With rapid globalization there has been a surge of manpower being transferred / migrating from one country to another. At present there are approximately 232 million migrants around the world, representing
3.1 per cent of the global population. Women make up almost half of the migrants. It is estimated that one in eight migrants are between the age of 15 and 24. Migrant workers contribute to the economies of their host countries, and the remittances they send home, help to boost the economies of their countries of origin. Yet, at the same time migrant workers often enjoy little social protection, face inequalities in the labour market and are vulnerable to exploitation and human trafficking. Skilled migrant workers are less vulnerable to exploitation, but their departure has deprived some developing countries of valuable labour needed for their own economies. ILO standards on migration provide tools for both countries of origin and destination to manage migration flows and ensure adequate protection for this vulnerable category of workers.11
India, having a large workforce pool, sees a substantial relocation of human resources to foreign lands for work.. It was noticed that such migratory workforce, working in various countries, is mandatorily required to contribute towards social security funds of the host countries; but these contributions were lost as benefits in case of return to homeland and were also not payable before completion of a minimum qualifying period. Therefore, in order to protect interests of the such migrant workforce, the Government of India (GoI) entered into Social Security Agreements12 (SSAs) with certain countries; in order to put in place exemption from mandatory social security contribution in the country of deployment/working and also the benefits of contribution made abroad to be received by way of totalization and payable to the workforce even in case of return to India. Likewise, there was also a large contingent of foreign nationals who were working in India but there was ambiguity regarding their contribution to the social security fund here.
Foreign nationals were brought under the purview of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (the "EPF Act") in October 2008. The EPF Act governs social security in India. Originally, the EPF Act was applicable only to Indian workers. The Government of India, in 2008, broadened the scope of the Act, to include within its purview specific categories of Indian employees working outside India and non-Indian employees working for an establishment in India. The social security registration and contribution requirements were also extended to international workers (IW) in India, whether employed by a foreign company or a business domiciled in India. It is to be noted that the requirements apply to both the Employee Provident Fund (EPF) and Employee Pension Scheme (EPS), for both contributions and withdrawals.
Consequently, in order to implement the bilateral SSAs, enabling provisions were inserted in the form of Para 83 of the Employees' Provident Fund Scheme 1952 (the 'Scheme') and Para 43-A of the Employees' Pension Scheme 1995 (the 'Pension Scheme'), which came into effect from October 01, 2008. Hence, the concept of IW came into being. If there is a SSA between two countries, the rules regarding provident fund (PF) of International Worker are determined as per the provisions of the relevant SSA. In respect of those countries with which India has not entered into any SSA, the PF provisions are governed by the EPF Act and the Scheme.
The EPF Act governs employee provident fund contributions for employees in scheduled factories and notified establishments in India whereas the Scheme (framed under the EPF Act) requires provident fund contributions to be made in respect of international workers. Every business establishment in India that employs more than 20 workers must register with the national Social Security system, and make mandatory contributions toward retirement and insurance benefits.
As per above two noted provisions of the respective schemes, IW means:
- an Indian employee having worked or going to work in a foreign country with which India has entered into a social security agreement and being eligible to avail the benefits under a social security programme of that country, by virtue of the eligibility gained or going to gain, under the said agreement;
- an employee other than an Indian
employee, holding other than an Indian passport, working for an
establishment in India to which the Act applies;
Provided that the worker who is a Nepalese national on account of Treaty of Peace and Friendship of 1950 and the worker who is a Bhutanese national on account of India-Bhutan Friendship Treaty of 2007, shall be deemed to be an Indian worker.
Going by the plain reading of the definition of IW, all international workers in an establishment which comes under the purview of the EPF Act must become members of the Employees' Provident Fund Organization (EPFO); however an International Worker, who is an expatriate and who contributes to a social security programme of his/ her country of origin, either as a citizen or resident, with whom India has entered into a social security agreement on reciprocity basis and enjoys the status of a detached worker for period and terms, as specified in such an agreement is exempted from the purview of the EPF Act. Similarly, an Indian employee who, having been a member of the fund, withdraws the full amount of his or her accumulations or whose pay exceeds Rs15,000 (approximately $233) per month will be excluded from the EPF Act.
12 SSA is a platform that coordinates the social security schemes of two contradicting nations in order to overcome the barriers and facilitate extension of benefits to beneficiaries. SSAs aim to safeguard the interests (social security) of workers posted in other countries.
To view the article please click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.