Dear Selvakkumar,
Gratuity is a lumpsum terminal benefit based on the length of service and lastdrawn wages of the concerned employee.
Among the various kinds of termination of employment, dismissal is also one. Dismissal in relation to payment of gratuity implies the dismissal for certain proven misconducts only as per sec.4(6) of the Payment of Gratuity Act,1972. Cl (a) of sec.4(6) contemplates proportionate forfeiture of gratuity and Cl (b) deals with total and partial forfeiture.
Therefore,
(A)what the essentials for proportinate forfeiture of gratuity of an employee are that (i) there should be the occasion of his dismissal (ii) that should be for certain misconduct of wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer and (iii) the forfeiture should be strictly to the extent of damage or loss so caused only.
(B) Regarding total/partial forfeiture at the discretion of the employer, the dismissal must be for riotous or disorderly conduct or for any other act of violence or the commission of any offence involving moral turpitude in the course of his/her employment.
What you've simply mentioned is that the employee had violated the rules and regulations of the institution only. It would not be suffice for forfeiture of gratuity in the absence of the events afore-mentioned.