Employees' Provident Fund Schemes for International Workers
Fundamental changes to Employees' Provident Funds & Pension Schemes have been introduced for coverage of international workers. The amendments, as published in the Gazette of India No. 538 dated October 1, 2008, have been made relating to Employees' Provident Fund by introducing a new category of employees known as an "International Worker" who will be required to join these schemes with effect from November 1, 2008.
These changes will result in additional liabilities of around 24% for all affected employees and the employers.
Earlier, participation in Employees' Provident Funds was not mandatory where an employee's monthly wage/salary exceeds Rs. 6500. The employees who will be affected are, therefore, those working in India who are assigned from a country with which there is no social security totalization.
Salient Features
- The employees qualifying as 'international workers' will contribute to the EPF schemes and the employers would also be required to make an equal contribution.
- Like Employees' Provident Funds Act and schemes, there will be no wage/salary ceiling for international workers.
- The employees likely to be affected or benefited would include expatriates (foreign citizens) working in India and even Indian employees deputed to work abroad. With almost all expatriates being tax equalized, and the employer picking up their share of the contributions also, the expatriate assignment costs are going to increase even further.
- The notification exempts international workers from those countries with which India has signed Social Security Agreements, commonly known as Totalization Agreements, and who have been contributing to their home country social security schemes. India has currently finalized totalization agreements with Belgium, France, and Germany. The entire objective of such agreements is to ensure a level playing field for mobile assignees. These agreements aim to protect the interests of Indian professionals by securing exemption from social security contributions in case of certain short-term assignments in the host country.
In essence, there is no impact of the amendment on the employees of the establishment who are working in the foreign countries with whom India has not signed SSA. Such employees will continue to contribute to the Social Security Schemes of the country in which they are posted but may not get any benefit out of such contribution. The Indian employees on short-term international assignments (period specified in each agreement), who are contributing to the Indian PF scheme, would not be required to contribute to the social security schemes in the respective host countries.
Sum & Substance
The amendment will apply to the establishments that employ expatriates and also depute their employees to work in foreign countries:
1. Persons deployed overseas by the Indian Company/Establishment.
- Contribution to be made to Indian Provident/Pension Funds. Rate and limit to be governed by the SSA.
- Employees will continue to contribute to social security benefit in the Host Country.
2. Expatriates deployed in India
- No contribution required to be made to the Indian Provident/Pension Funds.
- Contribution to be made to Indian Provident/Pension Fund on Basic Salary, DA, and Retainers Allowance.
What Every Employer Needs to Comply
To send to the Provident Fund Commissioner, within 15 days of the commencement of the scheme (November 1, 2008), a consolidated return in such form as the Commissioner may specify of the International worker indicating clearly the nationality of each and every international worker required or entitled to become a member of the fund showing the basic wage, retaining allowance, if any, and Dearness Allowance irrespective of wage/salary ceiling including the cash value of any food concession paid to each of such international workers. However, if there is no international worker who is required or entitled to become a member of the fund, the employer shall send "Nil' Returns.
To send to the Commissioner, within 15 days of the close of each month, a return in Form 5 of the International workers qualifying to become members of the fund for the first time during the preceding month together with a declaration in Form 2 to furnish by such qualifying International workers (indicating distinctly the nationality of each and every International worker).
If there is no International worker qualifying to become a member of a fund for the first time or there is no International worker leaving the service of the employer, the employer shall send a 'Nil' Return.
Full notifications have been published in the November 2008 issue of Labour Law Reporter.
From Hong Kong
Acknowledge(0)
Amend(0)
55Fundamental changes to Employees' Provident Funds & Pension Schemes have been introduced for coverage of international workers. The amendments, as published in the Gazette of India No. 538 dated October 1, 2008, have been made relating to Employees' Provident Fund by introducing a new category of employees known as an "International Worker" who will be required to join these schemes with effect from November 1, 2008.
These changes will result in additional liabilities of around 24% for all affected employees and the employers.
Earlier, participation in Employees' Provident Funds was not mandatory where an employee's monthly wage/salary exceeds Rs. 6500. The employees who will be affected are, therefore, those working in India who are assigned from a country with which there is no social security totalization.
Salient Features
- The employees qualifying as 'international workers' will contribute to the EPF schemes and the employers would also be required to make an equal contribution.
- Like Employees' Provident Funds Act and schemes, there will be no wage/salary ceiling for international workers.
- The employees likely to be affected or benefited would include expatriates (foreign citizens) working in India and even Indian employees deputed to work abroad. With almost all expatriates being tax equalized, and the employer picking up their share of the contributions also, the expatriate assignment costs are going to increase even further.
- The notification exempts international workers from those countries with which India has signed Social Security Agreements, commonly known as Totalization Agreements, and who have been contributing to their home country social security schemes. India has currently finalized totalization agreements with Belgium, France, and Germany. The entire objective of such agreements is to ensure a level playing field for mobile assignees. These agreements aim to protect the interests of Indian professionals by securing exemption from social security contributions in case of certain short-term assignments in the host country.
