Can Companies Use "Moral Turpitude" to Deny Gratuity? Exploring a Real Case Scenario

I have gone through many threads on gratuity benefits and the rules therein. Thank you all for the information.

Case Study: Gratuity Payment and Moral Turpitude

Here's a case in point: One has worked in a company for 8 years and is highly decorated. There's a fallout with leadership. He resigns or is forced to resign. Is there a way the company creates the "moral turpitude" situation just to wriggle out of the gratuity payments? I presume the payout will be substantial (close to 2 lakhs). In my mind, proving "moral turpitude" in hindsight could be open to long legal wrangles. Is the company liable to "show" how they have come to that decision?

Yes, in my opinion, the company would have to prove to the court that there was "moral turpitude" due to which gratuity is being denied. In most cases, it is very difficult to prove, and the case would be decided in favor of the employee.

However, it would be advisable for the company to pay the gratuity in a proper manner. In such a case, they would have to pay the amount after a long legal battle that would entail them a higher cost in terms of time, manpower, and money in addition to the due amount as well as interest and penalty thereon.

Thanks,
Avika

Gratuity Forfeiture and Moral Turpitude

Please see section 4(6)(b)(ii) of the Payment of Gratuity Act. According to this section, gratuity could be forfeited if the employee was terminated for any act which constitutes an offense involving moral turpitude. In the case cited by you, the employee has not been terminated but has resigned. I hope the resignation has been accepted. As the termination of the services of the employee is due to resignation and not due to any act involving moral turpitude, gratuity cannot be forfeited under the Payment of Gratuity Act in this case.

Moreover, after the termination of the services due to an act which constitutes an offense involving moral turpitude, the employer has to issue a separate show cause notice asking the employee to show cause as to why the gratuity payable to him should not be forfeited. The employer has to consider the explanation offered by the terminated employee and then pass an order forfeiting gratuity.

Regards

As per the provisions of the Payment of Gratuity Act, the gratuity payable to an employee can be forfeited, inter alia, if his service was terminated on the ground of moral turpitude. In the instant case, the employee resigned, and his service was not terminated for committing moral turpitude; hence, his employer is legally bound to pay him the gratuity. If not paid, the employee can lodge a complaint before the concerned ALC & Controlling Authority for appropriate relief. It is more economical and less time-consuming. If you go straight to the court, it will dismiss it with the advice to file it before the appropriate forum.

Regards,
A.K. Maitra, M.Com; LL.B; A.C.A; A.C.S; M.I.M.A Retd. Company Secy. & G.M. (Law) National Fertilizers Ltd. (A Mini-Ratna Central P.S.U.)

M/s Harikrishnan & Maitra are absolutely right. Having accepted the resignation, the employer cannot raise the issue of misconduct. If there was misconduct of moral turpitude, he should have legally terminated the employee. In this case, if gratuity is denied, the employee can approach the Controlling Authority under the Act.

Regards,
Varghese Mathew
Labour Law/HR Advisor
[Phone Number Removed For Privacy Reasons]

In the case cited by you, the employee has not been terminated but has resigned. I hope the resignation has been accepted.

With specific reference to this part, the company in question has a habit of not responding to resignation emails, or at best sends something like "We will discuss this..."

I wanted to understand, does the date of resignation stand from the date it has been sent or the date it has been accepted? What happens if the line authority/HR fails to respond?

Regards