Thursday, October 27, 2011

The Payment of Gratuity Act - Staffers with 5 yrs of service can avail gratuity

The Madras High Court Bench here has ruled that every employee, who has served an organisation for five or more years, is entitled to gratuity, irrespective of any terminology used to send him out of service, including retirement, resignation or death.
The order was given Justice K Chandru, who dismissed a writ petition filed by the Sri Rangam Cooperative Urban Bank claming the right to withhold the gratuity of an office assistant who was allowed to retire after 34 years of service without prejudice to the criminal proceeding pending against him.
The court ruled that "merely because in the relieving order it was stated that it was being passed without prejudice to the criminal proceedings against the workman, that will have no bearing in determining the liability for payment of gratuity under section 4(1) of the Payment of Gratuity Act. Therefore, this objection must necessarily fail".
The court, however, said section 4(6) of the Act enables the employer to forfeit the gratuity. It also said that the option of invoking section 4(6) would not be available for the employers if the employee had retired or reached the age of superannuation as held by the Madhya Pradesh High Court in a 2002 verdict.
According to Section 4 6), the gratuity of an employee whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss caused.
The gratuity payable to an employee may be wholly or partially forfeited if the services of such employee have been terminated for -(i) his riotous or disorderly conduct or any other act of violence on his part or (ii) any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment. PTI

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