Forfeiture of Employee’s Gratuity Under the Payment of Gratuity Act, 1972: Current Legal position in India
Introduction Gratuity is a statutory retirement benefit payable to employees under the Payment of Gratuity Act, 1972 (hereinafter the “Act”), designed to provide financial security upon cessation of employment. It serves as a financial safety net and a reward for an employee's long and continuous service to an organization. While the Act generally mandates the payment of gratuity upon completion of five years of continuous service, it also provides specific grounds under which this benefit can be wholly or partially forfeited. The question of when and to what extent an employer can forfeit an employee's gratuity has been a recurring legal challenge, with the Supreme Court of India offering crucial clarifications through its recent pronouncements outlining the conditions under which such forfeiture is legally sustainable. The Statutory Framework: Section 4(6)…