The Delhi high court on Tuesday upheld the Centre’s notifications mandating international employees to contribute to the Employees’ Provident Fund (EPF) irrespective of their income, while requiring Indian employees to do so only if their salary exceeds ₹15,000.
A bench of chief justice D.K. Upadhyay and justice Tushar Rao Gedela delivered the verdict while dealing with SpiceJet’s petition against the Centre’s September 2009 and October 2010 notifications. The notification provides that international workers employed in Indian establishments covered by the EPF scheme must become members of the fund, regardless of whether their monthly salary exceeds ₹15,000.
International workers refers to an employee who contributes to the social security program of a country that has a reciprocal Social Security Agreement (SSA) with India and holds the status of a detached worker; an Indian employee who has worked or will work in a country having an SSA with India and is eligible for that country’s social security benefits; and any non-Indian employee working for an establishment in India covered under the EPF Act.
In its petition, SpiceJet had asserted that such a classification between foreign and Indian employees was discriminatory. The airline further asserted that though the Act did not distinguish between an Indian and a foreign employee, the same was sought to be made by introducing the notification, and the distinction on the ground of nationality was not permissible.
The Centre’s counsel justified the classification, arguing that the decision was based on a rational distinction. The counsel further contended that imposing mandatory contributions on all Indian employees, irrespective of income, would cause economic hardship, whereas such duress does not apply to foreign employees, who typically work in India for shorter durations of two to five years.
Dismissing the petition, the court held that the distinction was reasonable since extending mandatory contributions to all Indian employees could lead to economic hardship. The classification, the court said, was not violative of the fundamental right to equality.
“The said reason, in our considered opinion, the classification made by inserting and later on substituting Para 83 in the principal scheme, is reasonable, and it also has an object sought to be achieved in the sense that the purpose of mandating an employee to be a member of a fund/scheme under the Act is to provide social security,” the court maintained.
It added, “In case all the Indian employees irrespective of the amount they draw per month, are mandated to become the member of the scheme/fund, they will be subjected to harsh economic duress for the reason they will be required to contribute to the Scheme/Fund throughout their period of employment which generally will be much large as compared to the length of employment of foreign employees in an Indian establishment, which normally is 2 to 5 years.”
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