In essence, there is no impact of the amendment on the employees of the establishment who are working in the foreign countries with whom India has not signed SSA. Such employees will continue to contribute to the Social Security Schemes of the country in which they are posted but may not get any benefit out of such contribution. The Indian employees on short-term international assignments (period specified in each agreement), who are contributing to the Indian PF scheme, would not be required to contribute to the social security schemes in the respective host countries.
Sum & Substance
The amendment will apply to the establishments that employ expatriates and also depute their employees to work in foreign countries:
1. Persons deployed overseas by the Indian Company/Establishment.
- Contribution to be made to Indian Provident/Pension Funds. Rate and limit to be governed by the SSA.
- Employees will continue to contribute to social security benefit in the Host Country.
2. Expatriates deployed in India
- No contribution required to be made to the Indian Provident/Pension Funds.
- Contribution to be made to Indian Provident/Pension Fund on Basic Salary, DA, and Retainers Allowance.
What Every Employer Needs to Comply
To send to the Provident Fund Commissioner, within 15 days of the commencement of the scheme (November 1, 2008), a consolidated return in such form as the Commissioner may specify of the International worker indicating clearly the nationality of each and every international worker required or entitled to become a member of the fund showing the basic wage, retaining allowance, if any, and Dearness Allowance irrespective of wage/salary ceiling including the cash value of any food concession paid to each of such international workers. However, if there is no international worker who is required or entitled to become a member of the fund, the employer shall send "Nil' Returns.
To send to the Commissioner, within 15 days of the close of each month, a return in Form 5 of the International workers qualifying to become members of the fund for the first time during the preceding month together with a declaration in Form 2 to furnish by such qualifying International workers (indicating distinctly the nationality of each and every International worker).
If there is no International worker qualifying to become a member of a fund for the first time or there is no International worker leaving the service of the employer, the employer shall send a 'Nil' Return.
Full notifications have been published in the November 2008 issue of Labour Law Reporter.
From Hong Kong
Acknowledge(0)Amend(0)
Dear friends,
This write-up has been authored by the renowned authority, Mr. H.L. Kumar, advocate S.C. It is regretted that his article has been posted in this forum without his reference and acknowledgements, potentially attracting a copyright issue. Can't we restrain ourselves from engaging in such copy-paste exercises?
Regards,
Anil Kaushik
From India, Delhi
Acknowledge(0)Amend(0)
This write-up has been authored by the renowned authority, Mr. H.L. Kumar, advocate S.C. It is regretted that his article has been posted in this forum without his reference and acknowledgements, potentially attracting a copyright issue. Can't we restrain ourselves from engaging in such copy-paste exercises?
Regards,
Anil Kaushik
From India, Delhi
Acknowledge(0)Amend(0)
Dear Sir,
I would also like to inquire about the applicability of these notifications regarding the number of employees working in an establishment. So, if an establishment has fewer than 20 employees, including international workers, is there an obligation for these international workers to contribute to the funds?
Warm regards,
Seema
From Germany
Acknowledge(0)Amend(0)
I would also like to inquire about the applicability of these notifications regarding the number of employees working in an establishment. So, if an establishment has fewer than 20 employees, including international workers, is there an obligation for these international workers to contribute to the funds?
Warm regards,
Seema
From Germany
Acknowledge(0)Amend(0)
Hi all,
I want to know if companies are paying salaries to expatriates in huge Dollar amounts, how are they adjusting to this additional burden? Additionally, is this amendment applicable to expats working on a contract for a few months (2-3 months)?
Looking forward to a prompt reply... thank you.
Acknowledge(0)Amend(0)
I want to know if companies are paying salaries to expatriates in huge Dollar amounts, how are they adjusting to this additional burden? Additionally, is this amendment applicable to expats working on a contract for a few months (2-3 months)?
Looking forward to a prompt reply... thank you.
Acknowledge(0)Amend(0)
If the basic salary is 10,000 INR, then the contribution made by the employee should be 1,200 INR. What should be the contribution of the employer? Will that be calculated based on the basic salary of 10,000 INR, which is 1,200 INR?
Can you please reply to this immediately?
Thanks and Regards,
Saugata Das
From United Kingdom, Brentford
Acknowledge(0)Amend(0)
Can you please reply to this immediately?
Thanks and Regards,
Saugata Das
From United Kingdom, Brentford
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
INTERNATIONAL-W ORKERS-IWs-UNDE R-THE-EMPLOYEES ’-PROVIDENT-FUN D-SCHEME-1952-A ND-THEIR-COMPLI ANCE.pdf
EMPLOYEES' PROVIDENT FUND & MISC PROVISIONS ACT '1952.ppt