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Respected all,
We have Long Term Settlement with Union for giving Loan in which we have clause of recovery of any outstanding amount at the time of seperation against Gratuity payable to the person.
Is it legal?? what can be the consequencies??
Do give your valuable inputs to this.
From India, Ahmadabad

Dear Mahajan, As per my knowledge it is legal we can deduct outstanding amount from gratuity. Regard’s Shaikh
From India, Bhubaneswar
IT IS LEGAL. GET form V ( under Payment of gratuity Act,1972) filled in by employee at the time of giving loan. also obtain a request letter from employee that in case of failure to pay back loan due to any unforeseen circumstances in future, the balance amount may be deducted from gratuity payable to him. We have this practice succesfully working in our organisation since last 25 years. We have alsoa very strong union and this is a common caluse in all our agreements from yearstogether.
From India, Nagpur
Dear Sameer,
Irrespective of whether or not entered in to any agreement with the management, any outstanding amount or overpaid amount can be recovered from the amount of gratuity. On the other hand, no outstanding or overpaid amount can be recovered from Pension or Provident Fund, except that only the overpaid pension amount is recoverable from the monthly pension due to any employee.
There is no rule that prohibits any outstanding amount from recovery from gratuity, being a statutory benefit.

PS Dhingra
Chief Executive Officer
Dhingra Group of Management & Vigilance Consultants
New Delhi

From India, Delhi
Dear sam,
Lets us take situations and try to find out answer to your query:
Amount outstanding is very high, person is not in good books of management, and has left organization without full & final settelment. He does not seem to be willing to settle amount
Answer:In such situation you can definetly recover amount from his gratuity & settle remaining amount.
Situation 2:
Amount outstanding is considerably high, person is still willing to settle amount, but do not have funds.
Process his gratuty, subject to payble by cheque. Once you get his gratuity cheque, you can ask employee to come to office, take a PDC (Post Dated Cheque) from that employee against gratuity payment, and settle amount.
Situation 2 is more practicle, and do not create bad impression about company, but again, it is risky.
Just incase if the cheque given is not realised, company stands all rights to file case.
Anjali Kishor Limaye
From India, Mumbai
In view of the fact recovery of outstanding amounts can be recovered from Gratuity at the time of separation has been incorporated in your long term agreement with the employees, you could go ahead and implement the same.
However, it would be prudent to have separate written individual undertaking with the concerned individuals at the time of disbursal of loans etc.. to take care of such eventualities.
Vasant Nair

From India, Mumbai
Gratuity becomes payable only when the service rendered in satisfactory. Otherwise it is not payable.
In this case when the concerned employee has defaulted on his obligations to pay back, no gratuity should be payable in the first instance.
If there is no earning under the heading "Gratuity" , where is the question of any recovery.
Thanks & Best Wishes
Harsh Kumar Sharan (XLRI Alumnus)
Director & Head - Executive Coaching & Training
Kritarth Consulting Private Limited
New Delhi
From India, Delhi
Not repayng the loan doesnot amount to unsatisfactory service and further as per gratuity act, unsatisfactory service is not the criteria.
The gratuity can be forfeited only in case of 1) riotous, violent or disorderly behaviour (2) moral turpitude. However, both the misconducts are required to be proved by conducting domestic enquiry otherwise even if you know that these misconduct were done by employee, even if there are many witnesses, one cannot even think of touching the gratuity amount of the employee.
From India, Nagpur
there is clear provision under Payment of Gratuity Act here i would like to mention section 13 of the Act which provide protection to Gratuity. this section enumerate the principal that the gratuity of an employee can not be attached for under any decree by court or any kind of payment even for the recovery of laon provided to the employees.

it has been held in case titled as Yada Laxmi V/s A.P State Corporation Bank, LLR 2006 (108) that amount of gratuity is not liable to be adjusted towards any amount drawn by the employee as personal loan or housing loan.

it has been held by Delhi High Court in case titled as Taxmaco Ltd V/s Roshan Singh 2001 LLR 890(Delhi) in view of the direct and to categoric judgement of Supreme Court of India the Payment of Gratuity Act is a welfare peace of legislation and the amount of payment of gratuity can not be withheld of an employee for on even non vacation of company qarter.

Withhold or Adjustment of Gratuity is not permissiable under any circumstance other then those mentioned in section 4(6) of the Act held by Kerla High court in case titled as K.C Methew V/s Plantation Corporation Kerla LLR 2001(123) ker.

