Gratuity payment rules: The Supreme Court has ruled that an employee’s gratuity can be stopped on the grounds of ‘moral turpitude’ even without a criminal conviction. Employers will have to follow the principles of justice in this process.
Gratuity rules: If you have worked in a company for five years and you think that you will get gratuity, then this is your misconception. It is not necessary that you will get gratuity. Now in some cases, gratuity will not be given at all. The Supreme Court has recently given an important decision, which has brought a big change in the rules between employees and employers.
On 17 February 2025, the Supreme Court ruled that under the Gratuity Act 1972, a criminal conviction is no longer necessary to confiscate an employee’s gratuity. If an employee is fired on the grounds of “moral turpitude”, his gratuity can be stopped. For this, there is no need to prove the crime in court. Moral turpitude means doing any immoral, wrong or fraudulent act or committing fraud.
Earlier, the 2018 Supreme Court judgment (Union of India vs. Ajay Babu) stated that it is necessary to prove the crime in court to stop gratuity. But after this new judgment, the 2018 judgment will no longer be applicable. If an employee is fired on the grounds of moral turpitude, the company can stop his gratuity.
The employee gave the wrong date of birth.
According to the Economic Times report, in this latest case, an employee hid his real date of birth. He had shown the date of birth as 1960 instead of 1953. Because of this, he got the job for 22 years. When this lie was discovered, he was fired from the job and his gratuity was stopped. The court said that if the employee had told the correct date of birth in the beginning, he would not have got the job.
In this case, an employee got a job by giving a false date of birth and worked in a public sector company for 22 years. When this fraud came to light, the company fired him and stopped his gratuity, although no criminal case was filed against him. The Supreme Court held that such fraud is ‘moral turpitude’ and criminal punishment is not necessary for stopping gratuity.
However, the Supreme Court also said that employers must follow the principles of natural justice when withholding gratuity. This means that the employee must be given a chance to present his case, and the employer must adopt a sympathetic approach. For example, in this case, the Supreme Court ordered that 75% of the employee’s gratuity be returned to him and only 25% be withheld.
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