For several years, the expatriates in India bore the brunt of being ineligible to the social security benefits. Amendment to ‘The Employees’ Pension Scheme, 1995 Act (EPS, 1995)’ that came into force on November 1, 2008 (by insertion of para 43A) is a step towards extending benefits to the expats or international workers as available to the Indian Nationals in Social Security Agreement (SSA) signatory countries.
Expats are those persons who are not of Indian origin (and not holding Indian passports) but still working in the Indian Territory. Till November, 2008 foreign nationals working in India were excluded from being member to the fund as in most of the cases their salaries exceeded the statutory limit of ` 6,500/-. With the amendment, a newly inserted term IW (international Workers) recognized three categories of workers:
1st Category: Indian origin workers/ persons working in a foreign country that has entered into Social Security Agreement (SSA) with India. In this case, the workers are eligible to avail benefits under the social security of that country.
2nd Category: International Workers (IWs) who hail from the country with which India has a Social Security Agreement.
3rd Category: Workers who hail from the country with which India does not have any SSA.
The amendment brought the 2nd category of workmen within the ambit of the EPS Act. Till date India has signed 14 social security agreements with Germany, Switzerland, Denmark, Belgium, Finland, France, Luxembourg, the Netherlands, Hungary, the Czech Republic, Austria, Republic of Korea, Norway, and Canada only and negotiations with many countries are in progress. The United States and the United Kingdom are contesting against the issue and not signatories to the agreement.
After the amendment, the cap of salary with respect to the workers of Indian origin working in India was retained but due to insertion of Para 83 in EPFS, 1952 and Para 43A in EPS, 1995, there is no ceiling for the IW(s) to join the fund. Now, the IWs are liable to become member of the fund irrespective of the amount received by them as wages, dearness allowance, retaining allowances, etc.
The answer is:-
Para 36 of the Scheme as amended with respect to the IWs and incorporated in Para 83 provides for the duties of the employer in this respect. A duty is cast on the employer to send to the Commissioner, particulars of IW(s) working in the establishment along with the details of the basic wages, retention allowance, etc. Such information has to be supplied to the Commissioner within 15 days of the commencement of the scheme i.e. on or before 15.11.2008. Under Para 36(2) there is a recurring duty on the employer to send to the Commissioner within 15 days of the close of each month to till date, the return in the specified form.
An employee once a member continues to be the member of the fund unless he withdraws the fund under Para 69 of EPFS, 1952; or covered by a notification under section 17 of the Act; or covered under an order of exemption is passed under Para 27 or 27A; or if the benefits are settled in accordance with the social security agreement.
The contribution shall be calculated on the monthly pay containing:
Para 29 of the EPFS Act deals with both the employer and employee’s contribution towards the fund. The legislature has not made any amendment in Para 29 of EPFS, 1952 which deals with contribution to the fund by the employer and employee. Thus, an employee may contribute more to the fund by increasing the percentage of the contribution but the liability of the employer is limited to 12% of the salary. This is confirmed by the Employees Provident Fund Organization in FAQ on special provisions for IWs on its web-site. There is no cap to the salary on which the contribution is to be made by the employer and employee for provident fund. However, under Employee’s Deposit Linked Insurance Scheme, 1976, the salary upto which the contribution is to be made is ` 6,500/-
Unlike the Indian workers who can withdraw their contribution to the fund under number of circumstances, the options available to IWs are limited.
If the IW is covered under an SSA, the worker can withdraw the provident fund according to SSA. An IW from non-SSA country, can withdraw the provident fund at the age of 58 years only. However exceptions are carved out if he or she is retired due to any incapability to work or suffering from leprosy, cancer and tuberculosis.
An IW will be eligible for pension in the following events:
Moreover, the IW can withdraw superannuation benefits to the extent of his permanent retirement from the Indian workforce.
The employer has the primary liability to deduct contribution from the wages of workmen and deposit the same at the PF department along with matching contribution in a prescribed form. Upon noncompliance, the same can be recovered in a manner provided in Section 8B & 8F of the EPF Act, 1952.
Moreover, the employer may face penal action for such non-compliance.
Thus, there is no escape from complying with the provisions of the Act except to the persons engaged as ‘consultants.’
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