1. It is the duty of the state to ensure welfare and protect the interest of its workers. State can ensure welfare by enactment of welfare schemes for its workers. In some situations, only welfare is not enough but state need to perform sovereign functions to protect the interest of domestic workers from influx of foreign workers coming into state for employment form other countries. State not only required to prevent influx of foreign workers but need to impose some punitive or preventive restrictions on the workers coming from other states, so that state can diplomatically bargain with other states to allow its workers same kind of relaxation in other countries whatever state is going to provide to foreign workers on its land. This is called the principle of reciprocity where one state is providing the similar kind of treatment to workers from other state through an agreement between those two states and that agreement in this case is called Social Security Agreement (herein after referred as SSA for the sake of brevity). In nutshell we can say that state can adopt three ways for social security of its workers,
a) State can frame some welfare schemes for its own workers such as EPF Scheme, ESIC scheme etc.
b) State can impose reasonable restrictions on the employment of foreign nationals through employment visa of foreign national to prevent influx of foreign workers and hiring of only highly skilled workers. For example, Ministry of Home Affairs (MHA) has specified minimum wage ceiling of Rs. 16.25 lakhs per annum for engagement of any foreign worker on employment visa in India.
c) State can impose some preventive or punitive measures against foreign workers such as mandatory deduction of social security contribution of foreign workers and with holding it for specific age such as age of superannuation or forfeiting in some cases. For example, when any Indian worker used to go for work in another country on deputation on any project or in subsidiary company of any company based in India, then his social security contribution used to be deducted in that country. In that case, Indian worker used to suffer with double deduction as he was paying social security contribution in India as well as his social security contribution used to be deducted in foreign country also. Here, important point is that concerned worker used to go on deputation or work in foreign country only for a period of 4 to 5 years but his social security contribution either will be forfeited or if returned back then it will be allowed for withdrawal after age of superannuation in that country. In this whole exercise, only Indian workers used to suffer as no such provisions were existing in India for foreign worker and they used to enjoy the status of “Excluded Employee” without any mandatory social Security deduction in India. We can say that Indian Worker going out was not on the equal footing with the foreign national coming to India. At that stage, no country was coming forward for any kind of SSA with India as their workers were not being affected due to treatment as excluded employee. In order to punish foreign workers or force the other countries to enter in to SSAs for treatment on reciprocity basis, Indian Government has brought these provisions so that mandatory social security contribution of foreign workers will be deducted in India even while on deputation for short period in India, so that these workers can pressurise their governments to enter into SSA with India for their treatment on reciprocity basis. These provisions really brought positive changes and 21 countries came on board to enter in to SSA with India and now Indian workers are enjoying the status of excluded employee in 20 countries on reciprocity basis due to effect of these SSAs.
In the light of above stated three aspects of the social security, we will discuss the provisions of international workers as well as the very recent judgement of Hon’ble Karnataka High Court.
2. EPF & MP Act, 1952 was enacted with the motive to cultivate the habit of saving in the form of mandatory deduction from the salary of workers and payment of equal and matching contribution by employer to ensure social security benefits to workers as at that time there was no provision for gratuity or pension for workers in organised sector. It is pertinent to highlight that some private sector establishments were used to have similar kind of scheme for their workers even before incorporation of this Act and based on that only this Act was incorporated.
3. Employee is defined in the section 2(f) of the Act and it contain such a wide definition that even persons employed through contractor were also coming into fold of employee. It is pertinent to highlight that “excluded employee” is not at all defined in Act. (Emphasis supplied).
At this stage, it is very important to discuss that basic wage is defined in section 2(b) of Act and there is no concept of “notified wage ceiling” or “excluded employee” is defined in the definition of basic wages. In the similar fashion, in the definition of “contribution”, no such wage limit prescribed in the Act and even in the definition of “member”, no such wage limit is defined in the Act for the purpose of membership.
In Section 5, Central Government is vested with authority for framing a scheme for establishment of provident funds under the Act with full authority to give retrospective or prospective effect. Section 6 of the Act provides for contribution payable by both employer and employee and section 6A & 6C provide for diversion of contribution collected under Section 6 to Pension and Deposit Linked Insurance Scheme respectfully. In all the above said provisions for the contribution, nowhere, any wage ceiling is defined or notified. From the above provisions, it is clear that EPF & MP Act, 1952, is not providing or imposing any limit on contribution or not specifying any wage limit for contributions (Emphasis supplied).
