Though it is not mandatory for Indian workers to subscribe to the Employees’ Provident Fund Scheme (EPFS), international workers are mandated to contribute 12% of their basic salary to the EPFS. Further, the employers are also required to match an equal amount as their contribution to the scheme.
So if you are an international worker, you need to enrol to the PF scheme from the first day of your employment. According to a notification, dated 1 October 2008, issued by the ministry of labour and employment, every international worker, other than an excluded employee, shall be a member of PF. This has been effective since 1 November 2008. International workers drawing salary in any currency are to be covered.
Who is an international worker?
An international worker may be a foreign national or an Indian employee working in a foreign country that has a social security agreement (SSA) with India. Such Indian employee need not contribute under the social security programme of the said country on the basis of specified documents.
Any foreign national, with a working visa, is termed an international worker if he is working in an establishment in India to which the Employees Provident Funds & Miscellaneous Provisions Act, 1952 applies. Typically, factories and establishments employing 20 or more people are covered under the PF Act. The PF rule would not be applicable to a foreign employee of an employer, which is not liable to paying PF.
Who is an excluded employee?
Excluded employee refers to an international worker, who is a foreign national, coming from a country with which India has entered into an SSA. This international worker should also have a certificate of coverage issued by that country. Such a worker will contribute to the social security programme of the source country in terms of the mutual SSA signed between that country and India and may get exempted from contributing to PF in India.
Other regulations for international workers
The PF regulations will be applicable to total salary, irrespective of whether the salary is remunerated in India or outside India, split payroll, or multiple country sources. The exemption from making contributions for employees earning a salary above Rs 6,500 per month does not apply to international workers. International workers from countries not covered by SSA will not be able to withdraw accumulated balance at the end of their employment in India until they attain 58 years or on prescribed medical grounds.