Hope above clear all doubt of the member who wrongly gave opinion without considering the provison of law.

for more can further write.


Gratuity cannot be adjusted against any amount. The actual amount of gratuity payable shall be paid to the employee by means of cheque. In case any loan is payable by the employee it shall be collected by means of a seperate cheque or cash from the employee while giving the gratuity cheque to the employee. This is required to safeguard the Management from unwanted litigation in the event of the employee or his legal heirs filing gratuity claim before the Gratuity Authority at a later period.
I fully agree with what Mr. essykkr
From India, Selam
No deduction can be made from gratuity as it is a social security to employee.

the amount towards gratuity shall stand protected under Sec.13 of the Act.

sec 13. Protection of gratuity

No gratuity payable under this Act 22[and no gratuity payable to an employee employed in any
establishment, factory, mine, oilfield, plantation, port, railway company or shop exempted under
section 5] shall be liable to attachment in execution of any decree or order of any civil, revenue or
criminal court.
also read sec 4(6)

4(6) Notwithstanding anything contained in sub-section (1),
(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or
negligence causing any damage or loss to, or destruction of, property belonging to the employer,
shall be forfeited to the extent of the damage or loss so caused;
(b) the gratuity payable to an employee 16[may be wholly or partially forfeited]–
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or
any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offence
involving moral turpitude, provided that such offence is committed by him in the course of his

The speaking order with reasons stated in sec 4(6) to forfeit the gratuity to the extent of the damage is must following due process of natural justice
From India, Ahmadabad
This is not a very correct understanding of Gratuity. There is no qualifying criteria of "service rendered is satisfactory" for payment for Gratuity.

If one meets the qualifying criteria stipulated in the Act, one becomes eligible for payment of Gratuity.

Best Wishes,

Vasant Nair

From India, Mumbai
Sorry to point out dear "essykkr" that your opinion is quite misleading for the members of this forum, as you have NOT ONLY misinterpreted the provisions of Section 13 of the Payment of Gratuity Act, BUT ALSO misquoted the Case Laws. So, please review your reply by rereading the provisions of the said Section 13, which protects from attachment by any court of law, BUT does not specify that the loss to the employer may not be adjusted out of the gratuity amount. Making unauthorized additions or alterations in the Statutory Laws is not at all advisable.

I reproduce the extract of Section 13 below for the information of one and all:

13. PROTECTION OF GRATUITY. - No gratuity payable under this Act and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company or shop exempted under section 5 shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court.

You can very well see that there is no word "LOAN" mentioned in the said Section.

Further, the case law "Yada Laxmi V/s A.P State Corporation Bank, LLR 2006 (106), as quoted by you pertains only to the deceased employee, not any other retiring, resigning or terminated employee. You may also know that a particular case law applies to individual cases and does not become universal law unless a competent court of law specifically agrees to apply after its satisfaction to any other particular case.

Still further, it is not a case of withholding of the gratuity by the employer. It relates to payment of gratuity after adjustment of balance of loan amount. So, the case laws quoted by you are totally irrelevant in his particular case.

For your information the Payment of Gratuity Act clearly provides for forfeiture of gratuity of the employee by the employer for any loss or damage caused to the employer and Section 13 does not operate in that case.

So, please better review your reply by rereading the Payment of Gratuity Act as well as the case laws in totality, as reading between the lines is always dangerous and mislead a person.

From India, Delhi
Dear Friends,
I beg to differ on the comments that loan amount can be adjusted against gratuity.
Speaking legally,
A.P. High court in the case of Yada Laxmi Vs.A.P. state co-op. bank in 2006 has held that an employee can not pledge or permit adjustment of payment of gratuity before it had accrued to him.. The payment of gratuity Act as well as sec. 60 of CPC were amended to keep entire amount of gratuity out of purview of attachment or other adjustments .
In this case employee took loan from the bank and unfortunately he expired before repayment. Bank ajusted the gratuity amount of the employee against loan. employee's wife claimed the gratuity and court rejected the concept of the bank of adjustment of loan against gratuity and directed the bank to release the gratuity.
Se. 13 Of the Gratuity Act provides immunity from attachment of gratuity amount even from the court order. SC in the case of Calcutta dock labour board case in1985 held that even if the gratuity was payable in any other scheme, it will squarely come under the purview of the act in respect of attachment.
Many organisations must be adopting the way of having agreement from unions or workers in respect of adjustnment of loan against gratuity but such agreements or undertakings or declarations have no legal sanctity if challenged in court of law.
This system works till it is not challenged but that does not mean that this kind of arrangement is legal.
anil kaushik
Chief Editor,Business Manager-HR magazine
B-138, Ambedkar Nagar, Alwar-301001(Raj.) India

