Understanding Gratuity Forfeiture: What the Supreme Court's Ruling Means for Misconduct Cases

Interpreting Section 4(6)(b)(ii) of the Payment of Gratuity Act

The Supreme Court, in its order dated 14.8.2018 (copy attached), has held that forfeiture of gratuity on the ground of misconduct, which constitutes an offence involving moral turpitude, is permissible only if the individual is convicted by a court of competent jurisdiction for the said offence. The bench of Justice Kurian Joseph and Justice Sanjay Kishan Kaul (in Union Bank of India vs. CG Ajay Babu) also observed that forfeiture of gratuity is not automatic upon dismissal from service but is subject to Sub-Sections (5) and (6) of Section 4 of the Payment of Gratuity Act, 1972.

Thanks

Dear Prabhat,

Gratuity is payable for continuous service of 5 years. Contiguous service means 240 days in a year. Therefore, 4 years and 240 days are eligible for gratuity. The Honorable Supreme Court does not comment on existing laws; they simply interpret them.

Regards,
Sandeep