{"id":85118,"date":"2023-06-27T09:02:49","date_gmt":"2023-06-27T09:02:49","guid":{"rendered":"https:\/\/domore.in\/oldworkplus\/?page_id=85118"},"modified":"2026-07-01T16:20:35","modified_gmt":"2026-07-01T16:20:35","slug":"ex-gratia-payment","status":"publish","type":"page","link":"https:\/\/domore.in\/oldworkplus\/hr-glossary\/ex-gratia-payment\/","title":{"rendered":"Ex Gratia Payment"},"content":{"rendered":"\t\t
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What is Ex Gratia Payment?<\/span><\/h1>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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An ex gratia payment<\/strong> is a voluntary payment made by an employer to an employee. It is not required by law, not written into the contract, and not something the employee can demand. The employer chooses to make it as an act of goodwill.<\/p>\n\n

The term comes from Latin, meaning “from grace” or “by favour.” In HR practice, ex gratia payments go above and beyond what the law demands. They are completely separate from the employee’s regular salary<\/a>, their benefits package<\/a>, and the mandatory end-of-service gratuity<\/a> that UAE Labour Law requires.<\/p>\n\n

Employers pay them to show appreciation, resolve a dispute without going to court, or simply support someone through a difficult moment. It is a human gesture, not a legal checkbox.<\/p>\n\n

Types of Ex Gratia Payments<\/h2>\n

Ex gratia payments take different forms depending on the situation. Here are the most common ones you will encounter:<\/p>\n\n\n
Type<\/th>When It Is Given<\/th>Real-World Example<\/th><\/tr><\/thead>\n
Termination Bonus<\/strong><\/td>On top of mandatory gratuity during redundancy<\/td>AED 20,000 paid to a 10-year employee beyond their legal gratuity entitlement<\/td><\/tr>\n
Goodwill Settlement<\/strong><\/td>To resolve a dismissal dispute before it escalates to MOHRE<\/td>A quiet settlement to avoid a formal labour complaint<\/td><\/tr>\n
Recognition Bonus<\/strong><\/td>Exceptional performance or a major milestone<\/td>A one-time payment for closing the biggest deal of the year<\/td><\/tr>\n
Hardship Payment<\/strong><\/td>When a company decision causes personal disruption<\/td>Extra pay for an employee relocated on very short notice<\/td><\/tr>\n
Early Termination<\/strong><\/td>Employer ends a fixed-term contract before its end date<\/td>Additional payment beyond statutory notice when a project role is cut short<\/td><\/tr>\n<\/tbody>\n<\/table>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t
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Ex Gratia Payment vs End-of-Service Gratuity in the UAE<\/h2>\n

This is one of the most common points of confusion for UAE HR teams, so let us clear it up.<\/p>\n\n

End-of-service gratuity<\/a> is mandatory. The law sets the formula and every eligible employee gets it. There is no room for employer discretion. An ex gratia payment, on the other hand, is entirely your call. No law forces you to pay it, no formula dictates the amount, and the employee cannot chase you for it. It is a choice made out of goodwill.<\/p>\n\n\n\n
Feature<\/th>End-of-Service Gratuity (UAE)<\/th>Ex Gratia Payment<\/th><\/tr><\/thead>\n
Legal Requirement<\/strong><\/td>Mandatory under UAE Labour Law<\/td>Voluntary. No legal obligation.<\/td><\/tr>\n
How It Is Calculated<\/strong><\/td>21 days basic salary per year (years 1 to 5). 30 days per year after 5 years.<\/td>The employer decides the amount. No set formula.<\/td><\/tr>\n
Who Qualifies<\/strong><\/td>All employees with at least 1 year of service under UAE Labour Law<\/td>Whoever the employer chooses. No eligibility criteria.<\/td><\/tr>\n
Tax in UAE<\/strong><\/td>Tax-free in the UAE<\/td>Tax-free in UAE. May be taxable in the employee’s home country.<\/td><\/tr>\n
Payroll<\/strong><\/td>Paid via the Wages Protection System (WPS)<\/td>Processed through payroll for a proper audit trail and WPS compliance<\/td><\/tr>\n<\/tbody>\n<\/table>\n\n

When Do UAE Employers Give Ex Gratia Payments?<\/h2>\n

There is no single trigger, but these are the situations that come up most often in UAE businesses:<\/p>\n