The Delhi High Court has ruled that foreign employees working in India are required to mandatorily contribute to the Employees’ Provident Fund (EPF), upholding the validity of two Central government notifications issued in 2008 and 2010. The Court dismissed petitions filed by SpiceJet and LG Electronics challenging the legality of these rules, which extend EPF membership to international workers employed in India. A Bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela held that the Central government was empowered to extend the EPF Scheme, 1952, to foreign nationals and that the distinction between Indian and international workers was constitutionally valid. “We have already held above that there is no legal infirmity in the said notifications,” the Bench stated while pronouncing its decision, Bar and Bench reports.Court backs Centre’s power to include foreign nationals
The first notification, GSR 706(E) dated October 1, 2008, inserted Paragraph 83 into the EPF Scheme, 1952, creating special provisions for international workers. The second notification, GSR 148(E) dated September 3, 2010, revised this paragraph, defining “international worker”, creating the “excluded employee” category through the Social Security Agreement (SSA) route, and mandating contributions from the date of joining.Both SpiceJet and LG Electronics had approached the High Court challenging these provisions. SpiceJet’s petition also questioned a demand notice dated March 14, 2011, which sought the deposit of dues for international workers, and a summons issued on March 15, 2012, under Section 7A of the EPF Act, asking for contribution records. LG Electronics raised similar objections to the framework itself.Petitioners claim unfair distinction and excessive power.
The companies argued that paragraph 83 of the EPF Scheme unlawfully discriminated between Indian and foreign employees. While Indian employees earning above ₹15,000 per month are not mandatorily covered by EPF, foreign nationals are required to contribute regardless of their salary.They also pointed out that the withdrawal rule allowing access to funds only at the age of 58 was unreasonable and unworkable for expatriates who typically serve short stints in India.
Further, they contended that paragraph 83 went beyond the delegated powers under the EPF Act, which does not differentiate employees by nationality.Court: Classification justified and backed by international obligations.
The Bench rejected these arguments, observing that the classification between Indian and foreign workers was based on valid and reasonable considerations. Applying the Article 14 test under the Constitution, the Court concluded that the distinction had a rational connection to the objective of extending social security protection in line with India’s international obligations.Disagreeing with a contrary view previously taken by a single judge of the Karnataka High Court, the Delhi High Court said, “We have already held above that the classification in the instant case has a reasonable basis, which is based on economic duress, and such consideration is absent in the judgment rendered by the Karnataka High Court.
”Withdrawal rule linked to India’s global commitments
On the challenge to the withdrawal condition, the Court held that paragraph 83 was introduced to implement India’s commitments under international Social Security Agreements (SSAs). It observed that treaty-making is a sovereign function and that invalidating the provision would undermine the country’s ability to honour its international agreements.“So far as the submission of the petitioner that substituted paragraph 69 as is applicable to foreign employees is unreasonable, we may only observe that paragraph 83 in the Scheme has been added to implement India’s international treaty obligations,” the Court said, adding that striking it down would “take away the legal basis” for applying SSAs.All related challenges dismissed.
With the main notifications upheld, the Court also dismissed challenges to subsequent circulars and notices issued under the same framework. It ruled that since the foundational notifications were valid, all downstream measures based on them must also stand. Consequently, the writ petitions by SpiceJet and LG Electronics were dismissed.SpiceJet was represented by Advocates Atul Sharma, Abhilasha Sharma, and Dipan Sethi. The Union of India was represented by Advocates Manisha Agrawal Narain, Vikram Jetly, Shreya Jetly, Nipun Jain, and Ananya Arora. EPFO was represented by Advocate Siddharth with Advocates Amit Kumar, Prateek Goyal, and Harshit Manwani. LG Electronics was represented by Senior Advocate Sudhir Nandrajog with Advocates Rishi Awasthi, Amit Awasthi, and Piyush Vatsa.A reaffirmation of policy over convenience.
The verdict reinforces the government’s authority to align domestic labour regulations with international social security standards. While companies argued that the rule was impractical for expatriates with short-term assignments, the Court made it clear that compliance with global obligations and equitable protection for all workers outweighed administrative inconvenience.In effect, the Delhi High Court’s ruling settles the legal question over the mandatory EPF contributions of foreign employees in India, affirming that inclusion, not exemption, will be the rule going forward.