From India, Delhi

Dear Mr. Dhingra,

yes you are right about the applicability of section 13. it talks about the attachement by court but what point Mr "Essykkr"wanted to make you missed it completely. With due respect as you are a Senior Member i want to point out that he wanted to say that the Gratuity Amount is protected from even the attachement of court. so how a company recover any amount out of it.

in my opnion the point number 2 of Ms. "Anjali Kishor Limaye" with a little change is the solution to the problem Legally as well as practically. the change would be only this dont take the cheque for the exact amount of gratuity from him take several PDC's of the amount to be adjusted, if possible bifurcate the Loan/Recovery amount. if the amount is more than the amount of gratuity, devide the amount in such a way that the first cheque covers the most of the gratuity amount but not identical to the amount payable unger payment of gratuity. This will make the amout recoverable from court comparatively in easier way if the employee refuses to payback the Loan. why i am saying to make different cheques is because if you will take the idetical amount cheque from the employee the first contention of the employee will be that they have indirectally recovered the amount out of gratuity. this is simple principle of natural justice and we all know it "what cannot be done directly cannot be done indirectly too".

2nd point: section 13 and section 4(6) as rightly pointed out by Mr "vkshah" makes the amount of gratuity irrecoverable against any payment due to employer other than the exceptions provided under the section 4(6). so in my opnion and in the light of the judgments sited by the worty members it is my understanding that the amount should be recovered if needed in the abovementioned fashion otherwise not.

Further discussions invited.
From India, New Delhi
Sir, thanks for your suggestion. Certainly i will take care of that.

now i am comming to the question of the Author of this thread.
"We have Long Term Settlement with Union for giving Loan in which we have clause of recovery of any outstanding amount at the time of seperation against Gratuity payable to the person.""
Is it legal?? what can be the consequencies??
Yes, it's illegal. would like to refer here section 14 of the Act which clear give override effect to other enactments, any instruments and contract etc. as the same also held in by Ahalabad High Court LLR 1119 All
it's a special act and in case of any dispute with regarding any other enactment, contract,or insturment this Act shall prevail.
Further view of members are welcome.

  • With due respect, I beg to differ with Senior Member Mr. P S Dhingra.
  • Section 13 is not allowing even courts of this country to attach gratuity amount. It is obvious that, when any court passes decree or order for attachment, it is with due legal process. But still gratuity amount is protected by the specific provisions under section 13.
  • It is needless to mention that, most of the labor and social security legislations are enacted to protect rights of Labor and in most of litigations courts in India have favored the labor.
  • It is very naïve on part of Mr. Dhingra to argue that, since there is no specific mention of words ‘Employer’ or ‘Loan’ in act, means employer can collect outstanding loan from gratuity due.
  • Further by arguing in very same way like Mr. Dhingra, since there is no specific mention in the act that, ‘employer can recover outstanding loan from gratuity’ , loans can not be recovered from gratuity due.
  • I feel if courts are prohibited from attaching gratuity then employer is also obviously prohibited from same which goes without saying.
Further section 4(6) specifically mentions circumstances under which Gratuity can be forfeited and again forfeiture is allowed only in case of Termination alone.

From India, Pune
Dear Sir,
Can you please help me in Gratuity Issues?
I am working one private company, for the past 6 years. I want to know whether I am eligible to get Gratuity to claim or not, because I am not having any PF deductions in this company and also they transferred me from one company to one company in the same group.
Kindly let me know the rules for Gratuity.
S. Sujatha
From India, Madras
Dear Kaushik,
Reading between the lines is always dangerous and misleading that creates more confusions rather than solving any problem. The case law "Yada Laxmi V/s A.P State Corporation Bank, LLR 2006 (106), as referred by you pertains only to the deceased employee, not any other retiring, resigning or terminated employee.
Also, it is not a case of attachment by any court of law. So, reference to the aspect of attachment is also irrelevant in this case.
So, please better read the case in totality to arrive at your learned opinion. This is also important for your from the point of view that you are an editor of an HR magazine.
Accordingly, you may need to review your reply.

From India, Delhi
Dear vkokamthankar,

Differing in opinion is your right. You can differ with me or even with all other members of this forum. Nobody can prohibit you. If you feel something, others can also express their feelings. If you can declare it as naive on my part to discuss or argue, I can also declare naive on your part to discuss or argue like that in which you have tried to stress your point.

