Summary
- Islamabad – The Federal Government has increased the minimum gross salary of civil employees to Rs.
- According to the Office Memorandum No.1(2)R5/2022-PT-0001, the raise applies to all civil employees of the Federal Government, civilians paid from Defence estimates, contingent paid staff, and contract employees on civil posts in Basic Pay Scales.
- Special Allowance for Low-Paid Staff The government said employees whose current gross salary is less than Rs.
Islamabad – The Federal Government has increased the minimum gross salary of civil employees to Rs. 40,700, up from Rs. 37,000, with effect from 1st July 2026, the Ministry of Finance announced in an official notification issued on 21st August.
According to the Office Memorandum No.1(2)R5/2022-PT-0001, the raise applies to all civil employees of the Federal Government, civilians paid from Defence estimates, contingent paid staff, and contract employees on civil posts in Basic Pay Scales.
Special Allowance for Low-Paid Staff
The government said employees whose current gross salary is less than Rs. 40,700 will be given the difference as a “Special Allowance” till further orders.
The memorandum clarifies key rules for the new allowance:
- Taxable: The Special Allowance will be subject to income tax
- Leave: It will be admissible during regular leave and the entire period of LPR, but not during extraordinary leave
- Pension Excluded: It will _not_ be counted as part of emoluments for calculation of Pension, Gratuity, or House Rent recovery
- Abroad Posting: Not admissible during posting/deputation abroad, but will resume on repatriation at the rate that would have applied
Budgetary Impact
The Ministry stated that the additional burden of the increased wage and special allowance will be managed within the existing budgetary allocation for FY 2026-2027. No supplementary grants will be issued for this purpose, and respective Ministries, Divisions, and Departments have been directed to accommodate it from their own budgets.
The notification was signed by Tahir Rauf, SO (Regulation-V), and addressed to Kamran Ali Afzal, Cabinet Secretary.
What it means for employees
This is the first major wage revision for federal employees since last year. The Rs. 3,700 increase is aimed at providing relief amid inflation. However, because the Special Allowance is excluded from pension calculations, its long-term benefit for retiring employees will be limited.
The move is expected to benefit hundreds of thousands of federal workers, including lower-grade staff who were previously drawing the old minimum of Rs. 37,000.
The government has not announced any further increases beyond this revision.
Key Facts:
- New Minimum Salary: Rs. 40,700 from 1st July 2026
- Increase: Rs. 3,700
- Coverage: Federal civil, defence civilians, contract staff
- Funding: Within 2026-2027 budget, no new grants
