The Delhi High Court has ruled that all foreign employees working in India must mandatorily enroll in the Employees’ Provident Fund (EPF), upholding the government’s 2008 and 2010 notifications challenged by SpiceJet and LG Electronics.
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NEW DELHI: In a judgment impacting multinational companies and expatriate employees in India, the Delhi High Court has upheld the validity of government notifications mandating Employees’ Provident Fund (EPF) enrolment for international workers. The decision came in a case where the petitioners had challenged the 2008 and 2010 EPF notifications issued by the Central Government.
Court’s Observation
A Division Bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela dismissed the petitions, ruling that the Central Government was legally empowered to extend the EPF Scheme, 1952, to foreign employees working in India.
The Court held that the classification between Indian and international workers was constitutionally valid under Article 14 of the Indian Constitution, emphasizing that it was based on economic and social considerations rather than arbitrary differentiation.
“We have already held above that there is no legal infirmity in the said notifications,”
the Bench stated while recording its conclusions.
Background
The dispute centered on two key notifications:
- GSR 706(E) – October 1, 2008: Inserted Paragraph 83 into the EPF Scheme, introducing special provisions for international workers.
- GSR 148(E) – September 3, 2010: Substituted Paragraph 83, defining “international worker,” creating the ‘excluded employee’ category via the Social Security Agreement (SSA) framework, and mandating EPF contributions from the date of joining.
These provisions made it mandatory for non-excluded international workers employed in India to contribute to the EPF, regardless of their wage levels.
SpiceJet and LG’s Challenge
SpiceJet challenged a demand notice (March 14, 2011) seeking payment of dues for international workers and a summons (March 15, 2012) under Section 7A of the EPF Act, requiring production of records for determining contributions.
LG Electronics filed a similar plea contesting the same regulatory framework.
The petitioners argued that:
- Paragraph 83 unlawfully distinguishes between Indian and foreign employees.
- Foreign workers must contribute to the EPF regardless of salary, unlike Indian employees earning above ₹15,000 per month.
- The withdrawal rule (only at age 58) is impractical for expatriates who usually serve short-term assignments in India.
- The notifications exceed delegated authority, as the EPF Act does not classify employees by nationality.
Delhi High Court’s Findings
After hearing both matters together, the Court ruled that the notifications were within the scope of delegated legislation under Sections 5 and 7 of the EPF Act.
Applying the Article 14 “reasonable classification” test, the Bench concluded that treating international workers as a separate category was rational and justified.
“The classification in the instant case has a reasonable basis, which is based on economic duress, and such consideration is absent in the judgment rendered by the Karnataka High Court,”
the Bench observed, explicitly disagreeing with a contrary view earlier expressed by the Karnataka High Court.
The Court also upheld the withdrawal restrictions applicable to international workers, noting that Paragraph 83 was introduced to align with India’s international treaty obligations through Social Security Agreements (SSAs).
“Paragraph 83 in the Scheme has been added to implement India’s international treaty obligations, and entering into such treaties is a sovereign prerogative,”
the judgment stated.
The Court emphasized that invalidating the provision would effectively undermine India’s SSA framework with other countries, impacting reciprocal social security benefits for Indian workers abroad.
Concluding its detailed analysis, the Court held that since the core notifications of 2008 and 2010 stand valid, all subsequent circulars, notices, and enforcement actions issued under them are also legally sustainable.
The writ petitions by SpiceJet and LG Electronics were dismissed, affirming that foreign nationals working in India must mandatorily enrol in and contribute to the EPF unless specifically excluded under an SSA.
Appearance:
SpiceJet: Advocates Atul Sharma, Abhilasha Sharma and Dipan Sethi
The Union of India: Advocates Manisha Agrawal Narain, Vikram Jetly, Shreya Jetly, Nipun Jain and Ananya Arora
EPFO: Advocate Siddharth with Advocates Amit Kumar, Prateek Goyal, and Harshit Manwani
LG Electronics: Senior Advocate Sudhir Nandrajog with Advocates Rishi Awasthi, Amit Awasthi and Piyush Vatsa
Case Title:
SpiceJet Ltd. Vs Union of India & Anr.
W.P.(C) 2941/2012
