Gratuity for Suspended Employees: Are They Entitled to Payment During Suspension?

Gratuity Payment for Suspended Employees

Whether gratuity is payable for those who are suspended from service? Some of the personnel suspended have not been paid the gratuity amount. What are the rules for the payment of gratuity?

In this situation, it is essential to clarify the company's policy on gratuity payments for employees who are suspended from service. The rules regarding gratuity entitlement during suspension should be clearly outlined in the organization's policies and procedures. It is important to ensure that all employees are treated fairly and in accordance with the relevant employment laws and regulations.

If some suspended employees have not received their gratuity amount as per the company's policy, it may be necessary to review the situation and take appropriate action to rectify any discrepancies. Open communication with the affected employees and providing them with the necessary information and support is crucial in addressing such issues effectively.

Let me first tell you that suspension is not a termination of employment. It seems you have misunderstood the terminology. You mean to say termination. For your knowledge, I am giving below the provisions of forfeiture of gratuity. I hope you will get an answer to your question from it.

1. An employee may wholly or partially forfeit the gratuity if his services are terminated:
- (a) for his riotous or disorderly conduct or any other act of violence on his part; or
- (b) for any act which constitutes an offence involving moral turpitude.

2. An employee partly forfeits the gratuity if his services are terminated for any act, willful omission, or negligence causing any damage or loss to, or destruction of, property belonging to the employer, to the extent of the damage or loss caused.

Suspension and Gratuity Payment

Suspension is purely temporary and should be revoked immediately after the enquiry is over. It shall end up either in termination or reinstatement. In the case of reinstatement, payment of gratuity will not arise because it is paid when the employee leaves the company. When he leaves, the suspension period should be taken as a period worked for the purpose of computation of gratuity.

On the other hand, if it is decided to terminate him, then also the non-payment of gratuity depends upon the misconduct for which the employee was placed under suspension, on the basis of which he was dismissed. Gratuity can be withheld only if he was dismissed on charges of riotous behavior or on the charges of moral turpitude. In the former case, of course, there should be loss caused due to his behavior, and the withholding of gratuity should be limited to the amount of loss caused to the company by his behavior. For all other charges, even if the person has been dismissed (it should be discharge rather than dismissal), gratuity should be paid.

Regards,
Madhu.T.K

Gratuity Forfeiture Under the Payment of Gratuity Act

The gratuity payable to an employee can be forfeited in case of termination for the following reasons as per the Payment of Gratuity Act Section 4:

- (a) The gratuity of an employee, whose services have been terminated for any willful act, omission, or negligence causing damage, loss, or destruction of property belonging to the employer, shall be forfeited to the extent of the damage or loss caused.

- (b) The gratuity payable to an employee may be wholly or partially forfeited if:
- (i) The services of the employee have been terminated for riotous or disorderly conduct, acts of violence, or
- (ii) The services of the employee have been terminated for an offense involving moral turpitude committed in the course of employment.

In your case, the question arises if the employee is suspended. Please check and clarify whether the employee is suspended or terminated. If terminated, please verify against the provisions of the Act mentioned above.

Regards,
Shailesh Parikh

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