MIND IT, interpretation of any legal provision, except on the face of the existing provision of the language, is not within the right of any one except the Ministry of Law of the Government of India, or the competent court of law. Nobody can add or omit any specific word against the existing provisions in he legal language. So, your interpretation about Section 13 with stress on the word EVEN, while stating "not allowing even courts of this country to attach gratuity amount" dos not justify at all, when the language is very clear and specifically meant for courts only.

Would you kindly like to clarify, who else can attach the amount due to be paid to any one? Can employer issue an attachment order? For your information attachment cannot be made by any person other than a court of law. So, where comes the question of attachment by EVEN courts?.

Evidently, just to oppose my views, you clearly seem to have forgotten that the present case, as referred to by the poster of this thread DOES NOT RELATE TO ATTACHMENT or FORFEITURE of gratuity.

The question of attachment by courts arise in cases filed by any third party, not having been related to the employer or the employment of the concerned employee, like Banks, Mortgage companies, etc. So, the Section 13 provides protection from attachment by courts against the debt of any third party against the employee. You may better discuss this issue with some judge to have clarification about attachment or the provisions of Section 13 of the Gratuity Act, if you feel my opinion is wrong.

If there is no specific mention of words ‘Employer’ or ‘Loan’ in act, it is clearly evident that the provisions do not automatically bar the employer, who pays the money to adjust his own dues out of the dues admissible to the employee. Rather, it is clearly naive on your part to intentionally apply the provisions of the section negatively against the employer, when section 13 has no relation with the employee and has specifically been designed to prohibit the courts to unnecessarily attach the dues against of the employee against the dues of the third parties. You are advised to reread the section to make clear what actually hat states.

Further, any judgment of any case law does not become universal. That is applicable individually only to the concerned case or if allowed specifically to some other particular case by virtue of the judgment of any court.

MIND IT, I am not an anti-employee person, which you can definitely observe from my hundreds of posts available in this very forum. Of course, to call a spade a spade is my habit, may that be in favor of employee or an employer that I discuss very frankly.

PS Dhingra

From India, Delhi
Dear Sujatha,
Having already put in service of 5 years and more, you are quite eligible for the gratuity to claim from the previous organization. So, you must claim that, or get confirmed in writing from your present employer that your service with the past employer (sister company), being under the same group of companies, would also be accounted for in the present employment while parting with the organization. If you don't get that confirmed now the matter may get disputed later on and you may have to knock the door of the court of law to claim your dues.
PS Dhingra

From India, Delhi

Can you support your contention with any relevant case law that its against the third party not against the employer, it does not matter whether protection provided is against third party or the employer himself.

Is it mention in Act any where?is it not your own interpretation. Please if you can

Agree with you that attachment is the subject matter of Courts but even deduction, recoveries or withhold also come under the preview of Section 13.

If it would have been not so then certainly as contended by you, the court would have allowed to deducted or withhold the payment of gratuity against any dues of employee, but not in a single case. if its in your knowedge then kindly point out.

There are a catina of judgments wherein the court has bared employer from withholding/deduction from employer( if you want I can mention), without any attachment from the court against the outstanding dues..

Withholding/adjustment/recoveries against outstanding dues to an employees is a sort of attachment as held in recent judgment Neyveli Lignite Corp Ltd V/s O Raju and others 2010 LLR 506(Mad) it was not open to the respondent that they were justified in the denying, payment of gratuity amount of account of the failure of employee to pay house rent, electricity charge.

So it if there is any adjustment or recovery of any dues then it's a sort of attachment. Such an action is not possible in view of section 13

Even a workmen give undertaking for making deductions, the gratuity of an employee can not be withheld Ram Ranjan Mukhjeri V/s Minining and Allied Machinery Corporation Ltd 2001 LLR 297(Cal HC).

As far as concerned about the interpretation these interpretation are done by the competent court of law not by any individual for their gain or profit, just to save the essence of Gratuity Act being social peace of legislation.

For the answer to the Author of this thread who has asked about the legality of settlement which allow adjustment from the Gratuity is illegal. It’s an agreement.

Section 14 of the Act which clear give override effect to other enactments, any instruments and contract etc. as the same also held in by Ahalabad High Court 2010 LLR 1119 All.

I know that it depend on the fact & circumstance of the each case, but where the same question arise before the High Court or lower court, lower court take into consideration and have binding effect within that state & have a pervasive value for others, until and unless the same has been over ruled by the Court of a higher jurisdiction or by Double Bench or (B.D). or for your information if any judgment passed by Supreme Court of India, it's have a binding effect by virtue of Article 141 of constitution.

