Can anybody let me know the meaning of exgratia payment act :?: Thanks Moushomi
From India, Lucknow
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Hi Moushomi,

Ex-Gratia is a part of CTC which is attached as a predefined bonus and is paid at the time of Diwali on a pro-rata basis. Nowadays, companies have incorporated this structure in their CTC content to reassure employees that this amount will be paid at the time of Diwali and will be calculated on a pro-rata basis.

Regards,
Amit Seth

From India, Ahmadabad
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Dear Sir,

An employee was appointed at X CTC, whose breakup includes ex-gratia. After two years, HR, while giving the increment letter, includes a small clause stating that the ex-gratia payment will only be made if the employee is in service at the time of the disbursement of ex-gratia, without taking the employee's consent into consideration.

Since this ex-gratia amount was actually part of the employee's salary, can management refuse to pay this amount if the employee is relieved before the disbursement day, typically around Diwali?

Your immediate response would be of immense help.

Regards,
Rahul


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Dear Rahul,

Ex-Gratia is an amount that is added as a pre-defined bonus. Since it is a part of CTC, it must be paid even in the case of separation, whether it occurs before or after Diwali. It is usually paid on a pro-rata basis, so it should be paid according to the individual's length of service if no prior clause is defined in the HR policy.

Regards,
Amit Seth.

From India, Ahmadabad
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Thks Amit for your immediate response. Can we have any similar legal clarification? As logically this exgratia payment should be made, but what if Co. is reluctant to pay? Rahul

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Thank you, Rahul.

Actually, if the employer is reluctant to pay that amount, then in that case, he must have some policy regarding that; otherwise, he must pay the same. For that, one may even go to the labor court also.

Regards,
Amit Seth.

From India, Ahmadabad
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