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SC clarifies rules on gratuity forfeiture by employers
short by / on Monday, 3 August, 2026
The Supreme Court has clarified that employers can forfeit an employee's gratuity only to the extent of the proven financial loss caused by the employee. The ruling reinforces that gratuity is a statutory benefit that cannot be withheld arbitrarily, and that employers must establish the actual loss before deducting any amount from an employee's gratuity.
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