In case an employee has been found to be guilty of fraud, or any action that is unethical, unjust or immoral, and fired for the same, it is enough reason for the employer to forfeit their gratuity. That means, it is not necessary for an employee to be criminally convicted for their gratuity to be forfeited, as per the Supreme Court.
As per a new ruling, employers can now hold back the gratuity payments of employees under the Payment of Gratuity Act, 1972, for moral turpitude. They need not wait for the case to be decided by a court if the employee has been dismissed for moral turpitude. So what is moral turpitude?
The Court was hearing a case where the complainant, who was born in 1953, had mentioned his year of birth as 1960 at the time of job appointment. Basis this information, he had been appointed at a public-sector undertaking or PSU where he worked for over two decades. Had he revealed his actual date of birth, he may not have got the job in the first place. He was fired for moral turpitude and his gratuity was forfeited by the PSU, but no criminal charges were pressed against him, as per media reports.
In the past, the Supreme Court had (in Union of India vs. Ajay Babu) ruled that it was necessary for employers to prove the termination of an employee under the reason of ‘moral turpitude’ to justify forfeiture of gratuity. This significant new ruling changes all that.