Further view of members are invited.


Dear Essykkr,

By trying to twist the argument can't make your point. You have been referring to case laws pertaining to deduction from the gratuity in respect of charges of residential accommodation allotted to the employees, or withholding of gratuity on some pretext, or attachment by court of law, etc. None of the case relate to payment of part amount of gratuity by adjustment of existing balance of loan. You are not coming forward with such type of case, WHEN YOU FULLY AGREE that "it depend on the fact & circumstance of the each case"

SO, if your interpretation is correct why not come forward with some SPECIFIC case law about loantaken by employee but the employer was barred by any court not to adjust the outstanding loan amount out of the gratuity by paying the balance amount? If there are several cases pertaining to attachments, withholding, non-payment of gratuity, there must be the cases pertaining to adjustment of the outstanding balances of loans taken by the employees from their employers.

If we go by your interpretation, employees would start taking home loans of several lakhs from their employers and then resign to join another company and claim their gratuity from the past employer. They would continue with the same practice with other employers also and would be able to garner even hundreds of lakhs from their several employers by switching over from one employer to another every five years.


May I suggest you, why not you experiment yourself by taking loan from your employer and then resign and claim your full gratuity, and if your employer adjusts the balance of loan amount take the shelter of Section 13 of the Payment of Gratuity Act and get the case settled in your favor. That way you would also be able to set an example to prove your own point. RATHER I POSE A CHALLENGE ON YOU, you won't be able to get that example set even through a court of law.

From India, Delhi

Dear Mr Dhingra,

please don't take it personally, what ever i have said and argued have supported with proper relevant case law & reasoning, not by writing in bold letters. writing in bold letter does not give force to one's agruments.

As far as concerned about specific case law in respect of loan adjustment the case has already been refered by me & numbers of other members i.e Yada Laxmi V/s A.P. State Co-operative bank 2006(1)ALD733 decided by Andhra Pradesh High Court is fit example & specific.

Again i would like to say this is not my interpretation, this is the correct position of law in this respect, if you are talking about legality.

The loan taken is not adjustable toward only Gratutiy. However there are other legal aspect & provisions those deal with the recoveries of loan etc. The employer have right to initiate legal action for recovery.

Or please think before writing, i have no where mentioned in my any of the post recourse to increase the fraudulent activities, have only given the legal position if dispute arise.

personally i am also not against this, if any employer who is extending helping hand to the employee in times of need then, employee should return such loan within time.There is no use of prolong & entagled litigation except wastage of time & money.


Dear Friends,
With respect to all learned members, I am of the view that discussion on the point has gone out of good taste.
Everyone has its own view and right to put forward. No one should let down others by attempting to prove that they are fools.
This forum views should not be taken as final verdict on any point. Member asking query should also not take it in that way and must go by his co. legal expert opinion because in such matters company is the only stakeholder and no one else.Facts of each case differs and so the views.
If all of us indulge into words bullet firing on each other, platform will loose its prime objective.
However, With all humility,I stand by my version .I am also fully aware of my responsibility while putting my views on any point being editor of a professional journal which is read and respected by thousands of readers every month.
anil kaushik
From India, Delhi
Dear Essykkr,

I have not taken it personally, nor I at any time intend to take any thing personally, but I am not in favor of misleading the community.

About Yada Laxmi V/s A.P. State Co-operative bank 2006(1)ALD733, case, I have already pointed out that the case pertained to a deceased employee where the gratuity was due to be paid to his heirs, and for your information gratuity to be paid to the heirs of the deceased is not liable to be slashed or withheld on account of any amount of loan outstanding against the deceased employee. It is not he correct position of law in respect of the living employees having retired or resigned. However, if you have any instance of case law pertaining to any living employee retiring or resigning and would have claimed full gratuity through court of law where any loan would have been outstanding against him, you are welcome to quote that, as that would enhance my knowledge also.

For your kind information, loans and other dues outstanding against the deceased employee have to be waived of. On the other hand in the case of any living employee, but parting ways with the organization by resignation or retirement, management has full right to recover the organization's dues from him.

Needless to emphasize, while discharging our duties sincerely, we need to apply our own common sense also and should not always look forward for every matter towards courts of law. Court cases arise only when the management tries to impose their authority unduly and irrationally over the employees or their heirs. Laws are made only to desist the employer to apply highhandedness, otherwise there would not have been any need for framing such laws, if employers always would have worked rationally and ethically.

