The Karnataka High Court has invalidated the Central Government decision to extend the Employees Provident Fund Scheme and Employees Pension Scheme to international workers in India.
The Single Bench of Justice K S Hemalekha bench noted a discriminatory practice between Indian employees in non-SSA countries (not classified as international workers) and foreign employees from non-SSA countries working in India (classified as international workers).
The lack of a rational basis or reciprocity for this classification was noted especially regarding whether Indian employees in non-SSA countries are required to contribute their entire pay without a statutory limit towards PF.
The petitions contested the demand for contributions from international workers regardless of their salary, stating it was discriminatory and caused harm, particularly as international workers often have limited work periods.
The court deemed the introduction of para 83 of the EPF Scheme and para 43A of the EP Scheme by the Government of India as arbitrary and unreasonable, violating Article 14 of the Constitution due to unreasonable classification. Counsel KN Vasuki represented the petitioners, arguing against the constitutionality of these provisions.
The Karnataka High Court found no substantiated nexus with the intended purpose and declared para 83 discriminatory, treating international workers of Indian and foreign origin differently. The demand for contributions based on global salary was observed to be arbitrary and unconstitutional.
“The legislation has arbitrarily and unreasonably enacted para 83, the Government of India introducing para 83 of EPF Scheme and para 43A of EP Scheme is violative of Article 14 and the classification made is unreasonable and would defeat the very intent of the Act”, the bench observed.
In result, the introduction of para 83 of Employees’ Provident Fund Scheme and para 43A of Employees’ Pension Scheme were thereby struck down as unconstitutional and arbitrary and consequently, all the orders passed thereof were held to be unenforceable.
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