Ex gratia is lump sum amount paid by employer as a sweet will. This has no legal sanctity; unless there is memorandum of settlement or as per terms of appointment. It can't be legally claimed,but if it is precedent for last so many years, than there can be IR issues.salary is not the criteria at all.
ex gretia gives when an employee is under the esi scheme..
Suri Babu Komakula
Now lets see the following ruling:
Indian Supreme Court in this case held that –“An ex gratia payment is in the nature of incentive payment which is in the discretion of the management. To make an ex gratia payment to the staff is a well recognized legitimate mode of incentive payment. Incentives are necessary for securing from the workmen co-operation and efficient work. The decision to make the payment has, therefore, to be left entirely to the discretion of the management.”
 Coffee Board Employees’ Association v. A.C. Shiva Gowda (1992) 1 SCC 500
EX Gratia is nothing but Bonus. If the Employer pay more than 20% of the Employee Gross Salary as Bonus then it is called as Ex Gratia .
Only Railway and BHEL will pay more than 20% of thier gross salary as bonus.
ESI attracts Ex gratia
B S Mohan
Here I would like to elaborate a little more (Also refer to my posting below)
In India, the Payment of Bonus Act, 1965 (‘Bonus Act’) provides for the payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity and for matters connected therewith. The Bonus Act links bonus exclusively with productivity-whether it is individual or collective. The Bonus Act prescribes for minimum bonus of 8.33% of the salary or wages and a maximum bonus of 20% of the salary or wages. The Bonus Act makes it mandatory for an employer to pay bonus. Bonus is essentially “allocable surplus” and a "share in the profits" of the organization
Thus a cash bonus, which satisfies the minimum statutory requirement of bonus under the Bonus Act is a statutary bonus and thus a compulsory payment. Therefore only those discretionary payments termed as bonus can be accounted as ex-gratia paymnts which does not arise out of any statutary requirement or mandate.
 Section 10 and 11 of the Payment of Bonus Act, 1965
Ex-Gratia is nothing but part of a payment which either could be paid along with salary or separately. The Bonus is statutory as 8.33 % and it must be paid to the employee those who are getting some level below as salary. More than this 8.33 % whatever is paid is called as Ex-Gratia. There is no statutory tie-up for this. The Company can pay any time to any employees against their individual recognition of the employees. While an employee getting some thing more than what others get as per his personal recognision the other employee can not claim the same amount from the Management. It is wish of the Management and employees cannot question about this.
will you pls guide me if the ex-gratia payment is mentioned in concerned employees CTC payment while offering employment. i mean if company is treating the payment of ex-gratia in the perks of the employee than is not mendatory to pay the ex-gratia to the employee on annual basis. and in this situation whether company hold the Ex-gratia payment of one employee. pls confirm at the ealiest.
if the company is offering me ex-gratia in writting in my CTC even though it's not mandetoty to give me..? even though it is completely depend on the managment to pay ?
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