Employer Cannot Withhold Gratuity Without Recovery Proceedings
The Karnataka High Court ruled that an employer cannot withhold the gratuity of a dismissed employee without initiating recovery proceedings for alleged losses caused by the employee’s actions.
Case Summary
Justice Suraj Govindaraj dismissed a petition by Central Warehousing Corporation challenging an order by the Controlling Authority. The authority directed the corporation to pay Rs. 7,88,165 with 10% interest from 12.12.2013 to G.C. Bhat, a dismissed employee.
The corporation claimed that the dismissal was due to misappropriation, causing a loss of Rs. 1.71 crore. It argued that it was entitled to withhold the gratuity amount to offset the losses.
Court Findings
The court observed that the corporation did not initiate recovery proceedings for the alleged losses.
Without such proceedings, retaining or forfeiting gratuity is not justified.
Dismissal serves as punishment for misconduct, but it does not compensate for employer losses.
Employers must provide the employee an opportunity to contest in recovery proceedings before adjusting dues.
Final Order
The High Court upheld the Controlling Authority’s decision, stating that withholding gratuity without adjudication of losses is unlawful. The court extended the deadline for payment of gratuity to 31.01.2025.
Suggestion to Employer
The court urged the corporation to initiate recovery proceedings in future cases of misappropriation to address such issues properly.
