Can I Claim My Ex-Gratia Bonus for the Past 7 Years? Seeking Legal Advice on Company Policies

I worked for a group with several companies registered in the eastern region of India and plants in other locations. I worked at the corporate office of the group in Delhi, where several senior staff members were seated and receiving their salaries from different companies under the group. The corporate office used different policies regarding salary increments and bonuses compared to those used at the various plants of the companies and branch offices. For the past 8 years, I was one of those under the corporate office policies. The company (Z Ltd) that was paying my salary also followed different policies for all employees except me, as I was one of the few employees who joined the ranks of Z Ltd but were situated at the group's corporate office. The salary and bonus policies of Z Ltd were better than those followed at the corporate level, and I had no issue with that as the gratuity payment to employees was good at the corporate level, where gratuity was paid based on gross salary rather than basic salary.

Everything was going well until I decided to resign today. I was informed that my gratuity would be calculated based on Z Ltd's policy and not on the corporate office policy that was followed for other employees when they left their jobs from the corporate office within the last 60 days.

As we all know, in such situations, management shows its true colors, and my immediate seniors at the corporate level did not support me or present my case.

Query Regarding Ex-Gratia Bonus

My query is regarding Z Ltd, which has declared an ex-gratia bonus every year since I joined the company and was stationed at the corporate office. During the first year in 2009, I was also given a bonus as I was new to the system, but the corporate office staff informed Z Ltd that I should be governed by corporate office policies.

Z Ltd paid bonuses to all employees yesterday, including the 2016 ex-gratia bonus. However, my name was not on that list, and that same evening, they denied me the benefits available to corporate office staff. Can I now claim the ex-gratia bonus for the last 7 years that was never paid to me, and what are the legal remedies available to me if the company denies this?

Thank you.

Understanding Ex Gratia Bonus and Its Implications

Ex gratia bonus is something that falls outside the purview of the Labor Act concerning the payment of bonuses to employees. From the post, it is not clear whether the bonus is statutory or not. A bonus is statutory only when it is payable to an employee whose salary (at least the Basic + DA portion) is not more than Rs 21,000. For the rest of the employees, it is not statutory, but as rightly said by Jack, it should be ex gratia only.

Ex gratia is paid subject to certain conditions, and one of the most important factors is whether the employee will continue to be with the employer or not. Naturally, one who has submitted their resignation will not be paid any ex gratia because it is given not by the operation of any law but purely as a gift. It can also be paid if there is a specific understanding as per the contract of employment. In the latter case, the employee denied the benefit of ex gratia shall proceed against the employer in the civil court for breach of the contract of employment.

Differentiating Pay and Bonus/Ex Gratia Payment

When it comes to differentiating pay and the payment of bonus/ex gratia, only management can take action because there can be individuals under different payrolls within the same organization. In the absence of a service rule or Standing Order, this can only be considered a work arrangement. In such a situation, normally, the terminal benefits applicable to the parent company (in your example, Z Ltd) will apply to the employee working at the Corporate Office representing the parent company, i.e., Z Ltd. It is not necessary for you to receive the same benefits as those applicable to other corporate employees.

Regards, Madhu.T.K

What is your designation? What is your work nature? What is your salary? These facts are required to find out whether you fall under the ID Act or the Indian Contract Act.

You can certainly take legal action for discrimination if you fall under the category of a workman; a good advocate can win a case for Exgratia. However, if you are moving to another company, we do not recommend any litigation.

T. Sivasankaran

Denial of payment due for the work already carried out is not acceptable. The company should adhere to policy consistently and not engage in selective enforcement. Employee turnover at TPC is a common occurrence, and the company should not act vindictively towards departing employees. This issue is not solely about money but also about upholding corporate values and ethics.