4. “Excluded Employee” is first time defined in Paragraph 2(f) of the EPF Scheme-1952, which excluded any employee, who has been member of fund and withdraw his accumulation under clause (a) or (c) of paragraph 69(1) and who was having salary above notified wage ceiling (basic wages + DA + Retaining allowance) at the time of joining with the employer and that employee will be treated as excluded employee for payment of contribution under EPF Scheme, 1952. This limit is revised to Rs.15000/- from 01.09.2014.
This concept of both notified wage ceiling and excluded employee is not prerogative of Act but it is a byproduct of EPF Scheme, 1952 incorporated by Central government with a motive to maintain a handsome in hand salary for workers as well as we are aware that we are a developing economy, so due to high population density and due to economic conditions, employers are not in position to contribute employer share on full salary so with a motive to provide a relief to employers, Central Government has notified a wage ceiling limit. Central Government has formed an opinion that due to economic constraint as domestic workers earning up to a specified wage limit is allowed to mandatory social security cover and for remaining higher salaried workers it should be sweet will of both the parties i.e. employer and employee. As per Paragraph 26(6) of the EPF Scheme-1952, both employer and employee can submit joint option to contribute on full salary if employer is ready to pay administrative charges on the full salary. Individual employee is allowed to pay his contribution of employee share without any cap as per section 6 of the Act. In addition to that it must be kept in mind that Central Government is providing budgetary support of 1.16% in Pension Scheme-1995 and this is to be provided from the taxpayer’s money so this cannot be provided for any uncapped salary, so that was why Central Government has notified a mandatory coverage limit for domestic workers and it is one kind of relaxation at the end of Central Government for domestic workers. International Workers cannot claim it as a matter of right.
5. in later part of this article, we have discussed that there is minimum salary limit of Rs. 16.25 lakhs per annum to obtain employment visa in India, so, in case, this “excluded employee” definition is followed that all International Workers coming into India on employment Visa will be treated as excluded employee by virtue of minimum salary limit for the employment visa. So, to counter this problem and to bring international workers into fold of this Act as well as to obtain relief for Indian workers going in other countries or convince that countries to enter into SSA under the pressure of their workers working in India special provisions for IW’s were incorporated in the EPF Scheme, 1952 w.e.f. 01.10.2008.
In these provisions incorporated under Paragraph 83 of EPF Scheme, 1952, a new definition of “excluded employee” was incorporated. It is stating that any international worker who is contributing to a Social Security Programme of his country of Origin (means that country where he was working before coming to India on employment visa), either as a citizen or resident, with whom India has entered into SSA on reciprocity basis and engaging the status of detached worker for the period and terms (means coming with certificate of coverage issued by nodal agency of that country), as specified in SSA, then that international worker will be treated as excluded employee in India and his contribution will continue to be deducted as per social security provisions of that country. In the similar fashion, natural person of any country, either as Citizen or resident, with whom India has entered in Bilateral Comprehensive Economic Agreement containing a clause on social Security prior to 01.10.2008 are extended the benefits of excluded employee.
We must keep in mind that, here the word “Citizen” is used as some countries are providing for Universal Social Security of all the citizens and it is not linked with employment but in India it is solely linked with employment so this provision was necessary to provide protection against double deduction of social security contribution both in country of origin and in host country. One more aspect, we have to keep in mind that it is giving protection even to resident. As there may be any refugee under UNO residing in any country and coming on employment to India through Government of that country with collaboration to UNO and his social security contribution is being deducted in that country, then his social security contribution will not be deducted in India for the period specified in SSA.
6. Now, we will go through the definition of international worker incorporated in Paragraph 83 of the EPF Scheme-1952. It is divided in two parts and we will discuss both parts one by one. At first, we will discuss, part (a); which state as under: –
“An Indian employee having worked or going to work in a foreign country with which India has entered into a social security agreement and being eligible to avail the benefits under a social security programme of that country, by virtue of the eligibility gained or going to gain, under the said agreement;”
It means, any Indian worker having worked or going to work in foreign Country with which India has entered in SSA and being eligible to avail the benefits under social security programme of that country, by virtue of eligibility gained or going to gain, under the said agreement. It is an option or choice given to Indian worker that instead of claiming the benefit of exclusion through Certificate of Coverage that Indian worker may opt as a status of international worker if it is beneficial for him by virtue of his past service or due to any other reason, he may be in position to avail benefits of social security in the country where he is going on deputation. We can understand the same with the help of one Illustration.
