EPFO clarifies on final withdrawal of the Provident Fund for International Workers
In a Nutshell – Employees’ Provident Fund Scheme, 1952,
The Government of India, through notifications issued in 2008, added Paragraph 83 to the Employees’ Provident Fund Scheme, 1952, and Paragraph 43-A to the Employees’ Pension Scheme, 1995, establishing Special provisions for International Workers. The term “international worker” here refers to “an Indian worker who has divided his/her career between India and another country with whom India has a Social Security Agreement (SSA) or a foreign national working in India.” Wherein all establishments covered/coverable by the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 that employ ‘International workers’ in India or abroad will fall under the ambit of these special provisions.
Background Information –EPFO clarifies on final withdrawal of the Provident Fund for International Workers
The Employees’ Provident Fund Organization (EPFO) is the legislative body of the Government of India that manages mandatory Provident Fund (PF) contributions, pensions, and an insurance scheme for the Indian workforce. Every organization with more than 20 employees must register with the EPFO, and both employees and employers must contribute equally to the retirement and insurance schemes. Employees of such organizations that have registered with the EPFO receive a lump sum payment upon retirement that includes both his/her own contribution as well as the employer’s contribution, along with the interest accumulated on both.
This post-retirement benefit serves as one of the largest social safety nets for the Indian workforce managed by the EPFO to ensure access to health care and guarantee income security, particularly in cases of old age, unemployment, sickness, invalidity, work injury, maternity, or loss of a breadwinner. They currently have the following 3 schemes in operation:
International workers since 2008 have also been brought under the ambit of this Act with the special provisions mentioned above. The international workers (except excluded employees) also have to mandatorily contribute 12% of their salaries to the Employees’ Provident Fund scheme. The exemption from making contributions for employees earning a salary in excess of ₹15,000/month does not apply to international workers, and their employers also have to make an equivalent contribution, i.e., 12 percent of their salary to the scheme. The complicated part is that if India has a Social Security Scheme Agreement (SSA) with a said foreign country, or if the international worker has obtained a Certificate of Coverage (COC) from the EPFO, Indian employees who are deputed abroad are exempt from making contributions to that foreign country’s Social Security Scheme.
 Para 83(2)(ja) of the Employees’ Provident Funds Scheme, 1952
 Para 26 of the Employees’ Provident Funds Scheme, 1952
 Para 2 f of the Employees’ Provident Funds Scheme, 1952, an International worker, being not an Indian employee, contributing to the social security program of the source country in terms of the bilateral Social Security agreement signed between that country and India and exempt from making any contribution to the Indian system for the period for the purpose of compliance under the Indian system.
The Clarification – EPFO clarifies on final withdrawal of the Provident Fund for International Workers
A Social Security Scheme Agreement (SSA) is a bi-lateral instrument that protects the interests of Indian professionals and skilled workers working in foreign countries. The Government of India works with various countries, such as Australia, Austria, Belgium, Canada, etc., through these SSA’s to ensure that Indian employees do not have to remit contributions to the host country and receive benefits such as totalisation period for determining pension eligibility, may receive a pension in the country where they choose to live and benefit employers by saving them from making double social security contributions for the same set of employees.
However, in the absence of an SSA with that foreign country, the Indian employee deputed abroad requires him/her to contribute towards the Provident Fund in India as well as that of the foreign country. And these Provident funds (PF) regulations will apply to the total salary, regardless of whether it is paid in India or outside of India, through split payroll or multiple country sources, till he/she withdraws from the scheme or upon return to India upon completion of such assignment. Following which, upon retirement on completion of 58 years of age or any of the other several circumstances when final provident fund accumulations become due to the international worker, This has now been clarified in the circular of the Employees’ Provident Fund Organisation, dated April 27, 2022, to also include international workers from non-SSA countries in the meaning of the term “international worker” in Para 69 of the Employees’ Provident Fund Scheme, 1952, and thus, even international workers from non-SSA countries like China, South Africa, Thailand, Mexico, etc., can make the final provident fund withdrawal of their accumulations from the fund upon retirement after attainment of 58 years of age.
KARMA comments – The clarification for international workers
The clarification has finally put to rest the confusion about international workers from non-SSA countries being subject to provisions for circumstances for withdrawal of PF accumulations. This is a welcome relief for employees because it has finally removed a genuine source of confusion for international workers, resulting in no doubt improved compliance.
For a more in-depth discussion of how this issue may affect your business, please contact Karma Management Global Consulting Solutions Pvt. Ltd.