Supreme Court Takes Up Plea Against EPF Rules for Foreign Nationals Working in India

The Supreme Court has agreed to hear a petition questioning rules that require foreign nationals working in India to contribute to the Employees’ Provident Fund (EPF), as per news reports. The issue relates to the Employees’ Provident Fund Scheme, 1952. 

Court Takes Up Petition on EPF Rules 

A Bench of Justices P. S. Narasimha and Alok Aradhe issued notice to the Union government on a petition filed by LG Electronics. The company has challenged Paragraph 83 of the EPF Scheme, which governs provident fund contributions by “international workers”. 

The Court also directed that no final orders be passed in proceedings initiated against the petitioners under Section 7A of the EPF Act while the matter is under consideration. 

EPF Provision for Foreign Employees 

Paragraph 83 was introduced through government notifications issued in 2008 and 2010. The provision created rules for provident fund contributions by foreign nationals employed in establishments covered under the EPF Act. 

The changes came after India started entering into Social Security Agreements (SSAs) with several countries. These agreements deal with social security coverage for employees working in more than one country.  

They are intended to avoid double social security payments and allow employees to retain or transfer benefits while working abroad for limited periods. 

Who Is Covered Under the Rule 

Under the EPF framework, an “international worker” refers to a foreign national employed in an establishment in India that is covered under the EPF Act. Such employees are generally required to contribute to the provident fund. 

An exception applies to workers classified as “excluded employees”. This includes foreign nationals who remain covered under the social security system of their home country through an SSA with India. 

Where no such agreement exists, foreign employees are required to contribute to EPF regardless of salary levels. Indian employees, in contrast, are mandatorily covered only up to a statutory wage ceiling. 

Earlier Delhi High Court Ruling 

In November last year, the Delhi High Court dismissed petitions filed by SpiceJet and LG Electronics challenging the 2008 and 2010 notifications. 

The court held that the Union government had the authority to extend the EPF Scheme to foreign nationals. It also ruled that treating international workers as a separate category for provident fund purposes was legally permissible. 

Following this decision, LG Electronics approached the Supreme Court. 

Submissions by EPFO 

The Employees’ Provident Fund Organisation (EPFO) informed the court that it acts as the nodal agency responsible for implementing India’s social security agreements. 

The organisation said removing Paragraph 83 could affect these arrangements and may amount to a “material breach” under the Vienna Convention on the Law of Treaties. 

EPFO also said India has signed nearly 20 social security agreements with other countries and recently finalised one with the United Kingdom. 

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Conclusion 

The Supreme Court has asked EPFO to place relevant treaties and related documents on record. These materials will be examined as the court considers the validity of the EPF provisions relating to international workers. 

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