Will My Company Deny Ex-Gratia Bonus Without Prior Notice? Let's Discuss!

Hello Friends,

Will the company deny ex-gratia (bonus) to its employees? If so, they would need to inform the employee in advance, isn't it?

Regards,
sens

Bonus is paid as per the Payment of Bonus Act 1965. There is an upper ceiling prescribed for the payment of bonus, i.e., 20%. Hence, any employer who is willing to pay a bonus over and above 20% pays it in the name of "ex-gratia" payment. "Ex-gratia" (Latin) means done, made as a favor, in the absence of a legal right. In order to maintain good harmonious industrial relations, ex gratia may be paid if you were paying it in the previous years. If, due to financial difficulties, ex-gratia cannot be paid this year, call the employees, talk to them, convince them, and request them to cooperate and assure them that ex gratia will be paid when the financial position improves.

Dear K C S Kutty,

As you correctly said, there is an upper ceiling prescribed for the payment of bonus, i.e., 20%, and the lower prescribed limit for bonus is 8.33%. However, from what I understand, if an employer wants to give the benefit of bonus to those employees who receive basic pay + DA more than Rs. 10,000, then this benefit is called "ex-gratia." I would like to know what the ceiling limit of "ex-gratia" is, similar to bonus (8.33% to 20%).

Regards,
Bandini

As mentioned earlier, ex gratia is paid in the absence of a legal right. For the payment of ex gratia, there is no ceiling since it is not prescribed by law. Please remember, if you pay 30% or 25% ex gratia this year, it will be demanded next year, and then it will become a custom and a right. Be generous but also be careful.

KCS Kutty

Dear K. C. Kutty,

Sir, I have a question about LTA. Can you please help me out? My query is, as per my understanding, the minimum working period to be eligible for LTA is 1 year (12 months). However, if an employee has completed 1 year (6 months as a probation period and 6 months as confirmed), will this person be eligible for LTA?

Thank you.

LTA or LTC varies from organization to organization. Employees of the Central government have a different scheme of LTC. State government employees, Government of India or State Government undertakings have their own LTA or LTC rules.

You have to check the LTA policy in your organization. If an employee is eligible for LTA after completing one year, he is entitled to LTA. The probation period is considered part of the service period and is solely for assessing suitability for the post. Once the services are confirmed, the employee becomes a regular employee with a service period of one year.

Kindly review the LTA rules of your organization once more. Also, verify if the confirmation letter states that the service period commences from the date of confirmation only.

KCS Kutty

Employers have to pay a minimum bonus of 8.33%, but there is no compulsion on employers to pay ex-gratia. It depends upon the employer's profitability and will. So, employees cannot object if they do not receive ex-gratia. However, ensure that they will receive a minimum bonus of 8.33%.

Mr. SENSE, do not confuse yourself with Ex-GRATIA and BONUS. Both are different. BONUS is statutory, and Ex-gratia is a voluntary payment by the employer. Thus, Ex-gratia can be denied with or without intimation, whereas Bonus cannot.

LTA will be granted to the person who has completed 1 year (inclusive of the probation period). The trainee period is excluded.

We are in an organization under the Companies Act. The organization is not paying BONUS to its employees but paying performance pay. The staff are receiving compensation as per their pay scales and performance parameters. The organization has not termed it as "bonus." Can we treat it as a bonus? Some of the lower-level staff should be paid a minimum of 8.33%. Staff who are appointed as agents, will they get the bonus? As they don't have a definite pay.

Dear Mr. KCS Kutty,

If an employer declares an ex gratia for 2009-2010, kindly clarify whether those who have resigned in April 2010 or afterwards or those who are on notice period are eligible to get this ex gratia. Can the employer deny them payment stating that they are not in the rolls when ex gratia/bonus is announced.

Please clarify.

Thanks and regards,
vvvraman

Clarification on Ex-Gratia Payment Eligibility

I need clarification regarding the payment of Ex-gratia. For example, the company pays ex-gratia for the financial period of 2010 to 2011 in the month of September 2011. An employee who has served in the above-mentioned financial period has resigned in August 2011. Can he claim the eligibility of Ex-gratia? If not, why?

Regards,

In my offer letter, my company clearly mentioned that they would pay the ex gratia after the completion of one year. I have resigned from the company after 14 months, and now they are denying giving me the ex gratia. Please advise if I can take action against them.

There was an uninformed deduction made from the salary of 1000 Rs, which was later justified as a deduction of ex-gratia. However, my fixed salary is 15000 Rs, so I would like to know about the detailed terms regarding this uninformed deduction. Does this apply to me? What is the procedure to stand against this ex-gratia, as no employee from my organization is ready for ex-gratia? We are a Pvt Ltd Organization, established in 2014.