Is Gratuity Payable for Employees Terminated Due to Fraud? Seeking HR Insights

Hi all,

I would like to gain some views from my HR colleagues on the following:

1. Is an organization liable to pay gratuity to an employee being terminated for fraud in the organization, assuming the employee has completed the required period?

2. If yes, is the organization liable to pay the full amount assuming the employee has completed the required time period?

Please comment on any other related threads.

Regards,
Supriya

Gratuity Entitlement for Terminated Employees

An employee terminated for fraud is entitled to receive gratuity if they qualify based on their service. Section 4(6) specifies that gratuity can only be forfeited in cases where the employee has been dismissed from service on charges involving moral turpitude. Similarly, the forfeiture of gratuity can occur if the employer has incurred any loss due to negligence or willful omission by the employee, causing damage to the employer's properties.

Therefore, if you have conducted an inquiry before terminating the employee on fraud charges and have determined the amount lost by the company, that amount shall be recovered from the gratuity. Before deducting any amount from the payable gratuity, ensure that you terminated the employee after conducting a proper inquiry following the principles of natural justice.

Regards, Madhu.T.K

Gratuity can be forfeited in full only when the employee has been terminated/dismissed from the service of the company on proven charges of the employee's involvement in acts of moral turpitude.

- bgramesh, Hosur