Under the Payment of Gratuity Act, 1972, there are certain conditions for the payment of gratuity to employees, as well as provisions for forfeiture of gratuity under specific circumstances. Let’s explore these in detail:
- Conditions for Payment of Gratuity:
- Completion of Five Years of Continuous Service: To be eligible for gratuity, an employee must have completed a minimum of five years of continuous service with the same employer. However, this condition is relaxed in case of the employee’s death or disablement due to accident or illness.
- Retirement, Resignation, Death, or Disablement: Gratuity is payable to the employee upon retirement, resignation, death, or disablement due to accident or illness, provided the employee meets the eligibility criteria of completing five years of continuous service.
- Forfeiture of Gratuity:
- Termination for Misconduct: If the termination of employment is due to the employee’s misconduct, the employer has the right to forfeit the gratuity payable to the employee. However, the misconduct must be proven in a fair inquiry conducted in accordance with principles of natural justice.
- Breach of Contract: Gratuity may be forfeited if the employee has breached the terms of the employment contract, resulting in the termination of employment.
- Act of Violence: If the employee has committed an act of violence on the employer or their property, the employer may forfeit the gratuity payable to the employee.
- Corruption or Wilful Negligence: If the employee has engaged in acts of corruption or wilful negligence causing financial loss to the employer, the employer may forfeit the gratuity.
- Any Other Reason: The Act allows for forfeiture of gratuity in any other circumstances as specified in the employment contract, provided such conditions are reasonable and not contrary to the provisions of the Act.
It’s important to note that the right to forfeit gratuity is subject to the provisions of the Payment of Gratuity Act, 1972, as well as any relevant rules or regulations. Employers must follow due process and ensure that the forfeiture of gratuity is justified and in accordance with the law. Employees also have the right to challenge any unjustified forfeiture of gratuity through legal means.