Gratuity Can Be Forfeited If Employee Terminated For Causing Damage to Employer’s Property, Forfeiture Not To Exceed Extent of Loss
Case: Union Bank Of India & Anr. V. Sh D.C. Chaturvedi & Anr.
Coram: Justice Pratibha M Singh
Case No.: W.P.(C) 4486/2021 & CM APPL. 13708/2021
Court Observation: “Thus, any employer can forfeit the gratuity of an employee if the employee is terminated for any act or omission or negligence causing any damage or loss to the property belonging to the employer. The forfeiture can only be to the extent of the damage or loss caused, and not beyond that.”
“In the present two petitions, it is worth noting that ld. Counsel for the Bank, during the course of hearing submitted that the Bank is not pressing the ground of forfeiture of gratuity of the employees on account of offence involving moral turpitude. Thus, insofar as the procedure to be followed for forfeiture is concerned, even if this Court does not take into consideration the judgment in Jaswant Singh Gill (supra), a mere reading of the provisions itself shows that the forfeiture can be only to the extent of the damage or loss so caused,”
“If both these conditions are not satisfied, the forfeiture would not be in accordance with law. It is nigh possible that the employee could argue that he was not responsible solely for taking the decision that is attributed to him. There may have to be apportionment of damage or loss. The damage or loss has to be connected with the act, omission or negligence of the employee. The entire damage or loss cannot be attributed to one employee. There cannot be duplication of forfeiture if more than one employee was involved. In view of these subjective conditions, a notice to the employee and a hearing would be required.”
“In a banking system, there may be various factual situations which may have resulted in termination of the employee. The misconduct alleged may be at an individual level or at the level of the team, for example, for sanctioning of a loan, only one employee of a bank may not be fully responsible. As per Section 4(6)(a) of the Act, the omission or negligence has to exist and forfeiture can be only to the extent of damage or loss caused to the employer,”
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