EPF for International Workers

Background:
In October 2008, the Ministry of Labour and Employment made fundamental changes in Employees Provident Fund (“EPF”) and Employees Pension Schemes (“EPS”). The ambit of both the schemes was broadened to compulsorily cover International Workers(“IWs”) under the purview of India’s social security regime. Thereafter on a couple of occasions the EPFO has issued Frequently Asked Questions (‘FAQs’) to streamline and clarify various questions and issues that were originating out of the new legislation. The schemes were further modified in September 2010, and stringent rules relating to Provident Fund (“PF”) withdrawal by IWs, upon attainment of 58 years of age were introduced.

Contribution:

  • The contribution in respect of all IWs is payable on full salary, irrespective of where the salary is paid.
  • Effective September 11, 2010, diversion of 8.33% from employer’s contribution to the Pension Fund will be calculated on the entire monthly salary (as opposed to the earlier ceiling of INR 6, 500 per month).

Compliance:
Outbound expatriates of Indian nationality are to be treated as IWs with effect from the date of commencement of Certificate of Coverage (“COC”) issued by EPFO, Head Office.
  • Member will continue to be an IW, till the time, final settlement is made in accordance with the provisions of the scheme.
  • All foreign nationals employed in an establishment are to be enrolled as IWs, other than an ‘excluded employee’, on the basis of COC issued by Competent Agency under an SSA with India.
  • For compliance and settlement purpose, IWs has to be flagged separately and a separate register in respect of IWs may be maintained by each office.

Procuring a COC for outbound worker:
A ‘COC’ is issued in respect of an employee, who is posted by his Indian employer for an assignment to a country with whom India has an SSA. Procedure for obtaining COC in India:
  • The employee is required to submit (through his employer) an application in the prescribed format to the Regional Provident Fund Commissioner(“RPFC”).
  • The RPFC post verification of the application shall forward the same to the International Worker’s Unit (IWU) at the head office for issue of COC.
  • The IWU issues COC to the concerned RPFC for handing over to the employer.

Settlement of PF Claims:
Instructions have been given to the PF officials to ensure that PF accumulations of IWs are settled only in the following circumstances :
  • On retirement, at any time after attaining the age of 58 years; or
  • On retirement on permanent disability due to bodily or mental infirmity(includes TB, leprosy and cancer); or
  • In respect of the member covered under an SSA, on such grounds asspecified in such SSA

Separately, EPFO has also clarified that the special provisions relating to the IWs must also be followed by Exempted Establishments given exemption under Section 17 of the Employee’s Provident Fund and Miscellaneous Provisions Act, 1952. Further, the PF officers are also instructed to regularly scrutinize the reports / returns in respect of IWs to detect cases of evasion.

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