Bengaluru, Karnataka – The Karnataka High Court recently made a significant ruling regarding the inclusion of international workers in the employees’ provident fund and pension scheme. This decision, deemed “unconstitutional and arbitrary” by the court, is expected to have legal implications and affect the status of many expatriates who are part of or have contributed to the social security scheme.
The petitioners, representing various sectors such as education, logistics, real estate, and technology, argued that the current provisions unfairly treat international workers differently than domestic workers when it comes to the provident fund scheme. They pointed out that international workers, regardless of their salary, are required to contribute to the fund, while domestic workers earning above a certain threshold are excluded. This discrepancy, they claimed, violates the principle of equality before the law as outlined in Article 14 of the Indian Constitution.
The ruling raises several questions and challenges for both expat workers and the government. It questions whether international workers should continue contributing to the fund or if those who have contributed in the past and left the country can claim refunds before reaching retirement age. Additionally, concerns arise about the tax implications of these contributions and the interest accrued over the years on both employer and employee contributions.
Justice K S Hemalekha’s judgment highlighted the original intent behind the Employees’ PF and Miscellaneous Provisions Act of 1952, emphasizing that the law aims to provide retirement benefits to employees in lower salary brackets. The court emphasized that it is unreasonable to extend these benefits to employees earning higher salaries, as outlined in para 83 of the EPF, specifically addressing international workers.
The court also criticized the government’s argument regarding mandatory contributions as a measure of reciprocity to honor social security agreements. Highlighting the discriminatory nature of requiring foreign workers to contribute on their entire salary while Indian employees working overseas only contribute a fixed amount, the court found this practice to be in violation of Article 14 of the Constitution.
Overall, the ruling by the Karnataka High Court on the inclusion of international workers in the provident fund and pension scheme has sparked debates and legal considerations about the fairness and implications of such policies. It remains to be seen how this decision will impact expat workers, government policies, and the broader issues of social security agreements moving forward.