If an employee transferred to another site due to completion of the existing site, firstly, he agreed and asked for a one-month extension due to a family problem. The company granted him the extension, and suddenly, after one month, he abruptly resigned from his job. He had served the company nearly 6 years and is now asking for gratuity payment. Due to his non-joining on the transferred site, the client has penalized for not deputing staff on the stipulated time. In this case, can we hold his gratuity amount towards negligence of his duties.
From India, New Delhi
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From India, New Delhi
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Section 4(6) of the Payment of Gratuity Act 1972 reads as follows:
(6) Notwithstanding anything contained in sub-section (i),-
(a) 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 so caused. The gratuity to be paid to an employee can be forfeited for causing loss to the employer subject to the following conditions:
1. The employee has to be terminated from service for negligence, causing loss to the employer. If the services are coming to an end on account of acceptance of resignation, then this condition is not met.
2. The forfeiture shall be to the extent of loss.
3. Following the termination of service due to negligence of duty, a show cause notice has to be issued as to why the loss caused to the employer be not recovered from the gratuity.
4. The explanation of the employee has to be considered, and a reasoned order has to be passed.
From India, Mumbai
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1655(6) Notwithstanding anything contained in sub-section (i),-
(a) 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 so caused. The gratuity to be paid to an employee can be forfeited for causing loss to the employer subject to the following conditions:
1. The employee has to be terminated from service for negligence, causing loss to the employer. If the services are coming to an end on account of acceptance of resignation, then this condition is not met.
2. The forfeiture shall be to the extent of loss.
3. Following the termination of service due to negligence of duty, a show cause notice has to be issued as to why the loss caused to the employer be not recovered from the gratuity.
4. The explanation of the employee has to be considered, and a reasoned order has to be passed.
From India, Mumbai
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Dear Member,
Mr KK!HR has well explained in which conditions the gratuity can be forfeited and how it is processed.
If we compare your scenario to the wordings it is not reflected anywhere that his negligence is causing loss to the employer.
Here the company suffered loss of his 01 month wages, but that can’t be determined his negligence. It is due to company granted his extension (comes under service conditions).
He is free to decide where he will work.
You can just check if he is not willing to serve the notice period then he may be required choose “Notice Buyout” option.
From India, Delhi
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Mr KK!HR has well explained in which conditions the gratuity can be forfeited and how it is processed.
If we compare your scenario to the wordings it is not reflected anywhere that his negligence is causing loss to the employer.
Here the company suffered loss of his 01 month wages, but that can’t be determined his negligence. It is due to company granted his extension (comes under service conditions).
He is free to decide where he will work.
You can just check if he is not willing to serve the notice period then he may be required choose “Notice Buyout” option.
From India, Delhi
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The penalty imposed by the client cannot be put on the employee. If the employee was given an extension or permission to stay back, naturally, the company should have sent somebody else to the client site. The client is not at all concerned about who is being deployed unless specifically agreed upon. Therefore, the loss caused cannot be attributed to the employee concerned. Moreover, gratuity can be withheld only when you have dismissed the employee for such gross negligence proved in an inquiry. In the absence of an inquiry and subsequent dismissal, the question of forfeiture of gratuity does not arise.
From India, Kannur
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From India, Kannur
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FORM-F-NOMINATI ON OF GRATUITY.pdf
Gratuity Form I.doc