Illustration
Suppose, Mr. A is an Indian worker and he has already worked for 06 years in a country “X” in the past before India has entered in to SSA with the country “X” and his social security contribution already lying with the nodal agency of country “X”. Now, Mr. A is again is going for work on deputation in country “X” for next 4 years and there in provision under the social security programme of the country “X” that anybody who will contribute for 10 years in the social security scheme of country “X” then concerned person will be eligible to avail social security benefits under the social security provisions of country. In that case, it is beneficial for “A” to contribute in social security programme of country “X” as his benefits are more and most important is that he is going to gain eligibility to avail benefits, then “A” is given choice not to opt for Certificate of Coverage and he will be treated as International worker despite being Indian Citizen as he is going to gain eligibility for social security programme of another country where he is going for work, which is ultimately more beneficial for Indian worker.
Second part of definition states that,
(b) an employee other than an Indian employee, holding other than an Indian Passport, working for an establishment in Indian to which the Act applies;
It is clearly stating that any employees holding passport other than Indian passport and coming to India for work and working in any establishment to which this Act applies then that employee will be treated as international worker for purpose of this Act.
7. At last, provisions for allowing withdrawal of accumulation of provident fund are incorporated. It is stating that IW’s are allowed for withdrawal of funds in the following circumstances.
(i) On retirement – provided that retirement is any time after attaining the age of 58 years.
(ii) On Retirement- Retirement an account of permanent and total incapacity for work due to boding or mental infirmity. This provision is one kind of mercy or relief at the end of Central Government on humanitarian ground for any International Worker who get into a state of permanent disablement while working that he is not in position to perform the work which he was performing or came to India to perform and this need to be certified by a medical expert for this purpose.
(iii) Another provision for withdrawal for the international worker, who is affected by any serious disease named as tuberculous or leprosy or cancer. This is a deeming provision where it is deemed that any international worker affected by these diseases is deemed as permanently incapacitated to work. So, this is also a kind of mercy or relief provision incorporated by Central Government on humanitarian ground in the interest of international workers. The only difference between this provision and the above said provision is that, under this provision international workers can avail benefit even after leaving the job as well as leaving India after completion of period of deputation.
(iv) It is pertinent to highlight that international workers from any country with which India has entered into SSA, will be allowed to withdraw accumulation on ceasing employment under the Act. Suppose, India and France have entered into SSA and any French national is coming to India for work for 06 years but suppose SSA between India and France is proving for detachment period of only 04 years then the French national will be treated as IW as his detachment period is exceeding the period provided in the SSA or any French national who has come to India without Certificate of Coverage, then due to SSA between both the countries, one benefit will be there for any national coming to India with whom India has signed SSA that he will be allowed to withdraw his full accumulation on ceasing the employment. On the other hand, national of any other country, which is not ready to enter in to SSA, will not be allowed this benefit and he need to wait up to age of 58 years. This provision is incorporated so that more and more countries will come forward to enter in to SSAs with India, otherwise PF accumulation of their nationals will be blocked in India up to age of 58 years. In case, international workers from the countries which has not entered in to SSA are allowed to freely withdraw the accumulation on ceasing the employment, then no country will bother to enter SSA with India and Indian workers will not be in position to get this benefit in that country based on reciprocity. This clearly establish that internation workers are not forming a separate class at the time of entering in to fund but they form a separate class even at the time of exit of fund otherwise India will not be in position to secure the interest of Indian workers who are going on deputation without Certificate of Coverage or whose accumulation is already lying in other country even before these provisions came in to picture to claim them their accumulation back on time. In case, India is not bringing relaxed provision for international workers from SSA countries then Non-SSA countries will not be motivated to enter into SSA and it will weaken the power of diplomatic bargaining of India to secure interest of its workers.
8. We have discussed the provisions related to IWs in EPF & MP Act 1952 in the above paragraphs. At this stage, it is important to discuss the conditions and restrictions for employment visa issued by Ministry of Home Affair (MHA). It clearly states that an employment visa is granted to a foreigner who is highly skilled and / or qualified professional. Employment visa shall not be granted – (i) so for jobs for which qualified Indians are available and (ii) for routine, ordinary or secretarial / clerical job.
