The Delhi High Court has upheld the requirement for foreign employees working in India to contribute to the Employees’ Provident Fund (EPF), affirming the validity of two Central government notifications issued in 2008 and 2010. The ruling came after the Court dismissed petitions filed by SpiceJet and LG Electronics that challenged the legality of extending EPF coverage to international workers employed in India.
The term “international worker” includes:
-
Employees contributing to the social security system of a country that has a reciprocal Social Security Agreement (SSA) with India and who hold the status of a detached worker.
-
Indian employees who have worked or will work in a country that has an SSA with India and are eligible for that country’s social security benefits; and
-
Non-Indian employees working in an establishment in India that falls under the purview of the EPF Act.
In its petition, SpiceJet argued that the distinction between foreign and Indian employees was discriminatory. The airline contended that while the EPF Act itself makes no such distinction, the notifications introduced this differentiation based solely on nationality, which it claimed was impermissible.
The Centre’s counsel, however, defended the classification, stating that it was based on a rational and reasonable distinction. The counsel further argued that making EPF contributions mandatory for all Indian employees, regardless of income, would impose economic hardship — a concern that does not arise for foreign employees, who generally work in India for relatively short periods of two to five years.
Dismissing the petition, the Court ruled that the classification was reasonable, noting that making EPF contributions mandatory for all Indian employees could result in economic hardship. It further held that the distinction did not violate the fundamental right to equality under the Constitution.
