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Apr 28, 2025

Greater Flexibility for Employers to Forfeit Gratuity

The SC, in Western Coal Fields Ltd. v. Manohar Govinda Fulzele,[1] ruled that criminal conviction is not necessary for forfeiting an employee’s gratuity as per the Payment of Gratuity Act, 1972. The SC stated that the termination of employment for an act of ‘moral turpitude’ is sufficient justification for forfeiture of gratuity. This judgement overrules the erstwhile judgment passed by the SC in the matter of Union of India v. Ajay Babu.[2]

[1] Western Coal Fields Ltd. v. Manohar Govinda Fulzele, 2025 3 S.C.R. 183.

[2] Union of India v. Ajay Babu, (2018) 9 SCC 529.

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These are the views and opinions of the author(s) and do not necessarily reflect the views of the Firm. This article is intended for general information only and does not constitute legal or other advice and you acknowledge that there is no relationship (implied, legal or fiduciary) between you and the author/AZB. AZB does not claim that the article's content or information is accurate, correct or complete, and disclaims all liability for any loss or damage caused through error or omission.

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