Former Employee's Gratuity Claim: Can We Legally Deny It Despite Misconduct?

Hi Friends, I need a favor from all of you. One of our employees resigned from his position a few months ago and is now claiming gratuity from us. This employee was not in the good books of the management due to misconduct with his HOD and some senior management personnel. He also instigated other employees reporting to him, leading them to resign alongside him. Now, he is willfully damaging the reputation of our institution, resulting in some students dropping out.

We, in good faith and with their future in mind, chose not to terminate them. In response, they have served us a notice from the labor commissioner for not providing gratuity. This employee worked for more than 5 years as a manager. Is there any way to reject the claim for gratuity payment?

Please help.

No, did he misuse any funds or has any case been filed by management? If not, you are liable to pay the amount.

Regards,
Laxmi
[Phone Number Removed For Privacy Reasons]

No, you cannot hold/reject payment of gratuity for him. As per Section 4(6b) of the Payment of Gratuity Act, which states: The gratuity payable to an employee may be wholly or partially forfeited if:

1. The services of the employee have been terminated due to his riotous conduct or any other violence on his part.
2. The services of the employee have been terminated for any act constituting an offense involving moral turpitude, provided such offense is committed by him in the course of employment.

Therefore, since his services were never terminated on the grounds mentioned above, on what basis can you forfeit his gratuity?

Thank you.

Mr. Malik is right. You can forfeit his gratuity if you have conducted domestic inquiries and terminated him on the ground of any one of the above-said misconducts. In your case, you have to disburse his eligible gratuity.

Regards,
Sethupathy