Is an Employee Entitled to Gratuity from 2011 if Back Wages Were Stayed by Court?

One of our employees joined in 2011, served for almost two years, and was terminated on disciplinary grounds. He challenged the termination in court and was reinstated with back wages; however, he was reinstated in 2017 without payment of back wages. The payment of back wages was challenged in the High Court, and the High Court stayed the labor court order of back wages.

This employee is being terminated on disciplinary grounds based on a Domestic Enquiry and management decision.

Question
Is he entitled to gratuity since 2011 or not, since the back wages payment was stayed by the High Court?

Reinstatement and Gratuity Eligibility

Reinstatement can be with or without back wages, but once an employee is reinstated, it should be construed that they continued to be in service without any break. As such, they are eligible for gratuity from the date of joining.

Termination and Gratuity Forfeiture

When you terminate the employee now, the charges on which you are terminating them is an important question that may arise. If the charges are moral turpitude or riotous behavior, you can forfeit the gratuity following section 4(6) of the Payment of Gratuity Act. On charges other than those mentioned in section 4(6)(a) or (b), you cannot forfeit gratuity.

When an employee is reinstated, he is entitled to all benefits. For the disentitlement of gratuity, you are supposed to give notice to the employee stating the grounds on which you are going to disallow the gratuity. Charges proved against moral turpitude or financial damages to the employer can lead to the disallowance of gratuity.

I am in complete agreement with Mr. Madhu. The issue raised is, as I understand, not the forfeiture of gratuity but whether the period of absence during, say, 2013 to 2017 due to the operation of the punishment of dismissal that was set aside later should be included in the qualifying service for gratuity or not. When the award mentions "reinstatement with back wages," it would automatically imply "reinstatement with back wages and continuity of service with all attendant benefits." In the absence of the grounds of challenge against "the payment of back wages" part of the award that is not made available for perusal, one has to presume that the Labor Court might have set aside the punishment of dismissal in its entirety and hence the direction to reinstate with back wages. Otherwise, the Court would have modified the punishment as excessive and would have ordered no back wages or a lesser rate of back wages under the powers vested in the Court u/s 11-A of the I.D Act, 1947.

Dismissal Proposed on Other Grounds

Coming to the dismissal proposed at present on some other grounds of misconduct, the poster needs to explain why the management raises the issue of exclusion of the individual's service from 2011 to 2017 based on its pending appeal against the back wages part of the award. If one delves deep into the sweeping meaning of Sec. 2-A of the P.G Act, 1972, one cannot escape the conclusion that the absence of the incumbent, say, from 2013 to 2017 due to the punishment of dismissal which was subsequently set aside by the Labor Court has to be notionally treated as continuous service only. Even if the appeal of the management regarding the issue of back wages succeeds, in my opinion, it cannot alter the factum of continuity of service of the individual.