How Should We Handle Gratuity and Termination for Employees Caught Stealing?

Dear All,

I want to discuss the following cases with you. In my company, Mr. A, working in the stewarding department, was caught red-handed stealing napkin papers from the hotel with the help of security guard Mr. B. Both of them were suspended at the same time, and a domestic enquiry was conducted. The appointed lawyer had given a judgment in favor of management. However, termination has been pending for 2-3 years, and the company is paying a subsistence allowance. I am unsure why this termination has been pending.

Termination and Gratuity Concerns

Now, we want to terminate these two employees. My question is whether we have to pay gratuity for these employees. As per the Payment of Gratuity Act, the employer can forfeit their gratuity.

Union Settlement Considerations

During these years, the management has had a union settlement where they have increased the wages and other facilities. Do we have to consider that angle as well?

Please let me know how to settle the account of these employees, as I know they are going to raise an industrial dispute in the labor court, surely.

Regards,
Ranjeet

Anyway, the matter will be discussed at length in the Labour Court. However, I think they are eligible for gratuity because theft is not an offense for which gratuity can be forfeited. Regarding the payment of the revised salary, since the employee has not worked these days, he is not eligible for the revised salary. Certainly, if he is exonerated and reinstated, he will be eligible for the revision.

Regards,
Madhu.T.K

I differ with Mr. Madhu's view.

An employee involved in theft is not eligible for Gratuity as it is covered under the provision stating "INVOLVED IN MORAL TURPITUDE."

If any dispute arises, then the Labor Court/Courts is the final authority to give the final decision.

I am a little bit confused now. If I have to terminate an employee after the domestic enquiry where the charges have been proved and the enquiry officer has given a decision in favor of management, how do I calculate his F&F first thing?

Secondly, what about gratuity as I have also gone through some cases where gratuity is payable on termination. In case someone was caught in any misconduct, do we have to pay the gratuity or not?

Regards,
Ranjeet

Forfeiture of Gratuity Under the Payment of Gratuity Act

According to Section 4(6)(b)(ii) of the Payment of Gratuity Act, gratuity can be forfeited for misconduct involving moral turpitude, whereas theft is not considered such an act. Please refer to Padmanabhan A Vs. Joint Commissioner of Labour, Chennai, in which the Madras High Court has determined that not all immoral acts amount to turpitude; turpitude signifies base, most foul, or detestable immorality. In a similar case, Karnataka Road Transport Corporation Vs. Mahadev and Others, the Karnataka High Court directed the payment of gratuity to an employee dismissed for moral turpitude, stating that total forfeiture of gratuity is only possible if the employee was convicted of the alleged offense involving moral turpitude.

Furthermore, if the departmental inquiry is not concluded by the accused employee's retirement date, the employer cannot withhold gratuity payment, as ruled in a Supreme Court judgment, Jaswant Singh Gill Vs. Bharat Coking Coal Ltd.

In light of the above, I believe that the forfeiture of gratuity should strictly adhere to Section 4(6) of the Act. Failure to do so may lead to court intervention and a directive in favor of the employee.

Regards,
Madhu.T.K