PS Dhingra

From India, Delhi
Yes Sujatha you are very much entitled to receive payment of Gratuity since you have already fulfilled the qualifying criterion of 5 years of continuous service in the Company.

However, payment of Gratuity shall become due only upon your cessation of employment with your present employer.

That you have been transferred from one group company to another does not interfere with your period of continuous employment.

The rules with regard to entitlement to Gratuity are:

1. To become eligible you have to complete five years of continous employment with a Company.

This clause does not apply in case of death while in employment.

2. Gratuity is payable only when you leave the organization by way of resignation or superannuation.

3. Gratuity is calculated @ 15 days' wages for every completed year of service.

The formula is Wages/26x15xNo.0f years of service.

Best Wishes,

Vasant Nair

From India, Mumbai
Dear Friends,
One of my relatives retired from Maharashtra Zilla Parishad Services in May 2012.
The Zilla Parishad had sanctioned him the Senior Pay Scale with effect from 1990.(In 2004)
Now at the time of Retirement the Auditors are saying that the Senior Pay Scale was sanctioned in the wrong manner by the Committee Authorised to Sanction Senior Pay Scale By Chief Executive Officer of Zilla Parishad.
So they have initiated a recovery of over 2 Lakh rupees from Gratuity Amount which is more than 50% of the whole Gratuity Amount.
No Pension has been sanctioned after 7 Months after retirement.
So my Questions are:
1) Can they recover this amount from Gratuity?
2) Can Auditors Change Decisions which are not clerical or Mathematical in Nature? The Decision to Sanction the Senior Pay Scale was taken by the Special Committee Formed for only Deciding on Senior Pay Scale of Employees. (Please Cite Case Laws)
3) Can they Delay Payment of Pension due to this Recovery Process?
From India, Pune
Respected All,
We are suffering from a long term case in which judgment was given in our favor in year 2012,
Situation is,
There was an employee from Central Pollution Control Board, New Delhi, had taken some amount from ours family but he was not giving the same on time. Later we filed a case with the same reasons and judgment was given in our favor, from the day onwards the person was not at home address also left his job without any notice in his office.
Can you please tell me the recovery will be done from his gratuity amount or not and if possible kindly will give the proper Act and any judgment related to this later given in these kinds of cases
Your kind cooperate will be highly appreciated as we are suffering from so many years.
Manoj Kumar
+91 9711110388
From India, New Delhi
Dear PSDHINGRA , I worked with a Bank. If the Gratuity is credited into my account then does the bank has the power to recover the amount from my account without my consent.
From India, New Delhi
Gratuity is a lumpsum and one-time-payment ensured to the employees by a special legislation only on account of certain modes of termination of their employment specified therein and that particular law has been recognized as a complete Code in itself in this regard. So, my view-point is that everything connected with gratuity has to be approached from the perspective of what the Payment of Gratuity Act,1972 stands for.

Even those learned members who are of the opinion that the amounts due from the out-going employee can be recovered by the employer from his gratuity would admit that the P.G Act is a social security legislation. Forfeiture, either partial or whole, of the amount of gratuity is certainly different from the recovery of dues from the gratuity by way of adjustment or otherwise.Therefore, recovery of any monetary dues created out of the subsisting employment relationship between the employer and employee can not be effected in any manner from his gratuity which arises only on the termination of the employment relationship. In view of this fact as well as the provision of Sec.14 of the Act,It is to be noted that any settlement or agreement envisaging the recovery of or adjustment of monetary dues from/against the amount of gratuity is null and void.

Similarly, the protection of gratuity ensured under section 13 of the Act is only against attachment in execution of any decree or order of any court seems to be a hyper-technical argument.
From India, Salem
Dear Anuj,
Gratuity once paid, may be by credit in to the bank account by the employer, cannot be recovered from the employee's bank account. Needless to emphasize, the roles of an employer towards its employee and the banker of an individual are quite different from each other. So both the roles of the bank cannot overlap with each other..
From India, Delhi
i think many of them giving wrong information. you cannot recover outstanding amount from gratuity and its illegal. i request those who said it legal kindly go through the gratuity act and case studies clearly.
From India
Dear Balaji,
Instead of asking any or every person to go through the Act as a whole, you may please like to quote relevant section of the Act, which you intend to refer that debars recovery of employer's dues against the employee, such like outstanding balances of home loans, advances or losses, etc., to any establishment.
From India, Delhi
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