“The foreign national being sponsored for an employment visa in any sector should draw a gross salary in excess of Rs. 16.25 lakhs per annum. However, this condition of annual floor limit on income will not apply to : (a) Ethnic cooks employed by foreign Missions in India (this will not apply to ethnic cooks employed in commercial venture), (b) Language teachers ( other than English language teachers) / translators (this will not include teachers employed to teach particular subjects in foreign language), (c) staff working for the concerned Embassy/ High Commission in India, (d) foreigners, eligible for ‘E’ visa for honorary work with the NGOs registered in the country without salary, (e) foreign teaching faculty employed in the South Asian University and the Nalanda University, and (f) Circus artists. The salary threshold limit of Rs. 16.25 lakhs per annum will be worked out taking into account the salary and al other allowances paid to the foreign national in cash and also perquisites like rent free accommodation etc. which are included in the salary for the purpose of calculating income tax. Such perquisites should be quantified and indicated in the Employment Contract.”
This clearly establish that it is sovereign power of any sate to protect the employment of its worker and any state is doing so through employment visa that was why such strict wage limit and period fixed in employment visa. This clearly establish that international workers cannot be compared with domestic workers and they form a separate class. This categorisation is based on intelligible differentia and formed by the state while exercising sovereign function of the state in the interest of domestic workers and international workers are not eligible to demand parity for any kind of relaxation in wage limit or withdrawal rules provided for domestic workers.
9. Now, we will discuss the necessity of bringing international workers provisions in the EPF Scheme-1952, Why IW Provisions: –
We are aware that EPF & MP Act, 1952 was incorporated in 1952 for provident fund and later provision for Pension and Deposit Linked Insurance also added in the Act. At that time, the concept of international workers was rarely in picture as most of the economies not used to be so open. Indian economy was opened through economic reforms of nineties and lot of Indian companies opened their branches, offices, and subsidiaries in other countries so lot of Indian workers used to go to other countries to take care of projects, offices, or subsidiaries of Indian companies on detachment. On detachment, these Indian workers used to face a situation where their social security contribution used to be deducted in the country where they were going for work. In some countries they were allowed to withdraw the contribution deposited in social security fund of that country at the time of superannuation at certain age, while some countries used to provide no benefits if Indian workers have not contributed for minimum period and some used to forfeit this contribution. In that case, this deduction from salary of Indian workers in foreign country used to go waste and Indian workers were suffering. In that case, employer need to continue to contribute in India as worker was in the employment with the establishment while there was no use of contribution deducted in foreign country. So, employer used to pay contribution at both places and same was the case with Indian worker for the employee share. Similarly, employees used to face double deduction, but benefits of deduction in foreign country either not used to provided or provided at the time of superannuation only. In that situation, no foreign country was coming forward for any kind of agreement on this aspect as foreign workers were not facing the similar situation of double deduction in India as they were treated as excluded employee in India due to fact that notified wage ceiling of Rs. 6,500/- per month was much less than the monetary limit prescribed for employment visa.
In that situation, some interested groups approached Indian Government with the request to incorporate the social security provision in Indian law and on their request, in order to protect interest of Indian workers going on detachment, these provisions were incorporated in EPF Scheme-1952.
After incorporation of these provisions, international workers also started facing the problem of double deduction which Indian workers used to face earlier, so these international workers pressurised or convinced their governments to enter into SSAs with India. These provisions were incorporated on 01/10/2008 and now, 21 countries have entered in SSAs with India as well as SSAs with 20 countries are operationalised. Here, question is raised that these provisions are discriminatory with IWs from SSA and Non-SSA countries. We have discussed that in case, any Indian worker going to some SSA country for detachment of 04 years then he need not to pay in to the social security system of that country but he continues to pay in India. In the similar fashion, any foreign national of SSA country also need not to pay in India and he will continue to pay in his own country social security system. While, International worker from non-SSA country need to pay in India other than whatever is paying in his own country. This provision is providing benefits based on reciprocity based on SSA between two countries. Purpose of international workers provisions is to convince more and more countries for SSA so that Indian workers can be benefitted on the basis of reciprocity. This is one of the ways to ensure welfare or social security for the domestic workers. Any country, which wants to diplomatically bargain similar benefit for their workers in another country, then that country at first need to take away that benefits from foreign national or bring the similar kind of provision in their book whatever their workers are facing in other country, so that a level playing field is created for the agreement or diplomatic bargaining for treatment of reciprocity basis. In case, there is no such provisions are there in law in India for international workers, then no country will come forward for agreement on reciprocity as for that both parties need to stand on the same footing. Another aspect is that in case, international workers from both SSAs and Non-SSAs countries were treated at par then no country will come forward for the agreement so Indian Government will not be in position to secure benefits or bargain benefits for its nationals and this was not possible in the set up without bringing the special provisions for international workers.
