearness Allowance

This rule substitutes the sub-rule (1) of Rule 8 of the Life Insurance Corporation of India Class III and Class IV employees (Revision of Terms and Conditions of Service) Rules, 1985. The dearness allowance for such class of employees shall be recovered at the rate of 0.08% of pay plus the special allowance as mentioned in rule 13B for every four points increase or fall in the quarterly average of the All India Consumer Price Index above 6352 points. For the purpose of calculation of dearness allowance, the ‘Pay’ shall include basic pay, additions to basic pay, special allowances payable to liftmen and watchmen, head peon, and special allowance for Passing Examinations payable to Class III employees. Appendix IV of the rules describes the number of slabs for which the dearness allowance becomes payable according to the pre-revised and revised rules. Also, an additional dearness allowance shall be paid whenever it is drawn.

Rule 9(1) – House Rent Allowance

The house rent allowance for Class III and Class IV employees except for those who have been allotted residential accommodation is specified below – 

S.No.Place of postingRate of House Rent Allowance
1Cities of Mumbai, Chennai, New Delhi, Noida, Faridabad, Ghaziabad, Gurugram, Kolkata, Hyderabad, Bengaluru and other cities with a population of forty-five lakh and above. 10% of Pay or a minimum of Rs. 1,720/- per month and a maximum of Rs. 7,840/- per month
2Cities exceeding twelve lakh population but less than forty-five lakh 8% of Pay or a minimum of Rs. 1,475/- and a maximum of Rs.6,620/- per month.
3Other places7% of Pay or a minimum of Rs.1,400/- and a maximum of Rs. 6,370/- per month.

Rule 10 – City Compensatory Allowance

The City Compensatory Allowance payable to the Class III and Class IV employees is as specified below – 

S.No.Place of postingRate of House Rent Allowance
1Cities of Mumbai, Chennai, New Delhi, Noida, Faridabad, Ghaziabad, Gurugram, Kolkata, Hyderabad, Bengaluru and other cities with a population of forty-five lakh and above. 3% of Pay or a minimum of Rs. 510/- per month and a maximum of Rs. 1,555/- per month
2Cities exceeding twelve lakh population but less than forty-five lakh 2.5% of Pay or a minimum of Rs. 420/- and a maximum of Rs.1,460/- per month.
3Other places2% of Pay or a minimum of Rs.310/- and a maximum of Rs. 1,255/- per month.

Rule 11 – Hill Allowance 

The scales Hill Allowance payable to the Class III and Class IV employees is as specified below-

S.No.Place of postingRate of Hill Allowance
1Employees situated at the height of 1,500 meters or above the mean sea level2.5% of Basic Pay or a maximum of Rs. 1,000- per month.
2Officers situated at a place situated at the height of 1,000 or above but less than 1,500 meters above the mean sea level, or at Mercara or a place declared as “hill station” by the Central or State Government concerned for their employees.2% of Basic Pay or a maximum of Rs.790/- per month.
3Officers situated at a height of not less than 750 meters or above sea level. 2% of Basic Pay or a maximum of Rs.790/- per month.

Rule 13B – Special Allowance 

The amount of special allowance payable to the Class III and Class IV Employees is as specified below – 

The special allowance that is given to Class I Officers shall be specified in the table below – 

S.No.Class III/Class IV EmployeesAllowance per month (Rs.)
1Higher Grade Assistant3,000
2Stenographer2,500
3Assistant2,000
4Record Clerk1,800
5Driver1,800
6Peon1,600
7Sweeper1,500

It is important to note that the special allowance shall be reckoned for the purpose of calculation of dearness allowance but not for the purpose of calculation of house rent allowance, pension, encashment of privilege leave, gratuity, pension and fixation of pay upon promotion. 

