Dear All,

Should exgratia be paid for every financial year along with bonus.Can anyone tell me meaning for DEARNESS ALLOWANCE.

Thanks,
Richa

Hi

Exgratia is not mandatory. It is purely the discretion of the management to pay exgratia. Normally when an amount is paid to the employees who are not coverable under the Payment of Bonus Act and when some amount is given in excess to the ceiling prescribed under the Act (Bonus earnings restricted to Rs.3500/- per month), it will be termed as Exgratia in the bilateral/tripartite settlements. Normally exgratia is the amount paid to the employees in recognition of their cooperation and contribution. The employees have no right to demand exgratia unless it is contemplated in a settlement between the employer and employee.

Minimum wages has two components. 1) Basic wages 2) Dearness Allowance. Dearness Allowance prescribed under the Minimum Wages Act will be revised every 6 months once based on the increase in cost of living index.

Companies pay Dearness Allowance to the employees based on the long term wage settlement they enter into with the Unions.

Like Basic wages, Dearness Allowance will also be taken into consideration for indirect benefits such as Bonus, PF, Gratuity, Superannuation etc.

Please revert to me for any clarification.

Have a wonderful day and great week ahead.

Thanks & Regards
Govil