New Delhi, Feb. 20 -- The Supreme Court of India has issued a ruling significantly altering the interpretation of gratuity forfeiture under the Payment of Gratuity Act, 1972. In a major shift from past legal precedent, the court ruled that a criminal conviction is no longer a prerequisite for an employer to deny gratuity payments if an employee has been dismissed on grounds of 'moral turpitude.' This term, frequently referenced in employment and labor law, encompasses unethical, dishonest, or fraudulent conduct.
With this decision, employers now have the authority to withhold gratuity without requiring a prior court ruling on the matter, provided the termination is based on moral turpitude. Legal experts emphasize the importance of this verdict, highlighting its departure from the Supreme Court's 2018 judgment in Union of India vs. Ajay Babu, which mandated that employers establish the charge of moral turpitude through legal proceedings before forfeiting gratuity. By overturning the necessity of a court conviction, the 2025 ruling effectively nullifies the previous requirement, making it easier for employers to act on such dismissals without waiting for judicial confirmation.
Published by HT Digital Content Services with permission from Millennium Post.