The Gratuity payable to an employee can be forfeited in case of TERMINATION of employee for following reasons as per Payment of Gratuity Act section 4.
(a) the gratuity of an employee, whose services have been terminated for any act, willful 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 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 employment.
In your case how the question comes if employee is suspended? Pl. check and clarify whether it is suspended or terminated and if terminated than please check against the provisions of the Act mentioned above.
Regards
Shailesh Parikh
Vadodara, Gujarat
99 98 97 10 65