International workers form a distinct class from the stage of employment visa itself, so there is nothing illegal for having separate provisions for them. There is nothing illegal to provide relaxation for international workers from SSA countries, as they are providing the similar relaxation for our workers, otherwise no country will come forward for SSA and this will impact the power of diplomatic bargain and secure interest for Government of India for its own workers.
10. Now, we will discuss these provisions in the light of judgement of Hon’ble Karnataka High Court in the matter of Stone Hill Education Foundation & others Vs Union of India & others in Writ Petition no. 18486/2012.
With due respect to Hon’ble High Court, I am having the considered opinion that these provisions are not discriminatory between domestic workers and international workers and we have discussed in detail in above paragraphs of this article that whatever differences are there between domestic and international workers as well as international workers from SSA and Non-SSA countries then these differences serve the particular and reasonable purpose. This reasonable discrimination is created in systematic manner as at first these provisions are incorporated to bring Indian law on par with the social security provisions of other countries. Then the SSAs are bargained with the countries on the reciprocity basis in order to secure the rights and benefits of domestic workers. So, in my considered opinion the classification between domestic worker and international workers is on intelligible differentia at the stage of employment visa itself while the classification between international workers of SSA and Non-SSA is based on reciprocity as SSA countries are ready to provide the similar kind of treatment to domestic workers on their land whatever we are providing to their workers in India with the purpose to secure interest of domestic worker discussed in detail in paragraph 9 of the this article. So, this classification is not only reasonable but also carries a purpose to ensure welfare of domestic workers to fulfil sovereign obligation of the state. In any sense this discrimination can be termed as discrimination without reasons.
We have discussed in paragraph 9 that classification is founded on intelligible differentia and this differentia is having a rational relation of welfare of domestic worker. So, there is nexus between the basis of classification and object sought to be achieved under the Act i.e. welfare and social security of domestic workers.
11. In paragraph 19 of the order, the Hon’ble High Court has discussed salient feature of paragraph 83 of EPF Scheme. In sub-paragraph (xi) of said paragraph Hon’ble Court has observed that provisions of inoperative accounts are not applicable in the case of international workers. This is not factually correct as there is no separate provisions for international workers in respect of inoperative account are incorporated in paragraph 83 but similar provisions for both domestic as well as international workers are there in paragraph 60 of EPF Scheme-1952 and equally applicable for both domestic workers and international workers. Cap is maintained for contribution under Deposit Linked Insurance Scheme (EDLI) as maximum benefits available under the scheme is capped, so in case, contribution is not capped proportional to benefits then it will cause loss to the beneficiary so contribution is capped.
11. Hon’ble High Court in paragraph 22 held that “It is nowhere mentioned in the objects of the enactment i.e., EPF & MP Act, 1952 with regard to covering employees irrespective of the salary drawn by them. In fact, to start with, only those employees who drew a salary of Rs.3,500/- and less were to be covered. Later on, it was raised to Rs.6,500/- per month and then to Rs.15,000/- per month indicating that the EPF & MP Act was enacted with a view to see that those in lower salary brackets get retirement benefits and by no stretch of imagination, could it be said that the employees who draw lakhs of rupees per month should be given the benefit under the enactment. In order to ensure strict compliance with the Act, stringent provisions of 7A, 14B, and 7Q have been provided and personnel of the EPF & MP Act, 1952 are exclusively employed to ensure the imposition of heavy cost in terms of interest and damages in case of noncompliance. Such personnel cannot be diverted to cater to the needs of rich international workers who earn huge amounts of money.”
We must keep in mind that object of any Act will come into picture when language of the Act is not clear then we need to get in to object of the Act to deliberate on any particular provision. In this case, language of the Act is very much clear that Act is not restricting coverage based on the any wage ceiling but wage ceiling is prerogative of Scheme only for mandatory coverage for lower strata of the society. This fact is missed by Hon’ble High Court that Act is not specifying any statutory wage limit so any such finding is not correct finding. Further, it is discussed in detail in paragraph 3 of this article that in Act there is no salary cap for coverage and compliance and Salary cap is only a prerogative of EPF Scheme 1952 and reasons for notification of such cap by the Central Government for domestic workers. This is for one kind of relaxation by Indian Government for its domestic workers in view of economic conditions so international workers cannot claim it as a matter of right when Act in permitting the payment of contribution strictly as per section 2(b) read with section 6 of the Act.
