Gratuity Forfited On The Grounds Of Governance Termination

Dear Ritesh,

As I mentioned in the trail, she was served a show cause notice on her last working day after business hours. She had a couple of email exchanges after the first show cause notice wherein she had denied transferring any confidential customer data. However, there was no physical or phone discussion with management and her. After her last response to the show cause notice, there was no news for a couple of days, and suddenly one fine day they forwarded an email informing her termination without any compensation.

Regards,
Ronie

@Eronie7 - She has been given a show cause, and there was no inquiry held, but she was terminated from service. If the termination letter mentions such misconduct, then obviously such termination will be bad in law. She can challenge such illegal termination and can claim reinstatement with full back wages. Please consult a lawyer with all documents at the earliest.

My labor law blog: www.labourlawhub.com

Here, the ultimate question is whether the gratuity of the employee can be forfeited by the employer as they please. The answer is no, with reference to the provisions of the forfeiture of gratuity laid down in Section 4(6) of the Payment of Gratuity Act, 1972.

First, this is a case of an accepted resignation that was subsequently put on hold on the last working day of the notice period, even after the employee's relief. In such a situation, the management should have either continued her services by placing her under suspension or called her back to work after rescinding her relief based on the resignation.

Secondly, the order of termination was issued on a later date, taking effect from an earlier date. Termination cannot take place with retrospective effect but only from the date of the issue of such orders.

Thirdly, for argument's sake, if the termination is accepted as proper, the forfeiture of gratuity requires a simultaneous formal notice under Section 4(6) and not just an informal intimation, especially following a claim from the employee.

Fourth and finally, gratuity, being a statutory right of the employee, can only be forfeited to the extent prescribed in clause (a) or (b) of Section 4(6) of the Act, depending on the gravity of the proven misconduct.

Therefore, the employee has a valid claim for gratuity against the employer, along with interest, and she can approach the Controlling Authority under the Act, as suggested by Mr. Ritesh.