EPFO reviewing options after K’taka HC ruling

The Employees’ Provident Fund Organisation (EPFO) is ‘actively’ evaluating its options following a recent Karnataka High Court judgement that has struck down the inclusion of international workers under the ambit of Employees’ Provident Fund (EPF), terming it as “unconstitutional and arbitrary”.

“The EPFO acknowledges the recent judgement issued by the esteemed High Court of Karnataka. The EPFO is actively evaluating the course of action in response to this judgement,” the social security organisation said in a statement on Tuesday.

Earlier in April, hearing a bunch of writ petitions filed by the employees and employers belonging to sectors such as education, logistics, real estate and technology, a bench headed by Justice K S Hemalekha held that the EPF is established to guarantee retirement benefits for employees in lower salary brackets. She emphasised that it would be inaccurate to argue that employees earning higher salaries should also receive benefits under this law.

Paragraph 83 of the Employees’ Provident Fund Scheme, 1952 and Paragraph 43A of the Employees’ Pension Scheme, 1995 which were struck down were introduced in 2008.

Sonu Iyer, partner at EY India says the petitioners argued in the court that international workers are covered under the scheme irrespective of the amount of salary drawn. Whereas domestic workers who draw monthly pay exceeding the prescribed statutory ceiling (~15,000 per month) are outside the purview of the provident fund scheme.

“The petitioners further argued that international workers work in India only for a limited period and requiring them to pay contributions on their entire global salary would cause irreparable injury,” Iyer said.

The Karnataka High Court also rejected the government’s argument to mandate contributions under these provisions as a form of reciprocity to uphold social security agreements, deeming it “unsustainable”.

The EPFO in its response to the judgment also added that India presently has social security agreements with 21 countries and these agreements ensure continued social security coverage for employees from these nations on a mutually reciprocal basis.