PF Rules: According to the Karnataka High Court, it is unconstitutional to provide foreign workers with benefits from the Pension Scheme and Employees Provident Fund (PF). The court’s ruling was rendered fifteen years after the legislation was changed.
Revocation of Provisions
The provisions created by amending the law to give international workers benefits under the PF and Pension Scheme have been revoked by the High Court, which deemed them to be arbitrary and unconstitutional.
It is anticipated that this High Court ruling will be contested by the government and Employees Provident Fund Organization (EPFO). Thousands of foreign workers who have contributed to or are currently enrolled in the social security system will be impacted by this decision.
Petition Submission
In relation to this, some people had submitted a petition. Those from the real estate, technology, education, and logistics industries were among them. He claimed that these clauses go against the right to equality before the law, guaranteed by Article 14 of the Constitution. In a note, EY stated that they were concerned about discrimination against Indian and foreign workers.
Foreign employees are covered by the Provident Fund (PF) scheme regardless of their salary, while domestic workers earning more than Rs 15,000 are not. His claim was that since foreign employees only work in India temporarily, it would be irreversible to have to pay taxes on their full worldwide salary.The government and foreign workers face numerous challenges as a result of the High Court’s decision.
Legal Interpretation by Justice KS Hemlekha
Justice KS Hemlekha said that “The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 was enacted to ensure that low-paid employees get retirement benefits and the benefits of this law should not be extended to high-paid employees. It said that paragraph 83 of the EPF (dealing with international workers) is in the nature of subordinate legislation and cannot go beyond the scope of the law.”
She added that, “The judgment said that an Indian employee working abroad would have continued to contribute Rs 15,000 to the PF. Whereas asking a foreign worker to contribute the entire salary is discriminatory and a violation of Article 14.”
Central Government’s Reciprocal Measure
The Central Government claimed that mandatory contributions were made as a reciprocal measure to uphold social security agreements, but the High Court dismissed this claim as temporary. These agreements allow foreign employees to withdraw their corpus upon leaving India, rather than waiting until they turn 58, or they exempt them from becoming members altogether.