Searching Case Laws & Precedent on Legal Query!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query!
Scanned Judgements…!
Ex-gratia payments, including annual variants, are consistently portrayed as discretionary, non-obligatory gestures across employment, accident, and scheme contexts, with no source indicating mandatory annual obligation; companies retain unilateral withdrawal rights. Annual ex-gratia is not mandatory. ["KESATUAN PEKERJA-PEKERJA PERUSAHAAN SIMEN SEMENANJUNG MALAYSIA vs TASEK CORPORATION BERHAD - Industrial Court"] ["Fuleshwari Tamrakar W/o Late Ramdas VS Varun Kumar Sinha Constable No. 1601 - Chhattisgarh"] ["SUPPIAH VELLAISAMY vs THE NEW STRAITS TIMES PRESS (MALAYSIA) BERHAD - Industrial Court"]
In the realm of employment law, employees often wonder: whether annual ex gratia is mandatory? These payments, typically labeled as 'goodwill gestures' or bonuses, are common in many Indian companies, especially around festivals. But can regular payouts transform into a legal entitlement? This blog dives into Supreme Court and High Court precedents to clarify when—or if—such payments become obligatory implied terms in contracts.
Drawing from key judgments, we'll examine the strict tests courts apply and why explicit 'ex gratia' declarations often keep them voluntary. Note: This is general information based on case law; consult a legal expert for personalized advice.
Ex gratia payments are voluntary, gratuitous amounts paid by employers without legal obligation. Unlike statutory bonuses under the Payment of Bonus Act, 1965, they stem from goodwill, industrial peace, or custom. However, repetition raises the question: do they imply a contractual term?
Courts answer with caution. For an implied term, payments must pass rigorous tests: unbroken regularity over a long period, uniformity, independence from profits, and circumstances excluding pure bounty. Labels like 'ex gratia' in notices or loss-making years typically negate obligation. Workmen of the Modern Tile And Clay Works, Feroke VS Industrial Trubunal, Kozhikode - 1964 0 Supreme(Ker) 190
The Supreme Court has outlined clear criteria for customary or implied bonuses:
High Courts echo this, rejecting claims without proof of contractual intent.
Workmen claimed Vishu bonus as implied due to payments from 1951–1958. Management proved ex gratia nature, especially in loss years (1953, 1954, 1956, 1958) via letters (Exts. M18–M20) for strikes or goodwill.
Ruling: No implied term. Unbroken chain broken by ex gratia nature. Applied SC tests from Ispahani Ltd. v. Ispahani Employees' Union (1959-2 LLJ 4): Long unbroken payments excluding bounty needed; loss-year ex gratia doesn't suffice. Also, Grahams Trading Co. v. Workmen (1959-2 LLJ 393): Annual notices prevent implication.
Takeaway: Even regular annual ex gratia remains voluntary if evidenced as bounty.
Union sought ex gratia in lieu of bonus; past payments irregular.
Ruling: Demand rejected; triple test unmet. Inconsistent ex gratia cannot imply contractual obligation.
One-time ex gratia under settlement excluded from wages or precedents.
Ruling: Not obligatory; parties' agreement negates implication. Approved ESI Corp. v. AP Paper Mills (1978(1) LLJ 469).
Lump-sum 'Inam' to temporary workers.
Ruling: Not wages; voluntary, non-recurring. Burden on claimant to prove contract link or short-interval recurrence.
While annual bonuses rarely imply terms, specific schemes can create rights:
These show ex gratia in welfare/death/VRS contexts may bind via policy, but not general annual employment bonuses without implied term proof.
Industrial harmony favors rejecting unsubstantiated claims. Workmen of the Modern Tile And Clay Works, Feroke VS Industrial Trubunal, Kozhikode - 1964 0 Supreme(Ker) 190
No precedent mandates annual ex gratia as obligatory. It stays voluntary bounty unless unbroken long-term payments, uniformity, and excluded goodwill prove implied contract. Explicit labels, loss-year payouts, or scheme exclusions preserve discretion. Workmen of the Modern Tile And Clay Works, Feroke VS Industrial Trubunal, Kozhikode - 1964 0 Supreme(Ker) 190TRANSPORT AND DOCK WORKERS UNION VS BOMBAY STEVEDORES ASSOCIATION - 1992 0 Supreme(Bom) 603Employees State Insurance Corporation VS Mukund Iron and Steel Works Ltd - 2000 0 Supreme(Bom) 404S. T. REDDIAR & SONS VS REGIONAL DIRECTOR - 1988 0 Supreme(Ker) 383
Key Takeaways:- Pass triple test or face rejection.- Schemes may create entitlements; check specifics.- Seek legal advice—outcomes depend on facts.
This analysis underscores courts' balance: rewarding custom without imposing unilateral obligations.
#ExGratia #EmploymentLaw #LabourLawIndia
Simply say, the ex-gratia payment made by the Company before 2018 is a payment that is not mandatory for the Company to pay it every financial year. [43] In The New Straits Times Press (M) Bhd v. ... [50] Even though not pleaded by the Company, this Court is of the opinion that it is appropriate and relevant for this Court to examine and consider whether the Company's financial inability to pay the unconsumed medical leave ex-gratia in the current ... It is very clear that the Company can at any time withdraw the ex....
