Cos paying ex-gratia to employees to fight Covid-19 can do so from CSR budget

New Delhi, April 13 (SocialNews.XYZ) The government has decided to reward employers who are willing to go that extra mile and making payment of ex-gratia to their employees to fight the Covid-19 crisis.

Ex-gratia is a voluntary payment made by employers to help their cope with a crisis such as price rise etc. This payment is over and above the wage of an employee.

Such payment made by employers towards to temporary/casual workers/daily wage workers over and above the disbursement of wages, specifically for the purpose of fighting COVID-19, will now qualify towards CSR expenditure.

This would give option to employers to meet their statutory CSR obligation even by providing their own workers.

The corporate social responsibility rules make it mandatory for large Indian firms to set aside at least 2 per cent of their average net profit for socially responsible expenditures. The norms are applicable to firms with at least Rs 5 crore net profit or Rs 1,000 crore turnover or Rs 500 crore net worth.

While giving relief to employers for qualifying ex-gratia payment as CSR, ministry of corporate affairs (in a FAQ), it has left it to the employers' morality to see that wage payment is not halted during the current period of lockdown.

Payment of salary/wages in normal circumstances is a contractual and statutory obligation of the company. Similarly, payment of salary/wages to employees and workers even during the lockdown period is a moral obligation of the employers, as they have no alternative source of employment or livelihood during this period, the ministry said in its recent FAQ on CSR spend.

The same rule also applies in the case of casual and temporary workers, and daily wage workers.

The total corporate social responsibility (CSR) spending by the top 500 companies in the country since the applicability of mandatory CSR in 2014 is likely to cross Rs 60,000 crore by the end of the month as per industry reports.

Source: IANS