The Central Government has made an important change under the 7th Pay Commission. The new order brings clarity to how dress allowance will be paid to employees who join or retire in the middle of the year. This update will benefit both newly recruited and retiring government employees, especially those working in uniformed departments like postal services.
What is Dress Allowance?
Dress allowance is money given to government employees who must wear a uniform while doing their job. Earlier, there were different types of allowances like clothing allowance, uniform maintenance allowance, gown allowance, and shoe allowance. In August 2017, the Finance Ministry combined all these into one single payment known as the dress allowance.
New Rules for Dress Allowance
According to the new order issued on September 24, 2025, the Centre has made it clear that employees who join or retire in the middle of a financial year will now get a proportionate dress allowance. This means the payment will be based on how many months they have worked during the year.
Example of Proportionate Payment
| Period of Service | Allowance Percentage |
| Full Year (12 Months) | 100% |
| 6 Months | 50% |
| 3 Months | 25% |
So, if an employee retires in October after working for half the year, they will receive only 50% of the total dress allowance.
Approval from the Finance Ministry
Earlier, there was some confusion about how to pay this allowance to employees retiring after July 2025. An order issued in June 2025 said that the Finance Ministry’s approval was needed before changing the rule. Now, the Finance Ministry has given a clear answer that both new and retiring employees will get the allowance based on the number of months they have worked in that year.
When is the Allowance Paid?
The dress allowance is paid every year along with the July salary. This means that by July, most employees receive the full allowance. However, this caused an issue for those retiring later in the year because they already received the full amount.
To fix this, the new rule says that employees retiring from October 2025 will have extra payments recovered if they were paid more than their share. But employees retiring before September 30, 2025, will not face any recovery.
Clarification for New Employees
New employees who join before July 2025 will get their allowance according to the old rules that were active till June 2025. The government also noticed that in some offices, last year’s dress allowance was not included in the July 2025 salary. Orders have now been given to make sure those payments are corrected.
Relief for Employees
These new changes will bring relief to employees who join or retire in the middle of the year. They will now get their payments fairly and won’t face any confusion or loss. The Postal Department’s clarification has ensured that everyone, whether new or retiring, receives the correct allowance based on their working period.
Conclusion
The government’s decision to revise the dress allowance rules under the 7th Pay Commission is a positive move for central employees. It ensures fair payments, reduces confusion, and gives proper clarity on how the allowance will be calculated for both new and retiring staff. This step will make the process more transparent and fair for everyone involved.
Disclaimer: The information provided in this article is for general informational purposes only. Readers should verify details from official government notifications before taking any financial decision.
FAQs
What is dress allowance?
It is money given to employees who wear uniforms at work.
When is the dress allowance paid?
It is paid with the July salary each year.
Who will get proportionate payment?
Employees joining or retiring mid-year.
Will retirees before September 2025 face recovery?
No, they will not.
Who approved the new rule?
The Ministry of Finance approved it.