Could the company recover dues from employee gratuity?

Could the company recover dues from employee gratuity?

Hi,



Gratuity can be forfeited partially or fully only on the following grounds:


The gratuity of an employee whose services are being considered to be terminated on the accountability of an act of wilful omission/negligence causing any damage or loss to, or destruction of, property belonging to the employer shall be forfeited to the extent of the damage or loss/vandalisation so caused

Since any amount due from an employee would cause loss to the company and the same cannot be recovered once the employee is relieved, you can issue an order to recover the same from the gratuity amount payable following the usual procedures, like issuing a show cause notice asking him to explain why the amount due could not be recovered from gratuity. If he given consent to the employer to deduct the amount payable by him from gratuity, the employer can proceed accordingly. But unilateral deduction is not permitted and will be against section 4(6)(a) of the Act.

Dear Colleague,

Forfeit does not mean adjustment. In a very recent judgment, an employee took a loan from the petitioner Bank by executing a loan agreement having a clause that the loan amount can be adjusted against the gratuity amount. He was discharged from the services on account of disciplinary proceedings. His gratuity was adjusted against the loan amount. He claims gratuity on filing an application before the controlling authority. His application was allowed. An appeal was filed against the order of controlling Authority, it was dismissed. Bank filed a Writ before the Allahabad HC. Held- The amount of gratuity has been adjusted towards the housing loan. It has neither been forfeited nor withheld. Adjustment can be adjusted against the loan if the loan agreement so provides. It is not barred by the provisions of Section 4(6) of the Payment of Gratuity Act, 1972.
State Bank of Bikaner & Jaipur Vs Appellate Authority & Others, 2013 LLR 637 (Allahabad HC)

Yes. Gratuity amount can be attached.

Please find attached a Judgement.