Another reasoning at the end of Hon’ble Court that personal deployed for compliance of domestic workers U/s 7A, 14B and 7Q will be utilised for compliance for international workers. In EPF & MP Act 1952, compliance functions are establishment specific not an individual employee specific as in the case of Industrial Dispute Act, 1947. Suppose, when an assessment proceeding is to be carried out, then it is to be carried for a specific period against the establishment for all the employees until there is a complaint of any individual employee. Even, in case of complaint of individual employee then also records of establishment as a whole such as attendance sheet, salary statement and profit & loss statement need to be checked as challans of whole establishment need to be filed for all employees. So, this is not correct reasoning that personal exclusively employed for statutory function under Section 7A, 7Q and 14B are diverted to need to rich international workers. We have to keep in mind that officers of the Central Board of Trustees are not employees of the Central Government but they are paid out of the admin charges paid by employer @0.5% and so in case of higher salary, admin charges will be paid more, naturally a higher amount was collected in case of international workers. From administration point of view also it was beneficial for Act and Schemes to cover international workers which resulted in collection of higher admin charges.
13. Hon’ble Court in paragraph 23 held that by incorporation of paragraph 83, Indian Government has travelled beyond the scope of Act. Hon’ble Court has missed the sight that there is no cap in salary under the Act, let it be section 2(b), Section 6, Section 6A and Section 6C. It is only prerogative of scheme and that was incorporated by Indian Government in the interest of domestic employees and international workers cannot claim it as a matter of right. This is discussed in detail in paragraph 3 of this article.
Hon’ble High court held that “Keeping in view the aims and objects of the main EPF & MP Act, when a ceiling amount of Rs.15,000/- per month has been placed as a threshold for an employee to be a member to the scheme, para 83 of the EPF Scheme ought not to have an unlimited threshold for international workers while denying the same benefit to Indian workers.”
This is not correct observation in the context of international workers provisions. In case of SSA countries, Indian worker, while on detachment in other country, is subjected to provision of social security provisions in Indian law while an international worker at the time of deputation in India is subjected to the social security provisions of his country of origin provided that both have obtained Certificate of Coverage from their respective nodal agencies before moving on detachment. In case, they do not want to obtain Certificate of Coverage or their period provided for detachment is already over or benefits are more beneficial in the country where they are going on detachment, then they can move without Certificate of Coverage. In that case, Indian workers will be subjected to provisions of the country where he is going on detachment and in the similar fashion, international workers will be subjected to social security provisions in Indian law. Then also, benefit is there for the both Indian worker and foreign national as withdrawal is allowed on ceasing the employment without waiting for the age of 58 years. This is a perfect case of reciprocity. (emphasis supplied) As far as Non-SSA countries are concerned, an Indian worker is subjected to law of country where he is going on detachment and he will be completely subjected to provision of that country. In the similar fashion, international worker from Non-SSA country will be subjected to provision of social security provisions in Indian law.
14. Hon’ble Court in paragraph 24 of the judgement held that “An Indian employee working in a foreign country with SSA who is a member of EPF & MP Act, 1952 continues to contribute on meager sum of Rs.15,000/- whereas, a foreign worker from SSA country, without a certificate of coverage, is made to contribute PF on his entire salary although both are by definition of international workers. The Government of India is unable to substantiate any nexus with the object sought to be achieved, para 83 is clearly discriminatory in treating the international workers of Indian origin and foreign origin differently and thus violative of Article 14 of the Constitution of India.”
In this paragraph, comparison by Hon’ble Court is not proper as Hon’ble Court is comparing Indian worker, who is having Certificate of Coverage with the international worker, who is not having certificate of coverage. It is well described in above paragraph that with Certificate of Coverage both Indian as well as international worker will be subjected to their respective social security law in their country of origin, while without Certificate of Coverage, both will be subjected to the social security law of the country where they are going on detachment. When we are comparing, then we need to compare apples with apples and oranges with oranges. This is not at all violative of Article 14 of the Constitution of India. Moreover, Indian worker to SSA country is subjected to Indian law so it is his choice and his employer’s choice that they want to contribute on salary of Rs.15000/- or on full salary. Similarly, foreign national will be subjected to law of his home country so that is choice of his country and Indian Government cannot dictate terms and conditions for any provision in foreign law for any foreign national.
Hon’ble High Court further held that “The distinction in the amount of contribution between an employee going to a non- SSA country and an employee from a non-SSA country coming to India is clearly discriminatory and violative of Article 14. The demand for contribution on global salary i.e., salary earned by an international worker or remuneration received by an international worker from some other country or in home country should also be computed for the purpose of the contribution is on the face of it, arbitrary and hit by Article 14 of the Constitution of India.”
