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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