Changing Jobs, Not Character – Court Clarifies Moral Turpitude in Gratuity Law
- Arjun Paleri
- Sep 19
- 3 min read
(Arjun Paleri, Raisa Pinto and Harinie Seenivasan)
Introduction
Changing jobs is a normal part of career growth. Employees might look for new opportunities for better pay, career advancement, or a better work environment, even if it involves going to a competitor. But can these choices be labelled as “moral turpitude” to justify forfeiting statutory benefits like gratuity?
This question came before the Calcutta High Court in M/s/ Xpro India Limited v. State of West Bengal & Ors.1where the court examined an important question: does seeking alternative employment, even with a competitor, cross the threshold of moral turpitude? The Court’s ruling offers clarity for employers and employees alike on the limits of disciplinary action and the sanctity of gratuity as a statutory right.
Facts of the case – What happened?
The Respondent was employed at the Petitioner Company as a technician since 2012. During his employment with the Petitioner, he was privy to the confidential information of the Company, which included process and techniques that were developed in house through research and experimentation. The Petitioner identified that Respondent allegedly passed confidential technical information to a rival capacitor film manufacturing company. Following a domestic enquiry, the employer terminated his services and forfeited his gratuity, citing misconduct involving moral turpitude.
On a challenge of the same, the Controlling Authority and Appellate Authority under the Payment of Gratuity Act, 1972 (“Gratuity Act”), both directed the employer to release gratuity with interest, holding that no offence involving moral turpitude had been established. The Petitioner challenged these orders before the High Court.
What were the key questions?
The issue that the court decided was whether the alleged misconduct of sharing confidential information with a rival company constituted an “offence involving moral turpitude” so as to justify forfeiture of gratuity under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972.
How was it resolved?
The Court held that looking for another, even with a rival company, is a basic right and does not constitute moral turpitude under the Gratuity Act. The findings were substantiated with the following points:
Lack of Evidence – The court’s findings mainly rested on the fact that the Petitioner was unable to establish that the Respondent was in touch with the rival company. This was supported by the enquiry report which recorded that no call records or documentary proof were produced to substantiate the allegation that the employee was in contact with a rival company.
Moral Turpitude Explained – Based on existing precedents, the Court reiterated that moral turpitude means conduct contrary to honesty, modesty, or good morals—acts so vile or depraved as to shock the community’s conscience.
Looking for a Job does not mean Moral Turpitude – The Court emphasized that even seeking employment with a competitor, if proven, is not inherently dishonest or immoral. It does not, by itself, amount to “shameful wickedness” or depravity.
No Legal Basis for Forfeiture – Since the Petitioner was unable to establish act of riotous conduct, dishonesty, or violence was established, the court held that the forfeiture of gratuity was unsustainable.
Accordingly, the High Court dismissed the writ petition, upholding the orders of the Controlling and Appellate Authorities. The Court directed the employer to release gratuity with 8% interest, holding that the allegation did not amount to moral turpitude and the forfeiture was an abuse of power by the Petitioner.
What this means in practice?
For employers, this judgment serves as a reminder that disciplinary powers, especially regarding the forfeiture of statutory benefits like gratuity, must be used carefully. Allegations of disloyalty or breach of confidentiality do not automatically equate to “moral turpitude.” The following are certain points that can be considered while making such decisions:
Threshold: Moral turpitude has a high threshold. It requires proof of behavior that is fundamentally base, vile, or dishonest. This goes beyond just a breach of contract or suspicions of disloyalty.
Reliance on evidence: Forfeiting gratuity cannot rely on unproven claims. The disciplinary authority must provide clear and convincing material.
Other opportunities vs Fraudulent conduct: Seeking other opportunities does not equal misconduct or depravity. Employees have the right to look for other jobs, even with competitors, as long as there is no dishonest or fraudulent conduct involved.
Follow the principles of natural justice: Failing to provide evidence or ensure a fair hearing makes disciplinary action open to judicial review.
Conclusion
The Calcutta High Court’s ruling reinforces that gratuity, as a hard-earned statutory benefit, cannot be withheld lightly. Only proven acts of dishonesty, violence, or depravity, essentially conduct truly amounting to moral turpitude justify forfeiture. For employers, disciplinary measures must be backed by solid evidence and applied proportionately across all cases, uniformly.