III. Other Officers and Employees

The hikes and allowances that are given to a few other cadres of employees and officers are given over here

Benefits of LIC wage revision to staff

With the introduction of LIC wage revision in April 2021, the officers and employees finally have a reason to celebrate. The Department of Financial Services (DFS) of the Finance Ministry has approved a sixteen per cent wage hike for the employees of the Life Insurance Corporation. The following are the hikes from which the officers and employees are conferred with – 

  1. The revised wage includes a 100 basis point cut in the rate of interest for housing loans taken by various staff. 
  2. Although this move by the Centre has created a disparity in banks and insurance sectors, LIC staff were given favourable treatment as there was phenomenal growth and financial stability in the institution. 
  3. The settlement records of the Life Insurance Corporation of India are by far the best in the Industry. The employees have been given a well-deserved wage revision. 
  4. The said wage revision has also given the benefit of a five-day work week for the employees, unlike the public sector employees.
  5. An additional special allowance ranging from Rs. 1,500 to Rs. 13,500 has also been introduced for employees of all cadres. 
  6. This wage revision was a long-awaited move, and the staff may also see an 18.5-20 per cent jump going forward, excluding superannuation.
  7. Another intriguing aspect is the lack of a wage agreement between the LIC management and its employee unions. Even after the “information sharing” meeting, the management’s final proposal will be sent to the government and can be changed at any time before notification by the Finance Ministry (Department of Financial Services). No such thing can happen in a bipartite wage settlement situation and no rupee can be removed without the consent of the unions. 

Criticisms and Oppositions

With the increase in wages for the staff, the Life Insurance Corporation pensioners staged lunch-hour demonstrations opposite LIC Divisional Office seeking a wage increase in the family pension. Claiming the wage revisions to be discriminative on account of catering only to the need of working staff, they demanded a family pension at thirty per cent of the last pay drawn in place of the fifteen per cent of the last pay drawn. Although the pension funds were insufficient to meet this small expenditure, the Centre was not acceding to it. Hence, the employees strongly expressed their anguish at the inordinate delay in clearing the issue. Over fifty-eight thousand employees in the public sector general insurance including The New India Assurance Co. Ltd., (Mumbai), the Oriental Insurance Co. Ltd., (New Delhi), the National Insurance Co. Ltd., (Kolkata), and the United India Assurance Co. Ltd., (Chennai) went on a two-day strike condemning their woes of wage revision and the paucity of action from the Centre when the wage revisions are completed for the public sector banks and the Life Insurance Corporation. 

Conclusion

The 2021 LIC wage revision has brought out several benefits and increments to all the officers and employees effective from 15.04.2021. The officers and employees are immensely benefitted from the wage hikes as clarified by the above discussion. The ultimate objective of wage hikes is to improve the overall standard of living and to provide them with appropriate finance to meet the cost of living. It is pertinent for any organisation to have a well-devised salary structure and timely revision of such wages or salaries help companies reward their employees from time to time by keeping the human resource cost in control. 

Frequently Asked Questions

What is the salary after wage revision?

The salary after wage revision will increase up to sixteen per cent fitment as announced by the Government of India with effect from 01.08.2017.

When has the wage revision come into effect?

The LIC revised pay scales came into effect on the date of publication of notification in the Official Gazette, dated 15th April 2021.

Will the wage differ for each cadre of Class III employees?

After 2021 wage revisions, except for Higher Grade Assistants and Stenographers, all the Class III employees are given the same scales of pay under the “one pay band.”

What are the dearness allowance rates after wage revision?

The dearness allowance is paid at 0.08% on new pay scales at Base: Index No.6352 in the series 1960 = 100. 

References

  1. https://teutpdfdownload.in/wp-content/uploads/Wage-Revision-Instructions-Class-III-Class-IV.pdf
  2. https://99employee.com/wp-content/uploads/2021/04/LIC-wage-revision-2021.pdf
  3. https://indianexpress.com/article/business/banking-and-finance/govt-links-wage-hike-for-psu-insurance-staff-with-performance-8201249/
  4. https://www.businessinsider.in/india/news/india-innovation-index-karnataka-telangana-haryana-bag-top-3-ranks-among-major-states/articleshow/93028739.cms
  5. https://www.indiatoday.in/business/story/lic-employees-to-get-16-wage-hike-5-day-work-week-1791779-2021-04-16

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