Ex Gratia Payment - CiteHR
Pkjain62
Service As Dgm-hr/legal
Sridhar1986
Career Consultant
+1 Other

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Dear Seniors, Please clarify if the above amount can be a part of the salary. For Instance as below! Basic salary+HRA+Conveyance+PF+ Ex-Gratia = Salary Appreciate an early reply Thanks & Regards, Ss
Hi All,
The reason for asking this is because, my payslip reflects the Ex Gratia payment included with salary every month.
Is this a correct practice by HR.
I'd request seniors to give their inputs asap.
Thanks & Regards,
Ss

Ex Gratia cannot be a part of Salary, If I am not wrong Ex Gratia is paid on some occassion showing extra gratitude towards the employees work/job to the employer
Dear Saji,
Thanks a million for the input.
Please also clarify a few things for me.
My appointment letter suggests Performance Commission and in Pay Slip its Ex Gratia.
Which is correct and can Performance Commission be included in Pay Slip instead of the word Ex Gratia?
In my view both are incorrect to be added as part of your salary every month.
Kindly Suggest asap.
Thanks & Regards,
Ss

Yes Performance Commission can be included in Payslip, since it is based on your performance which can be derived for a particular period i.e. monthly, quarterly, yearly etc. It is basically like Sales Commission for a Sales personnels for achieving targets.
The word “ex-gratia” has not been defined in any labour enactment.
As per Oxford English Dictionary ex gratia is a payment, done from a sense of moral obligation rather than because of legal requirement.
It is very clear, as per the pronouncement of various High courts/Apex court in their many judgments that whether a particular item of payment is or is not a part of a wages/salary must be decided independently of any contrary agreement between the parties.
If the terms of appointment described for payment of performance commission it should be paid under the same head in pay slip the practice of employer for paying the same as ex gratia cannot be appreciated.
However, if any payment is made under the head ex gratia that too on monthly basis that would attract contribution towards PF/ESI.
Any payment as ex gratia at the best can be termed as allowance and can be paid through pay sheet for the purposes of CTC.
Pkjain

Dear All,
What is the difference between Performance Commission and Ex Gratia payment because, in my appointment letter the salary breakup suggest as performance commission and in Pay Slip as Ex Gratia.
Please suggest if this will be an hindrance of any sort in the future.
Thanks & Regards,
Sri

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