Similarly, there is no distinction between an employee going to a non-SSA country and an employee coming from non-SSA country. Any Indian employee going on detachment to non-SSA country is subjected to provision of that country as India is not having any agreement with that country. Similarly, any foreign national coming to India will be subjected to Indian law i.e. EPF & MP Act 1952 as India is not having any SSA with that country. Contribution from international worker is to paid as per section 2(b) read with section 6 only on the wages earned in India but not on global salary. So, in my considered opinion this is also not a correct finding on the part of Hon’ble High Court.
15. Hon’ble High Court in paragraph 25 of the judgement held that “The respondents in their statement of objections have claimed that para 83 has been introduced as a measure of reciprocity in order to honour social security agreements between India and other countries. Wherever the Government of India has entered into a social security agreement with another country, as a matter of reciprocity, the international workers of such SSA countries are considered as either excluding employees meaning that such excluded employees need not be members of the fund or if they are not excluding employees, they are free to withdraw accumulation of cessation of employment in India. It is relevant to note that, such benefit has not been extended under para 83 to international workers from non-SSA countries”
Yes, international workers from SSA countries are treated as excluded employees if they are coming with Certificate of Coverage as they are treating Indian employees as excluded employees if they are going with Certificate of Coverage and both will be subjected to their respective own country social security law. This is discussed in detail in above paragraphs of this article that this is perfect example of reciprocity.
Hon’ble Court observed that such benefits are not extended to international workers from Non-SSA countries. In case, these benefits are allowed to international workers from Non-SSA countries then these countries will not come forward for SSA with India. In that case, Indian employee will be suffering while going to detachment to Non-SSA countries as their contribution will be deducted and held up in Non-SSA countries, while international workers from Non-SSA countries will be enjoying in India and they will withdraw their accumulation on ceasing the employment from India and fly from India.
In those circumstances, no country will come forward for SSA with India as their workers will not be facing any difficulty in India and these workers will not force, pressurise, or convince their government to enter into SSA with India. I am unable to understand that how this is going to benefit Indian workers and helpful in fulfilling the object of Act. We need to understand that claim of reciprocity come in to picture upon entering SSA and allowing Indian workers the similar benefits in that country whatever they want for their nationals in India. Any country which is not willing to enter into agreement and not willing to give benefits to Indian workers, then the international workers of that country cannot be allowed the benefit of reciprocity. In case, international workers, whose country has not entered into bilateral agreement i.e. SSA with India are so concerned then, who is preventing them to convince their governments to enter into SSA with India and avail the benefit of reciprocity. They want benefit in India but their government is not willing to enter into SSA and allow similar benefit to Indian workers in that country then how it can be justified in the name of equality.
Hon’ble Court further held that “An international worker from a non-SSA country is not allowed to withdraw accumulation until he reaches the age of 58 years. Therefore, para 83 eventually applies to international workers from countries with which the Government of India does not have SSA, and therefore, the claim of reciprocity does not arise and thus the claim of the Government that the obligation of reciprocity has made the Government of India to enact para 83 is unsustainable.”
In this aspect, we need to keep in mind that at the first, paragraph 83 was incorporated and in the line of provision India has entered into SSAs on the basis of reciprocity. At this stage, we need to refer matter no 7 of Schedule II of Act which state that “The conditions under which withdrawals from the Fund may be permitted and any deduction or forfeiture may be made and the maximum amount of such deduction or forfeiture.” Central Government has the full power to frame rules in scheme for allowing the withdrawal of PF accumulation or forfeiture of PF accumulation. We have discussed in detail that not only at the time of entry but even at the time of exit international workers from SSA and Non-SSA countries forms a different class. In case, any Non-SSA country is not allowing the withdrawal of PF accumulation of an Indian worker or not even entering in to SSA with Indian Government, then Indian Government is well within its sovereign powers to deny the same benefits to workers from that countries. Benefit under the reciprocity can be claimed on entering into agreement with Indian Government and in case, any government is not entering into agreement then workers from that country cannot claim parity with the workers from other country which has entered into SSA with India. At this stage, we need to keep in mind that contribution such as rate of contribution and component of wage on which contribution is need to be paid is subject matter of Act but withdrawal is subject matter of Schemes. As per Schedule II of the Act, Central Government is fully competent to frame rules for withdrawal. It is discussed above that pre-mature withdrawal before the age of 58 years is not a matter of right but it is one kind of relaxation allowed on some humanitarian grounds even for members from Non-SSA countries. In case, Indian Government wants to provide this relaxation for member from SSA countries to allow them to withdraw PF accumulation on ceasing the employment then there is nothing wrong. Claim of reciprocity can be claimed by international workers from SSA countries only, as this is by product of agreement and in case, Non-SSA countries are not even ready to enter into agreement with India, then how their workers can claim any kind of reciprocity.
