PF of International Worker

• Any Indian employee working or having worked abroad in a country with which
India has entered into a Social Security Agreement (SSA); OR 1. Any foreigner who
works in India in an establishment where the Employees‟ Provident Funds &
Miscellaneous Provisions Act, 1952 is applicable. The Amendment come into force
in 2008.

• A Social Security Agreement is a bilateral instrument to protect the social security

interests of workers posted in another country. Being a reciprocal arrangement, it
generally provides for equality of treatment and avoidance of double coverage
 PF of International Worker
In October 2008, India brought foreign nationals working for an establishment in the
country – whether a foreign company or a business domiciled in India, under the purview
of the EPF Act.

Accordingly, every foreign worker employed with an establishment to whom the EPF
applies must become a member of the provident fund (PF) from the first date of his/her
employment. There is no minimum period of stay in India for activation of PF compliance.

The PF contribution rate for foreign workers registered with EPF (or IWs) is 12 percent. The
PF rate is calculated on full salary of the IW irrespective of whether the salary is
remunerated in India or outside India, split payroll, or multiple country sources. The
employer contributes an equal amount, with the sum of PF being 13 percent of the total
wages of the employees.
There is no cap on the salary on which contributions are payable by the employer as well as
the employee. An IW can claim an income tax deduction on EPF contribution of up to INR
150,000 (US$ 2,168).
Exemptions
IWs are exempt from contribution towards PF only if their home country has a social
security agreement (SSA) or economic-bi-lateral treaty with India.
 Establishments Covered

• All such establishments covered/coverable under the EPF & MP Act, 1952
including those exempted under section 17 of the Act) that employ any person
falling under the category of ‘International Worker’ shall take cognizance of
these provisions.
• The provisions will apply irrespective of where the salary is paid. In case of
split payroll the contribution shall be paid on the total salary earned by the
employee. Contribution is payable on the total salary payable on account of
the employment of the employee employed for wages by an establishment
covered in India even for responsibility outside India.
 Contribution
• PF for International Workers to be calculated on total wages instead of Basic and
DA. Total wages means whatever the wages/salary receiving in India(includes Basic
and all other allowances (HRA, Conveyance, Project Allowance) and the
salary/wages receiving in his/her home country. Adding of these amounts PF to be
calculated on 12% as employee contribution. The employee should disclose his
home town income to the Indian company for PF calculations
• W.e.f 11-Sep-2010, Pension Fund (8.33%) to be calculated on the Total wages,
whereas prior to the amendment it was calculated on Restricted Wages (Rs 6500/-
• The contribution shall be calculated on the basis of monthly pay actually drawn
during the whole month whether paid on daily, weekly, fortnightly or monthly
basis:
• There is no cap on the salary on which contributions are payable by the employer
as well as employee. There is no cap on the salary up to which the employer’s
share of contribution has to be diverted to EPS, 1995 and the same is payable on
total salary of the employee.
Countries Having Social Security Agreement

• The Government of India through it’s iniative for the benefit of both employer and
employee has entered into agreement with several countries to ensure that the
employee of Home country do not remit contribution in that country, get the
benefit of totalization period deciding the eligibility for pension, may get the
pension in the country where they choose to live and employers are saved for
making double contribution for same employee’s

• At present Ministry of labour has signed with 18 countries

• Belgium, Germany, Japan, France, Denmark, Republic of Korea, Australia, Etc.

 Withdrawal rules under EPF
An international worker may withdraw the accumulated balance in the EPF account in
one of the following situations:

1.at the time of retirements, that is, on or after 58 years of age;

2.in case of retirement due to permanent and total mental or physical incapacity to work;

3.in case of serious illness such as cancer, leprosy, or tuberculosis; or,

4.on completion of Indian employment, if the IW’s home country has an SSA with India.

The facility to receive PF refund on the date of completion of Indian employment is not
available for IWs who are not covered under SSA.