What is Ex gratia?
Ex gratia is a Latin term and it means” out of goodwill”. An ex gratia payment is one which the employer is not legally obliged to pay. It is something they are offering to pay an individual out of their own goodwill and if an ex gratia payment is to be made, usually at the termination of employment, the employer will invariably ask the individual to enter into a Settlement Agreement. They will want the comfort of knowing that the individual will not then try to take a claim against them in relation to their employment or the termination of that employment. This does not necessarily mean that the individual will have a claim to make but a prudent employer will still want a Settlement Agreement to be signed.
Ex gratia payments can be paid tax free up to £30,000, it is the same for a Termination Payment or a Redundancy Payment.
If you are looking for a solicitor to advise on ex gratia payments, please get in touch with us on 01483 303636 to discuss your situation and see how we can help.