Ex-gratia | Meaning and Definition

What is the ex-gratia payment?

The ex-gratia meaning is the amount that is paid as a favor. The government makes the payment to a particular person to compensate for the damages or losses faced. This payment is given to the people without expecting any liability or loan from their side. The individual or the company or government paying this money to the victim will not expect anything in return as this is compensation for the damages that have been faced. This action is a voluntary action taken by the company or the government involved. This is termed as one of the best gestures by the government or the company, whoever is paying the amount, towards the victims to help in their critical times.

Circumstances under which ex-gratia payment is made

Ex-Gratia payment is made under the following circumstance:

  • To employees who are laid off or terminated from the organization
  • To the employees who are injured or killed during his job
  • To the family of those employees who are killed during their job
  • To victims of some disasters¬†
  • To those employees who relocate due to their job

Features of Ex-Gratia Payments

Here are some of the features of Ex-Gratia Payments:

  • These kind of payments are voluntary and are not governed by any law
  • These payments are typically made as a gesture to maintain goodwill or to compensate some kind of loss
  • These kind of payments are not taxable by the law
  • The amount of this kind of payment is not limited and generally varies on the basis of needs of the group or an individual

Ex-Gratia Payment Calculation

However, there is no hard and fast rule or formula to calculate the ex-gratia payment but there are certain factors that decide the payment calculation:

  • Severity of loss or the hardship caused
  • Financial resources of the recipient
  • Ability of the organization to afford the payment
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