In light of a recent ruling by the Karnataka High Court, the Employees’ Provident Fund Organisation (EPFO) announced on May 7 that it is meticulously scrutinizing possible responses to the judgement that invalidated the compulsory provident fund coverage for foreign laborers, labeling it as ‘unconstitutional’. The court’s decision has triggered discussions and legal scrutiny on the applicability of such welfare schemes to international workers and the potential implications the judgement could have on the framework of social security agreements India holds with various countries.
The judgement scrutinized the inclusion provisions targeting international workers under Paragraph 83 of the Employees’ Provident Fund Scheme, 1952, and Paragraph 43A of the Employees’ Pension Scheme, 1995. According to the EPFO, these provisions were found to be at odds with Article 14 of the Constitution of India. Article 14 enshrines the right to equality before law, ensuring that no individual within the Indian territory is denied equal protection of the laws based on religion, race, caste, sex or place of birth.
Paragraph 83 addressed special considerations for international workers, demanding that every foreign employee earning a basic wage of up to ₹15,000 per month be mandatorily enrolled in the provident fund scheme starting from October 1, 2008. But with the court deeming these provisions arbitrary and discordant with constitutional guarantees, the EPFO now finds itself at a critical juncture where it must navigate the complexities of compliance with both domestic law and international agreements.
Interestingly, India engages in social security agreements with 21 countries, designed to afford ongoing social security benefits to employees from these nations based on mutual reciprocity. Such agreements play a crucial role in maintaining social security cover for individuals during cross-border employment. The EPFO highlighted that these bilateral accords are shaped by internationally acknowledged principles and are not confined by the EPF wage ceilings applied to domestic members. The goal is to foster global workforce mobility and to capitalize on India’s demographic resources.
As the operational agency in India managing these social security agreements, the EPFO is dedicated to ensuring that these sovereign pacts—actively negotiated and established by the Government of India and its international partners—function effectively to protect employees’ rights during their overseas assignments. The EPFO underlined the importance of these alliances, stating that they are pivotal to India’s strategy of encouraging international worker mobility while harvesting the demographic dividend.
Another significant point raised by EPFO is the empowerment of the Central Government by the EPF Act to craft distinct schemes tailored to different categories of employees. The organisation pointed out that this empowerment is reflected in the EPF Scheme, which incorporates specific provisions for varied groups, including newspaper employees, cine workers, and international workers, each subject to unique registration and contribution requirements.
The ramifications of the court’s judgement are far-reaching, not only for the EPFO but also for the overarching social security framework within India and its agreements with partner countries. The EPFO’s contemplation of an appropriate course of action is testament to the intricate balance that must be achieved between upholding constitutional mandates and honoring international obligations.
The organisation reassures that even as they evaluate their next steps, they remain steadfast in their commitment to workers’ welfare and in maintaining the sanctity and objectives of social security agreements. As the discourse unfolds, the EPFO’s response will be closely watched by international workforce experts, legal scholars, and nations involved in social security treaties with India, all of whom have vested interests in the sustainable and equitable administration of employee benefits on a global scale.
