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RAKESH PRADHAN (Accounts)     17 November 2010

Non-Payment of Exgratia

The Company has not paid certain dues like Ex-gratia, Performance bonus, Acheivement Bonus, etc which was very much part of CTC (%age of Basic Salary) and was also included along with Basic Salary and other Allowances in Salary Structure.

These payments were guaranteed amounts and mentioned in the appointment letter and was not part of  voluntarily payments by Company during Diwali / Dushera.

They also have a pay structure which includes Variable pay apart from above which is not guaranteed and is based on Company Performance (%age or Amount not fixed) which is not being demanded by the employees.

Can someone advise what legal action can be taken against the Company (under Labour or any other laws) to recover the pending dues like Ex-gratia, Performance bonus, Acheivement Bonus, etc as Company has blatently denied to pay any such dues and contending that these are payable at the discretion of Company and performance of Employes & Company during the period.




 3 Replies

Kirti Kar Tripathi (lawyer)     19 November 2010


you can file case. in case you fall within the definition of workman, you can file application under section 33-C(2) of the I.D. Act otherwise you have to file civil suit.


1 Like

Shivendra (Sr HR Executive)     19 November 2010

hello kirti  sir,

a very warm salaam for this evening, 

i am putting my problem directly in this page as i m not getting answers addressing my problem, expressing my sorry request you to look into this case.............

I have a problem regarding the payment of bonus of a senior of mine, please go through the below mentioned details ...............


"He worked with a 55 year old company at senior level & resigned on 20-04-2010. When He asked his company for the Bonus for the yeat 2009-10, he got refused & told that he is not eligible. He has worked for total 15 years in that organisation.
If such is a case then how all these years he used to get Bonus, because his salary was always above Rs.10000 pm from date of joining. Is there a clause in Bonus act that Bonus is not payable to employees who have resigned ."


sir i think he was not eligible for the payment of the bonus from the date he joined the organisation,

but he was being paid in the name of the bonus which we generally call an Ex Gratia payment,

sir, it is very true that an Ex Gratia payment is sweet will of the organisation and generally can not be pleaded against in case of  "not payment" of it (but from the begining as far as i know),


"but in a comment over a section of the PoB Act 1965 i have read that an Ex Gratia payment can not be denied if it has been being paid for past several years"  

i am putting this page from the act itself  for refernce........





  "" 8. Eligibility for bonus.-Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year.




(i)             Workers, who have option to attend to work at the factory premises, are entitled to bonus. [M/s. Kale Khan Mohd. Hanif v. Jhansi Bidi Mazdoor Union 1980 Lab. I.C. 1973].


(ii)            Season workers who have worked for not less than 30 working days, are entitled to bonus. U.K. Ginning & Pressing Factory v. P.O., 2nd Labour Court and Ors., (1991) 62F.L.R. 207 {Born.)].


(iii)           Eligibility for bonus depends upon the employee having worked for at least 30 working days in the year.


(iv)          There can be no condition against the statute. [Dewan's Modern Breweries Ltd. v. Industrial Tribunal & Ors., 1973 Lab.I.C. 129 (J&K)].


(v)            The employees at the Head Office are entitled to bonus at the same rate at which the workers of factory have been given by virtue of settlement. [Hindustan Construction Co. Ltd. v. G.K. Potankar & Anr., A.I.R. 1976 S.C.907].


(vi)          Employees working on part-time basis are eligible for bonus. [Arun Mills Ltd. v. Dr. Chandra Parshad C. Trivedi, (1976) 32F.L.R. 323].


(vii)         A probationer is eligible for bonus. [Bank of Madura Ltd. v. Bank of Madura Employees' Union. 1970 Lab. I.C. 1215].


(viii)        Every employee is entitled to bonus. [Mahabir Tiles Work v. Union of India, A.I.R. 1968 Ker. 143].





         9. Disqualification for bonus.- Notwithstanding anything contained in this Act, an employee shall be disqualified from receiving bonus under this Act, if he is dismissed from service for-


(a)   fraud; or

(b)    riotous or violent behavior while on the premises of the establishment; or

(c)   theft, misappropriation or sabotage of any property of the establishment.




      Bonus can be forfeited under section 9 only with reference to accounting year in which the employee committed fraud, theft, etc. [Himalaya Drug Co. v. P.O., 2nd Addl. Labour Court & Ors., (1986) 52F.L.R. 704].


         1[10. Payment of minimum bonus.-Subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall be 8.33 percent of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year:


     Provided that where an employee has not completed fifteen years of age at the beginning of the accounting year, the provisions of this section shall have effect in relation to such employee as if for the words "one hundred rupees", the words "sixty rupees" were substituted.




(i)             Ex-gratia bonus is not a bonus within the meaning of section 10 of the Act. [R.P.C. Officers' Association v. R.F.C. and Ors., 1990 L.L.R 222 (Raj.)].


(ii)            If employees have been getting ex-gratia bonus for last many a years, its payment cannot be stopped. [ibid.]


Claim for the minimum bonus lies to the Labour Court under section 33C(2) of the Industrial Disputes Act, 1947. [Kohinoor Tobacco Productions Ltd. v. P.0., 2nd Labour Court, 1986 Lab. I.C. 1055 (Bom.)].   ""

sir please see the lines above which are in this color

pleae advice me about the pursuance of the organisation for the payment of bonus.........

with thanks and regards


Subodha (Manager)     12 August 2012

Dear Sir,

I have one query that one of my friend left the company few months back. The question is as below:

  • He has asked his employer for his PLVP (part of his CTC) but the employer has denied to pay as the employees served 11 months and 8 days whereas in the appointment letter, it is mentioned that after completion of 1 year it can be paid. But not mentioned whether it implies to serving employee or left employee (not mentioned clearly as per the policy or in letter of appointment). the case is now the employee signed as the acceptance in token while on joining. Now, what the employee will do as the company denies to pay his PLVP in his settlement?
  • The same as to his LTA too. What he will do on this?
  • he has been paid 3 months notice pay. whether he will ask upto the closure of the notice period in actual or he will get upto he has worked in company. During these 3 months notice company has not allowed him to work nor he has worked anywhere. Can he claim for this 3 months medical benefits, LTA and his PLVP and along with the delay in payment of settlement?
  • What exactly the labour laws say on the above?
  • If any related laws and Acts are there for the above or any decisions under this type of petitions are there then please let me know.

Can anyone advise me so that I can help my friend on this case who is in very crucial stage of problems? Please advise.




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