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A very relieving news has emerged at the level of the Defense Ministry for more than 70 thousand employees and officers working in 41 Ordnance Factories across the country. The Empowered Group of Ministers (EGoM) headed by the Union Defense Minister has taken a major decision regarding the service rules and pension rights of the former Ordnance Factory Board (OFB) employees. According to the latest order of the government, former OFB employees who do not want to join or absorb the newly formed 7 Defense Public Sector Undertakings (DPSUs) will not be forcibly sent to the company cadre. They will be able to continue their services by continuing on “Deemed Deputation” till the last date of their superannuation/retirement.
This decision is like a lifeline for all those employees who were living in deep uncertainty about their future, service conditions and above all their pension security since the corporatization of ordnance factories on 1 October 2021. Till now the government was extending the period of deputation of the employees at an interval of two years, due to which the sword was always hanging over the heads of the employees as to what would happen to them after the expiry of the time limit. The new decision has completely ended this confusion.
In the official order of the Government, it has been made very clear that there will be no negative change in the basic service conditions and legal status of the employees who do not opt for merger with the DPSU. They will continue to be regular Central Government Servants, technically and administratively, in the same manner as they were before corporatization.
The protective shields provided to the employees under this system are as follows:
Pay Scale & Increments: The salary of the employees will continue to be determined as per the pay matrix of the 7th Central Pay Commission (7th CPC) and the Central Pay Commissions to be implemented in future. There will be no compulsion for them to go to the Industrial Pay Scale (IDA) of DPSU, rather they will be fully entitled to Central Government Dearness Allowance (CDA).
Promotion and Career Progression (Career Progression & MACP): As per the rules laid down by the Central Service, employees will continue to get the benefit of time bound promotion (MACP). The internal company promotion policy of the DPSU will not be imposed on the employees who are working on deemed deputation.
Medical and Housing Facilities: Employees will continue to be covered under the existing health facilities under the Central Government Health Scheme (CGHS) or Ordnance Factory Hospitals. Apart from this, they will have the same right to live in government quarters in Defense Pool or Factory Estate as other defense civilian employees.
Leaves and Service Conditions: Matters relating to Earned Leave (EL), Half Pay Leave (HPL), Leave Encashment and disciplinary action will be governed solely under the Central Civil Services (Classification, Control and Appeal) Rules i.e. CCS (CCA) Rules.
Pension security has been the most sensitive focus point of the agitation and concerns of the Ordnance Factory employees. The new guidelines have completely eliminated all the doubts related to pension.
Under the official provisions, employees who were appointed to the service before January 1, 2004, will continue to be eligible for the Old Pension Scheme (OPS) under the Central Civil Services (Pension) Rules. On retirement while on deemed deputation, their pension will be paid directly from the Government treasury through the Consolidated Fund of India through the Controller General of Defense Accounts (CGDA). There will be no impact on the profits, losses or financial efficiency of the DPSU.
Similarly, employees appointed after January 1, 2004 will be covered under the Central Government’s National Pension System (NPS) or the latest Unified Pension Scheme (UPS) under the Central Rules. The maximum limit of gratuity payable at the time of retirement, rules of Death-cum-Retirement Gratuity (DCRG) and all the benefits of family pension will also be payable strictly as per the defense civilian employees of the Central Government.
The EGoM also approved a ‘Common Absorption Package’ for all the 7 newly formed DPSUs—Munitions India Limited (MIL), Armored Vehicles Nigam Limited (AVANI), Advanced Weapons and Equipment India Limited (AWE India), Yantra India Limited (YIL), Troop Comforts Limited (TCL), India Optel Limited (IOL) and Gliders India Limited (GIL).
Under this package, every employee will be given the free option to either be duly absorbed in the DPSU or continue on deemed deputation. Employees who voluntarily choose permanent merger into DPSU:
They will get the benefits of DPSU’s Industrial Dearness Allowance (IDA) pattern pay scale, cafeteria allowance, Performance Related Pay (PRP) and corporate incentive schemes of the company.
The former central service of the employees moving to DPSU will be preserved for pension calculation, gratuity and leave balance.
However, those employees who do not exercise the option to merge with the DPSU will, by default, continue to serve as Central Government employees on deemed deputation till retirement. The government has not made the merger mandatory or binding for any employee.
This policy change has had a direct and positive impact on the major defense manufacturing cities of the country. Thousands of employees are employed in Ordnance Equipment Factory (OEF), Field Gun Factory (FGK), Small Arms Factory (SAF) and Ordnance Parachute Factory located in Kanpur, Uttar Pradesh. Similarly, defense workers of Vehicle Factory Jabalpur (VFJ), Gun Carriage Factory (GCF) and Ordnance Factory Khamaria (OFK) located in Jabalpur, Madhya Pradesh have welcomed this decision.
Pune, Khadki (Ammunition Factory Khadki), Dehu Road and Ambazari Factory of Nagpur in Maharashtra; Avadi Heavy Vehicles Factory (HVF) at Chennai and Tiruchirappalli, Tamil Nadu; Ishapur Rifle Factory and Dumdum in West Bengal; Dehradun (Opto Electronics Factory), Uttarakhand; And the uncertainty spread among the workers working in strategic industrial areas like Medak Ordnance Factory in Telangana has now gone away forever.
It is noteworthy that in the year 2021, when the Central Government divided 41 factories of the 220-year-old Ordnance Factory Board into seven different public undertakings, the three major defense federations—All India Defense Employees Federation (AIDEF), Bharatiya Praksha Mazdoor Sangh (BPMS) and Indian National Defense Workers Federation (INDWF)—had vehemently opposed it.
The main argument of the employees was that at the time of recruitment, they had entered into a service contract as Central Government Servants in the name of the President of India, which cannot be unilaterally converted into a corporate structure. The matter had reached the threshold of Parliament, various High Courts and the Supreme Court.
The courts had also sought a concrete affidavit from the government regarding the pension and service security of the employees. After thoroughly reviewing all the statutory, legal and humanitarian aspects, the Group of Ministers headed by Defense Minister Rajnath Singh has finally implemented this permanent solution in the interest of the employees.
The Department of Defense Production (DDP) will soon notify the final modalities for issuing formal option forms in all 41 factories. Employees must select their option within a certain time frame:
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If your priority is central service security, assured OPS pension and continuity of government rules, then continuing on ‘Deemed Deputation’ is considered to be the safest route.
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If you are relatively young, want to take advantage of the DPSU’s future financial growth, corporate incentives and PRP, you can evaluate the absorption package based on the calculations of financial analysts and your service record.
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Before signing any option letter, please verify the certified information about your qualifying service, accumulated leave and pension rules from your administrative office.