Can Ex-Gratia Payments Be Deducted from Employee Compensation Awards? Let's Discuss!

Ex-gratia Amount and Employee's Compensation Act

Whether the ex-gratia amount, which is not paid in accordance with the statutory provisions, can be deducted from the compensation awarded under the Employee's Compensation Act?

Ex-gratia Amount and Compensation

As per the Industrial Disputes Act, when a benefit is given to an employee, it cannot be withdrawn or taken back. The ex-gratia amount already given cannot be taken back and deducted from the compensation awarded under the Employees' Compensation Act.

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Compensation Adjustment Under the Employee Compensation Act

Any amount paid as compensation to a person involved in an accident by the employer directly cannot be taken back or adjusted when the final compensation is given under the Employee Compensation Act.

The only way you can adjust it is if it was given as an advance under humanitarian grounds, with the prior written approval of the concerned labor commissioner.

In fact, even if the full compensation is given directly, the Labor Commissioner is required to ignore the same and ask the employer to give the entire amount again.

The ex-gratia amount, which is not paid in accordance with the statutory provisions, cannot be deducted from the compensation awarded under the Employee’s Compensation Act.

Section 8(1) of the WC Act

No payment of compensation in respect of a workman whose injury has resulted in death, and no payment of a lump sum as compensation to a workman or a person under a legal disability shall be made otherwise than by deposit with the Commissioner. No such payment made directly by an employer shall be deemed to be a payment of compensation. Provided that, in the case of a deceased workman, an employer may make advances to any dependent on account of compensation not exceeding an aggregate of one hundred rupees. So much of such aggregate as does not exceed the compensation payable to that dependent shall be deducted by the Commissioner from such compensation and repaid to the employer.