Terminated for Absenteeism: Can a Company Legally Withhold Gratuity?

Dear Seniors,

If an employee is terminated after a proper inquiry and charge sheet for absenteeism, can the company hold his gratuity? I have read about theft, etc., but wanted to know specifically about termination for absenteeism.

Gratuity Forfeiture Conditions

The gratuity payable to an employee may also be wholly or partially forfeited if:

(i) The services of such an employee have been terminated for riotous or disorderly conduct, or any other act of violence on their part, or

(ii) The services of such an employee have been terminated for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by them in the course of their employment.

As held in the case of Bharat Gold Mines v. Regional Labor Commissioner, any decision under (i) and (ii) cannot be taken unless the employee has been given a fair hearing from the employer. Also, theft is an offense involving moral turpitude.

Read more about the Payment of Gratuity Act, Rules, Forms, Returns & All Other Information http://www.shramsamadhan.com/p/payme...act-rules.html

Dear Sir,

I have read this, but it discusses theft, violence, or other significant issues. I am specifically interested in information regarding absenteeism.

Thank you.

Prolonged absenteeism that is so rash as to constitute a breach of the employment contract can be covered under "disorderly conduct." However, this is subjective and there is no benchmark. Please review the case study in the link.

But if you ask me, I do not think absenteeism is a valid ground if you have a reasonable explanation for that.

This is a complex issue, but I do not think gratuity can be withheld under the law only for misconduct or habitual absenteeism.

Understanding Gratuity and Its Implications

Gratuity is a goodwill payment for long service by employees. It is given as a confirmation of accumulated goodwill (not in accounting terms) during the service period. Companies are free to deduct part or full gratuity (this has to be a judicious decision) payable if the "Goodwill Thread" is broken.

However, since the payment of gratuity is an established practice, it is advisable to support the organizational decision of non-payment (in part or full) of gratuity with a letter issued to the affected employee. This letter should provide details of any "punishable offense" committed by them and the deduction made from the gratuity thereafter.

Absenteeism is not a punishable crime for which deductions can be made from gratuity.

Regards,

Gratuity is not a goodwill payment. It is a right. Absenteeism is not a reason to forfeit it. Absenteeism, which is treated as a break in service, can be deducted from total continuous service as per Section 2A of the Payment of Gratuity Act.