One more aspect, we need to keep in mind that provision of SSA and exemption for India workers come in to force from entering SSA but Indian workers used to work in foreign countries even before these provisions came into force i.e. before 01/10/2008. Naturally their social security contribution was deducted and held up. In case, we are not allowing easy withdrawal facility for workers from SSA countries then they will not allow our workers to withdraw their claim which is already lying in that country. In case, we are not allowing easy withdrawal they will not allow withdrawal for Indian workers going on without Certificate of Coverage. In both the situations, it is going to affect the interest of Indian workers. Another aspect is that in case, we are not allowing easy withdrawal then many countries will not be convinced or attracted to enter SSA with India as this was not going to benefit to worker who has worked or working in India at the time of SSA with that country.
16. Hon’ble High Court in paragraph 26 of the judgement held that “Thus, it is clear from the above analysis that there is discrimination between the Indian employees working in a non-SSA country (who are not international workers as per definition) and foreign employees from a non-SSA working in India who are classified as international workers. There is no rational basis for this classification nor there is reciprocity that compels to classify foreign employees from non-SSA countries as international workers. The respondents neither have stated whether the Indian employees working in non- SSA countries nor required to contribute their entire pay without statutory limit towards PF of that country. In the absence of parity and also in the absence of reciprocity, there is no justification to demand a contribution on the entire pay of a foreign employee from a non-SSA country.”
There is no discrimination between Indian worker working in Non-SSA country and foreign worker from Non-SSA country working in India. Indian worker going on detachment to a non-SSA country will be subjected to social security provision of that country as India is not having any agreement with that country, so how Indian law will be applicable in foreign territory. Similarly, foreign worker, coming to India from Non-SSA country will be subjected to Indian law as India has not entered in to agreement with that country. Therefore, no claim of reciprocity lies as both countries have not entered into SSA. Any Indian worker going to work in other country, with which India is not having SSA, then how Indian Government can compel that what contribution they can take or what they cannot take, as this is their jurisdiction only and India cannot dictate terms to a sovereign country. In case, any foreign worker from Non-SSA country is not classified as International Worker in Indian Law, then that worker will fall in the definition of Excluded Employee under paragraph 2(F) of the EPF Scheme-1952. In that circumstance, foreign worker will not be affected at all and enjoying the status of excluded employee. In that scenario, no country will come forward for SSA as their workers are not affected. There is no discrimination as Indian Worker will be subjected to the social security provision of that country where he is going and foreign worker will be subjected to the social security provision of India apart from their respective compliance in their domestic territory.
17. Non-citizen employees working in India and employees who are citizen of India are treated equally as per provision of Act, but Central Government has provided some relaxation to domestic workers on some reasonable factors discussed in above paragraphs of this article then there is nothing illegal, unreasonable, or arbitrary in this. In my considered opinion, this is not the correct law laid down by the Hon’ble High Court and this need reconsideration for the following reasons: –
a. International workers form a separate class at the stage of employment itself and it is sovereign function of the State to govern their condition of employment to protect the interest of domestic workers.
b. Wage limit is not prerogative of Act but it is part of EPF Schemes and Central Government is fully competent to define or notify wage limit only for domestic workers keeping in view of economic factors as well as interest of both the parties i.e. employer and employee.
c. There is no discrimination between domestic workers and international workers as Indian Government even notified provision for contribution without notified wage ceiling for employee in Newspaper Establishments and Newspaper employees as keeping the wage limit was not practical due to higher salary and economic factors were not required to be taken into consideration in case of that kind of establishments and class of employees.
d. Central Government is fully competent to frame rules for withdrawal or forfeiture of accumulation of amount lying in provident fund. Any claim of reciprocity lies only on entering SSA. International workers from Non-SSA countries cannot claim parity workers from the SSA countries as they are not providing any facility or benefits to Indian workers in their country and not coming forward to enter SSA with India.
e. Function of Central Government to enter SSA is the commitment of Government and in case, there is clash between SSA and Act then naturally provisions of SSA will prevail.
f. International workers form a separate class at the time of withdrawal as they are not providing similar facility to Indian workers so Central Government is fully competent to protect to interest of domestic worker. Providing relaxations to international workers from SSA countries in lieu of similar benefits for domestic workers is the sovereign function of the Central Government and it is generally not matter of judicial scrutiny.
Author Bio
