Last Updated on November 9, 2025 by Galaxy World

An Option Certificate on Pay Fixation is a great tool for employees who are being promoted. An option certificate can be adopted if an employee is promoted after 1^st June.  As you all know that the condition for the annual increment is a minimum of 6 months of service in a particular scale, and if an employee is promoted after 1^st June, the 6 months of service are not completed by the same employee. Then what will happen to the employee if he is promoted after 1st June? Will he not get the benefit of the Annual Increment? This will be a loss for that employee. But don’t worry; this loss can be avoided by using the great tool of the Option Certificate for Pay Fixation.

What is an Option Certificate on Pay Fixation?

 

As earlier told Option Certificate is adopted when an employee is promoted after 1^st June to avoid the loss of 1x Annual Increment. In the Option Certificate, it is mentioned that the employee will avail the promotion after 1^st December instead of the date of Promotion to avoid the loss of Annual Increment. In this case, the pay is fixed on 2^nd December after availing the benefit of the Annual Increment on 1st December.

How the Option Certificate is used

I shall illustrate this by an example. Suppose promotion of an employee is on 3^rd June and his/her basic pay in the previous scale was 10,000/-. If the employee fixes his pay on 3^rd June in the new scale, then his pay becomes 10,500/-. In this way, he will not get an annual increment, and he will annual increment next year instead of the current year. If they fix his/her pay on 2nd December, then the situation will be as under: Before Pay Fixation: 10,000/- + Annual Increment (300/-) = 10,300/- After Pay Fixation: When 10,300 is fixed in the next scale, it becomes 10,800/- Thus this employee will get basic pay 10,800/- instead of 10,500/-

When this Option Certificate cannot be used?

If the pay fixed before 1^st December is greater than or equal to the pay fixed on 2nd December, then don’t use the option.

What is the Loss of Option Certificate?

The loss of the Option Certificate for pay fixation is that the employee cannot get the arrear loss, as the pay is fixed on 2^nd December instead of the actual date of promotion. Don’t worry, the main purpose is basic pay, not the arrear amount. An increase in basic pay is 100 times better than the amount of arrears as the arrear is a temporary amount, but the basic pay is a permanent increase in pay for the whole of the service.