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What is ex gratia?

An ex gratia payment is an additional sum paid by the employer on termination of employment to compensate the employee for the loss of their job. This can arise as a consequence of various situations such as an unfair redundancy, a performance management process or because of discriminatory conduct.

The term ex gratia comes from Latin and literally means ‘by favour’, as it is not paid because of a legal requirement and usually is offered without admission of liability.  In practice, employers offer an ex gratia payment to settle a dispute or to compensate for loss of employment following a restructure or redundancy and the payment is often contingent on signing a settlement agreement.

In all cases you will need legal advice to finalise the terms of a settlement agreement. However, it is worth getting legal advice from an employment law specialist in good time, because the amount of an ex gratia payment will vary and often the employer and the employee will negotiate to reach a figure that is acceptable for both sides.

Who can we help with ex gratia? 

An ex gratia payment is expected to compensate an employee for any injury to feelings suffered and /or financial loss caused by the loss of employment. The payment is in addition to what is required under your contract of employment or a statutory redundancy payment.  An employer will naturally try to pitch the lowest acceptable sum whereas an employee will seek to maximise the ex gratia payment to ensure an adequate financial cushion for the future.  

Get top-level legal support today

Before starting an ex gratia negotiation with your employer, you should seek legal advice to discuss your various options. We are always happy to arrange an initial call to discuss strategy and can work with you in the background to ensure you are able to propose an ex gratia payment in the most effective way.  Alternatively, if your employer has made an offer to you, get in touch to arrange a free consultation.

By understanding your sector and your employment situation we are able to tell you what is and what isn’t possible – some employers won’t negotiate, while others will expect there to be some discussion about the amount offered. 

Contact us for immediate consultation tailored to your circumstances.

Key features of ex gratia offer:

  • HMRC rules allow the first £30,000 of any ex gratia payment to be paid tax-free
  • Take early advice to put you in the best position to negotiate an ex gratia payment;
  • An ex gratia should not contain any contractual payments

Why choose Bloomsbury Square Employment Law?

Bloomsbury Square Employment Law is committed to providing partner-level advice to all.

All our partners are highly-experienced employment law solicitors who each have at least fifteen years employment law experience.  We are dedicated to acting for employees only and will work with you to maximise the value of your ex gratia payment.

We have acted in and advised on hundreds, if not thousands of settlements and employment tribunals and this ensures that we are best placed to give you clear and comprehensive advice on your options. We aim to offer you bespoke and individually tailored advice and ensure that you secure the very best outcome both in respect of the ex gratia payment and the non-financial terms of a settlement agreement.   

You will receive a swift and efficient personal service from an experienced practitioner who understands what you are going through.

Meet the Partners

Garvey Hanchard
Senior dispute resolution & constructive dismissal expert
Will Burrows
Highly experienced heavy hitter in employment & negotiations
Nicola Welchman
One of London’s top rated employment lawyers
Chris Hogg
Unflappable and assured employment law expert

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