Employee Fraud and Gratuity: Can We Legally Withhold Payments and How?

Can we keep gratuity on hold for the employee who has committed fraud (confidential data leaking)? If yes, what is the right path to follow.

Dear Nilesh,

As per the provisions laid down under Section 13, no adjustment can be made against the gratuity amount payable to the outgoing employee except for the amount of damages caused by an employee to his employer due to his disorderly behavior.

Dear Nilesh, I would like to request you to review the provisions of sec. 4(6) of the Payment of Gratuity Act, 1972, and analyze it critically and carefully.

Termination and Gratuity Withholding

The alleged act of leaking confidential data from the employer's establishment by the employee and your dilemma regarding whether to withhold the employee's gratuity indicates that his employment has come to an end. Not every termination of an employee's employment would trigger the provisions of sec. 4(6) of the Act, even if any one or both of the misconducts mentioned in its clauses (a) and (b) are present. Only when the employer has terminated the employee's services due to the mentioned misconducts can the employer take partial or total action accordingly. Therefore, the termination of the employee's services should have already been a form of punishment for committing such enumerated misconducts.

Thank you.