Can We Offer Bonuses Without Making Ex-Gratia Mandatory for Salaries Above ₹10,000?

Dear Seniors, Please help me out. If an employee has a basic salary above ₹10,000, can we give them a bonus? And if we provide them with ex-gratia, is ex-gratia mandatory, or can we avoid it?

Thanks,
Amit Sharma

If any employee's basic salary is above ₹10,000, then no employer is liable to pay a bonus. Even employees can't file any legal dispute case against the company either. Generally, to motivate employees and create a better industrial environment, companies pay them in the ex-gratia term. However, statutorily, no employer is bound to give a bonus above a basic ₹10,000.

For any further queries, you can discuss.

Regards,
Ratikanta Rath

Yes, you can give a bonus, though the basic salary is greater than ₹10,000, and ex-gratia is not mandatory. It is purely at the discretion of the management to pay ex-gratia. Normally, when an amount is paid to employees who are not covered under the Payment of Bonus Act and when some amount is given in excess of the ceiling prescribed under the Act (bonus earnings restricted to ₹3,500 per month), it will be termed as ex-gratia in the bilateral/tripartite settlements.

Normally, ex-gratia is the amount paid to employees in recognition of their cooperation and contribution. The employees have no right to demand ex-gratia unless it is contemplated in a settlement between the employer and employee.

Even when paying the ex-gratia, you should be very careful. Bonus is a statutory obligation; hence, whether your company is running with profits or losses, you should pay a minimum bonus, but not in the case of ex-gratia. Unfortunately, there is a critical word in English - "practice" - that plays a vital role. Therefore, when you are paying the ex-gratia, you should take an undertaking from each employee that they should not quote this as a precedent and demand the same next year.

If the company is profitable, they will pay the ex-gratia, but unlike the bonus, there is no obligation for ex-gratia.

Regards,
Kamesh

Dear Seniors, myself Subhajit, Assistant Manager HR in our company. Please help me out. Recently, we paid a bonus to an employee whose basic salary is ₹10,000 per month. We gave him a bonus of ₹10,000 and did not pay ex gratia. Is this right or wrong?

Thanks,
Subhajit Bhowmick

If for 1 month, then as per the Bonus Act, in the C register, you have to show Rs. 3500 for statutory purposes, and the rest amount of Rs. 6500 should be shown under the ex-gratia head.

Regards,
Ratikanta Rath

Statutory Liability for Bonus Payment

The statutory liability for the payment of a bonus is Rs. 10,000/- (basic + DA). The ex gratia payment is solely the liability of the employer.

Regards,
Sumit

I am Sundar. I have worked for a public limited company for the past 2.5 years, and recently, I resigned from my job in April 2011. I asked HR for the bonus for the financial year 2010-11. The HR person informed me that resigned employees are not eligible for the bonus, even though I worked for the previous financial year 2010-11. My basic salary is Rs. 4000/-, and my gross salary is Rs. 13500/-.

So, I kindly request anyone to help me with how I can claim my bonus.

Thank you.
Regards

Subject: Re: Bonus

Dear Seniors, my name is Servjeet, and I am the Accounts Manager in our company. I am seeking your assistance. Could you please provide me with a sample of the bonus register form C 4(b)?

Thank you,

Servjeet

Is Ex gratia mandatory to pay when an employee resigns voluntarily?

Dear Sir/Madam,

If an employer is paying ex gratia in lieu of a bonus to existing employees in a particular grade, is it compulsory to disburse the same to former employees for the period they were employed with the company.

Dear Anil,

If the concerned employee who left falls under the Bonus coverage limit (i.e., salary less than or equal to Rs 21,000) and the Bonus accounting Period, then the departed employee is also eligible for a bonus. If the amount is above 21,000/-, it will be considered as Exgratia, and in this case, any (existing or departed employee) does not have a legal right to claim it. It purely depends on the management's decision whether to pay or not.

T/R Ratikanta Rath