Ex gratia payments are voluntary compensation made without admission of guilt or liability. They are often made to victims of atrocities, man-made disasters, or health problems caused by industry practices. Governments and corporations make such payments out of a sense of moral obligation or perceived responsibility. Ex gratia payments can also be made on a smaller scale, such as to defray repair costs for willful vandalism or to civil servants ineligible for retirement. In some countries, such payments are non-taxable as income.
Literally, ex gratia is a Latin term that translates to “please.” In the modern vernacular, the term is most commonly used in legal parlance to mean payments or other compensation paid to an injured or injured party or to persons who would otherwise be entitled to limited compensation. Such payments are made without admission of guilt or assumption of liability by the payer, regardless of whether the debtor is a private company or a public body. Rather, such payments are made out of a sense of moral obligation, in the absence of legal obligation, liability or fault. In some cases, such payments are made to prevent a liability suit or other lawsuit, but the primary reason for such cash awards is the feeling that timely compensation is the morally correct thing to do.
The practice of making ex gratia payments is common throughout the world. Governments and corporations around the world have made such payments to private citizens and government employees, prisoners of war, victims of atrocities, victims of some types of man-made disasters, and those who have suffered health problems whose suspected cause, even if not proven, is a specific industry’s practices. Payments made in such situations are voluntary and are made out of a sense of moral responsibility or perceived obligation to members of a particular community, ethnic group or other subset of the population.
Making an ex gratia payment can be seen, in many circumstances, as an act of good will or good faith. For example, UK counties have clear policies regarding gratia payments made to county employees for damage to personally owned vehicles. While municipal government agencies accept no liability for loss or damage to such vehicles, in the event of willful vandalism by an unknown party, ex gratia payments are permitted to help defray repair costs. Similarly, in Bermuda, civil servants found to be ineligible for retirement could obtain special permission for ex gratia payments under Bermuda’s Ex Gratia Payments Act of 1983.
On a larger scale, ex gratia payments are often made due to war, atrocities or man-made disasters. Canada, for example, offers ex gratia payments to people adversely affected by tests of military herbicides such as Agent Orange in the 1960s. The United States pays ex gratia payments to citizens under the War Claims Act of 1948, for those individuals who suffered personal rights abuses during World War II internments. In most countries, such as the US and UK, these payments are treated as non-taxable as income, providing further relief to victims.
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