Can We Hold The Gratuity Amount Of An Employee Who Had Completed 5 Years Of Tenure?

Dear Richa ji,
You said the employee had been terminated because of his wrongdoing.
You are HR Executive. It will not be an appropriate to ask you a question what do you mean by "Termination".
Is this termination followed by due process as per law? Have you proved the wrongdoing?
It is your allegation on the employee that he is engaged in wrongdoing. You need to prove it by applying principal of natural justice.
Also as per recent judgement of HC Mumbai, Gratuity cannot be forfeited without a proper show cause notice and the proof of loss to employer. (WP No. 2749 OF 2004 in Nanubhai Nichabhai Desai vs The Dy.General Manager, Uco Bank).
There are similar judgement by other HCs also.
According to Karnataka HC (LLR Karn. HC 48) and many other HCs, forfeiture of gratuity only when dismissal is for prescribed misconduct under the Act.

Yes.
The thought of holding gratuity who has complied the primary condition of completion of 5 yrs.is itself wrong decision by employer.
The cause of removal is a lame excuse. whatever the reason not to bear him any more on performance basis we won't comment. But denial of payment of gratuity is challengiable..and you are inviting trouble even the worker challenge s his unlawful removal also along with non payment of gratuity benefit..Mere poor performance can not be a causefor denial of gratuity.
There was no single incident of his mis behaviour loss of charishma of your company reputation
So you have to pay gratuity and other removal benefits unconditional ly..
..

Performance related status needs to be established by the employers if Employee files a case. All in All, Gratuity should paid without delay. If not this does not reflect a good organization culture, you should find a job that will put yourself in a good environment. Environment is must for growth.
Cleaning up mess can be tried but should not try to improve cleanliness in drainage.

In invitation to the query we can not forfeited the Gratuity, if tenure of 5 years completed. Again if the employees faced any constrained may be take the advise as per I.D. Act either from Labour Court / Civil suit according the category of the employee.

Dear Mr. Richa,
I am agree with all the members who have advised not to hold Gratuity amount, since employee already have worked long term his performance cannot be consider by measuring 5 - 6 months work, that employee have contributed from long time.
Regards,
Asif Mulla

Dear Team,
We should not hold the Gratuity amount, its a legal issue and if you needed to any settlement, you can hold that amount except Gratuity.. If you are not payable to employee then you needed to pay along with Interest to the employee as per the Labour Law.....

Dear Member,
The forfeiture of gratuity can be done as per the provisions of Gratuity Act. The Contract of employment should also to be considered and it should be very specific; when an employee violates the terms and conditions of employment to what extent the damages claimed from his future dues and the proper enquiry should be made by following the principles of natural justice.
The Gratuity Act does not permits forfeiture of gratuity for disclosing any trade or business information to competitors or others unless the disclosure of information results in much loss to the business. The action of an employee resulted in set-back of business should be proved otherwise the forfeiture will become an act of victimization.
If an employee makes a claim before ACL-Gratuity, the authority will direct to pay the amount along with simple interest.