Challenged Paragraph 83: Special Provision in Respect of International Workers

Para 83 EPF Scheme & Para 43A EPS is Unconstitutional  Arbitrarily and Unreasonably Enacted - Karnataka High Court

The landscape of employment is ever-evolving, especially in a globalized world where workers often move across borders for work opportunities. In India, the treatment of international workers concerning their provident fund contributions has been a topic of recent contention. The insertion of Paragraph 83 in the Employees’ Provident Fund Scheme, 1952, by the Central Government, brought about significant changes and challenges, particularly in establishments in Bangalore.

Who Qualifies as an International Worker?

An international worker is broadly defined as an Indian worker who has split their career between India and another country with which India has a bilateral Social Security agreement (SSA). Additionally, it includes foreign nationals working in India.

Initially, when Paragraph 83 was inserted, there was a statutory basic wages limit of Rs. 6,500 per month for international workers, similar to Indian employees as defined under Section 2(f) of the Act, 1952. However, this salary rider was removed by a subsequent notification (G.S.R. 148 dated 03.09.2010), effectively subjecting international workers to EPF contribution on their total basic wages, without any salary cap.

Legal Challenge and Landmark Judgment

This notification regarding international workers' EPF contribution was challenged before the Hon’ble Karnataka High Court. In a landmark judgment delivered on 25.04.2024, the High Court pronounced Paragraph 83 of the Employees’ Provident Fund Scheme, 1952, as well as Paragraph 43-A of the Employees’ Pension Scheme, 1995, as unconstitutional and violative of Articles 14 and 21 of the Indian Constitution.

The legal battle was spearheaded by Learned Advocate Mr. B C Prabhakar, Bangalore, who filed eight writ petitions challenging the treatment of international workers. His efforts were instrumental in protecting employers from potential harassment regarding EPF contributions, including retrospective determinations, penal damages, and interest.

Moving Forward

The judgment by the Karnataka High Court brings clarity and relief to employers dealing with international workers in Bangalore. It underscores the importance of fairness and equality in the treatment of all workers, regardless of their nationality. Employers and employees alike should stay informed about such legal developments to ensure compliance and fair treatment in the workplace.