Understanding Ex-gratia Payments: Employee Rewards and Compensation Insights

Dear seniors,

What is the ex-gratia amount?

Regards,
Zainul

Hi,

Ex-gratia is nothing but an amount paid by your employer for the good work carried out by you that is in addition to your usual salary/wage. This is usually paid to the employees who are in the good books of the employer. This type of payment is to motivate the employees and get a good amount of work from them for the achievement of the end goals of the company.

Mohan Rao Manager HR

Hi Mr. Zainulaabdeen,

Coming to the point of the percentage of ex-gratia, there is no such percentage in labor law, and even ex-gratia payment is not a statutory payment to any employee. The employee pays ex-gratia out of regard towards the employee's work and sees it as a reward for the extra efficiency shown at work, sincerity towards the work allotted, commitment towards the company's end goals and achievements, achievement of targets set by the organization, etc. The employer makes a payment of ex-gratia to motivate the employee for further boosting their activities and extracting more efficiency for the good of the organization.

Moreover, ex-gratia is purely at the discretion of the management/employer and not a statutory payment. There is no specified limit for ex-gratia payment by the employer.

Mohan Rao Manager HR

Can ex gratia be given to only regular employees? That is for those who have completed 240 days or such criteria can be fixed up.

Hi Mr. Rameshanpt,

Ex-gratia can be given to any employee, i.e., he/she may be on regular, casual, or NMR rolls. There is no time period for completion to receive ex-gratia. It can be given to an employee by their employer for even a short period of work they have done, impressing the employer with the work carried out to satisfaction and even beyond. The employer may then award ex-gratia to that employee.

In general, employees on regular rolls usually receive ex-gratia from their employers in 99% of cases.

Mohan Rao Manager HR

Let me clearly understand what you have said: we are going to distribute ex gratia along with a bonus before the Pooja festival. Is it okay if we pay ex gratia only to those who have a minimum of 240 working days in the last 12 months? Please correct me if I am wrong.

Hi,

There is no need for an employee to work for 240 days in the last 12 months period to receive any ex-gratia. It is a reward given by an employer for extraordinary achievements in work that was entrusted or for efficiency shown to the satisfaction of the employer. Whatever the reason may be, it is a gesture of gratitude from the employer to an employee.

Ex-gratia can be paid at any point during a financial year. Do not confuse this with any bonus payments, as bonus payments have their own acts and rules.

Mohan Rao Manager, HR