Now, the second question which requires determination by this Court is as to whether the amount of ex gratia can be deducted from the amount of compensation. ... In my view, the ex-gratia amount is different from the compensation awarded under the MV Act. The ex-gratial payment is voluntary, whereas compensation under MV Act is mandatory on the basis of liability or contractual liability. ... In respect of issue ex-gratia amount. The dictionary meaning of ex-gratia payment is a payment....
(ii) Whether the person for whose death the ex-gratia is claimed was actually involved in such motor accident and due to such accident death was caused to the person concerned; (iii) Whether the person claiming ex-gratia is in fact the next of kin of the person who had ... An issue came up in WP(C) No. 2100/2019 on the question as to whether a person killed in a motor accident simpliciter would also be entitled to the ex-gratia payment of Rs. 2,00,000/- as provided in the notification....
The question involved is: If the petitioner is entitled to award of interest on the payment of ex gratia released with delay? The other question involved is: Whether at all there was a delay in the payment of ex gratia? On facts here, it would be more logical to answer the second question first. ... The short issue involved in the writ petition is : whether the respondent is entitled to the interest on “ex gratia” monetary compensation which was, admittedly, payable to her, because of her husband dying ....
On 20.05.2011, he was, during his Annual Medical Examination, found to be suffering from Hypothyroidism and Obesity and was therefore placed in low medical category. ... The question which, therefore, accordingly needs to be determined is as to whether the death of the petitioner‟s husband would qualify as death due to an accident during the course of performance of duties as envisaged under the aforesaid O.M. ... In order to appreciate this plea, it would be apposite to refer to the paragraph 12.1 of the O.M. dated 04.08.2016 which provides for ex-#HL_STA....
A perusal of the judgment Annexure P-6 would show that a co-ordinate Bench of this Court has dealt in detail with regard to as to whether the family pension is to be included in the total family income or not and this Court was dealing with the same scheme under which the petitioner is claiming ex-gratia ... It was further submitted that in fact this issue as to whether the family pension is to be included as a component for determining the family income or not is no longer res integra and has since been decided by a co-ordinate Bench of ....
In other words the question whether a High Court has territorial jurisdiction to entertain a writ petition must be answered on the basis of the averments made in the petition, the truth or otherwise whereof being immaterial. ... As per the said ex gratia Scheme known as "Bharat Petroleum Corporation Limited Monthly Ex Gratia Scheme" (Ex Gratia Scheme), the same is applicable to all the ex-employees who have completed minimum 15 years of continued service with the respondent and who had joined the service ... Thus, Clause....
Whether the government has taken effort for realization of the insurance money from the owner of Maruti vehicle whose number was apparent in the FIR itself, it has been intimated by both the counsel that they are not aware of this fact that whether the government has tried or made any effort for realization ... Learned counsel for the State on the other hand submits that the petitioner is not entitled for ex-gratia amount, as the petitioner has already received accidental claim. ... He submits that the said ex-gratia amo....
The crucial question to be considered is whether the case of the persons like the petitioner actually does come within the purview of Annexure R3(a) order, sanctioning the ex-gratia pension. ... The W.P.C.No.3987 of 2014 4 employees who had already retired from service on superannuation as above will also be eligible for the Ex-gratia Pension. ... The basic order sanctioning the ex-gratia pension was issued by the Government vide Annexure R3(a) dated 18.09.1999, which was adopted by the Board, issuing necessary Board ord....
[2] The first thing the court will have to do is to ask itself whether there was a dismissal, and, secondly, if so, whether such dismissal was with or without just cause or excuse (see Wong Chee Hong v. Cathay Organisation (Malaysia) Sdn Bhd . ... He enunciated further: When the Industrial court is dealing with a reference under s. 20 , the first thing that the court will have to do is to ask itself a question whether there was a dismissal, and if so, whether it was ... Bayer; [1998] 2 CLJ 197 ; [1998] 2 MLJ 599, the c....
Therefore, the observations in Reliance General Insurance Co. (supra) are very much applicable here. The purpose for which provision was made for ex-gratia payments is required to be considered. They should not be put in any financial difficulty. The intention is to help the family of the deceased to come out of the sudden crisis.
Basic pay plus DA only is to be taken into account for computation of ex-gratia under VRS. Whether allowances like personal Pay, HRA, NPA, Family Planning increment are to be included for computation of ex-gratia? 2. Whether the post of the employee who has taken VRS is to be abolished?
The said communication dated 16. 01. 2006 also stipulated that:- " (iv) No new claims for grant of ex-gratia for death or injury would be entertained. However, if there are any pending or disputed cases which are awaiting decision for want of the necessary proof / evidence, such cases can be considered if they are finally accepted as genuine claims. " Only those who received ex-gratia earlier should be eligible for the enhanced additional ex-gratia amount.
Only those who received ex gratia earlier should be eligible for the enhanced additional ex-gratia amount. However, if there are any pending or disputed cases which are awaiting decision for want of the necessary proof/evidence, such cases can be considered if they are finally accepted as genuine claims." The said communication dated 16-1-2006 also stipulated that :- "(iv) No new claims for grant of ex-gratia for death or injury would be entertained.
(a) Two months' salary (pay plus stagnation increment plus; special pay plus dearness relief) for each completed year of service, or (g) Any other category of employees as may be specified by the Board. 5. Amount of Ex-gratia. - An employee seeking voluntary retirement under the Scheme be entitled to the Ex-gratia amount mentioned below in para (a) of (b), whichever is less. (b) Salary (pay plus stagnation increment plus ; special dearness relief) for the number of months service left.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
