This article throws light on the Employees’ Provident Fund Organization, a statutory body of the Government of India under the Ministry of Labour and Employment and its efforts to bring International Workers posted in India within the Provident Fund Scheme.
Background
With investments into India picking up and the growth rates looking attractive, it is not uncommon to see foreign nationals working in India on behalf of their parent companies or employed in various projects and activities in the country.
The Employees’ Provident Fund Organization (shortened to EPFO), is a statutory body of the Government of India under the Ministry of Labour and Employment. It administers a compulsory contributory Provident Fund Scheme, Pension Scheme and an Insurance Scheme. It is one of the largest social security organizations in India in terms of the number of covered beneficiaries and the volume of financial transactions.
Bilateral Social Security Agreements
The Employees’ Provident Fund Organization also acts as an agency for implementation of Bilateral Social Security Agreements with other countries. Social Security Agreement (SSA) is a mutual agreement between two countries to protect the social security interests of an employee in a country from the other country. The schemes cover International workers who belong to those counties with whom such bilateral treaties have been signed. At present, India has social security agreements in place with fifteen countries viz. Austria, Belgium, Canada, Czech Republic, Finland, Germany, Sweden, Switzerland, Denmark, Luxembourg, France, South Korea, the Netherlands, Norway and Hungary.
The International Workers (IWs) of these countries posted in India are not required to make mandatory contribution towards social security schemes run by EPFO in India provided such employees produce certificate of coverage stating that they are covered under such social scheme schemes in their country and get exemption from contribution to EPFO schemes.
The Foreigners’ Regional Registration Office (FRRO)
Foreign nationals coming to India on business or employment visa valid for more than 180 days are required to get registered with the FRRO within 14 days of arrival. The FRRO monitors and keeps records of all foreign nationals visiting India.
The monitoring process
The EPFO has requested its regional offices to coordinate with the Foreigners’ Regional Registration Offices (FRRO) and obtain a list of foreign nationals employed in the establishments of their jurisdictions.
The employers are also required to file monthly returns providing details of employees qualifying as international workers. The return is mandatory for all covered establishments. In case there are no IWs, a nil return must be submitted.
The Provident Fund regional offices have, in turn, been asked to reconcile the data obtained from the FFRO with that from the monthly returns filed by employers and take suitable action where there is non-compliance.
Settlement and payment process
The Provident Fund office has started a new facility to transfer provident funds of foreign employees to bank accounts in their own countries. As of now, International Workers not covered under an SSA applying for withdrawal of provident funds (PF) are required to open bank accounts in India. After settlement of claims, they transfer their money from India to bank accounts in their own countries, a cumbersome and time-consuming exercise. An international worker under an SSA can have the provident fund credited to his or her bank account outside India.
Conclusion
It is important that Employers having International Workers in India should ensure timely compliance under the Indian Provident Fund Act.
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