The Supreme Court has ruled that an employee’s gratuity can be forfeited if they are dismissed for misconduct involving moral turpitude—without the need for a criminal conviction. The ruling clarifies that a disciplinary finding of such misconduct is sufficient under the Payment of Gratuity Act, 1972.
A bench comprising Justices Sudhanshu Dhulia and K. Vinod Chandran examined whether gratuity can be denied solely on the basis of termination due to serious misconduct, even if no criminal case is pursued. The Court concluded that a conviction is not a prerequisite, as the legal standard for disciplinary action differs from that of criminal proceedings.
The judgment explained that an “offence,” as defined under the General Clauses Act, includes any act deemed punishable by law and does not necessarily require a conviction. Unlike criminal cases that demand proof beyond reasonable doubt, disciplinary proceedings operate on the principle of the preponderance of probabilities.
Applying this reasoning, the Court upheld the forfeiture of gratuity in cases where employees were found guilty of fraudulent conduct, including suppression of birth dates and misappropriation of funds. The ruling reinforces that employers have the authority to determine whether an act qualifies as moral turpitude and to decide on full or partial forfeiture based on the severity of the misconduct.
With this decision, the Supreme Court has settled a key legal question, affirming that dismissal for moral turpitude alone is enough to justify the denial of gratuity benefits.