The High Court has analysed the aforementioned provisions through the lens of Article 14 of the Constitution of India, which guarantees the right to equality. IW Provisions were earlier contested in the case of Sachin Vijay Desai v. Union of India and Ors. [WP No. 1846/2018], wherein the High Court of Bombay, unlike the latest judgement, held that Para 83 of the EPF Scheme is not arbitrary and that treating international workers as a separate and distinct class is within the ambit of reasonable classification.

The Karnataka High Court emphasized that the aim of the EPF Act is social welfare of the employees and that all such employees should be treated alike both in privileges and liabilities, irrespective of their nationality.

1. Further, the High Court said that : Para 83 of the EPF Scheme requires International Workers to contribute PF on their entire salary, whereas Indian workers have to contribute on a wage ceiling of INR 15,000 which is discriminatory and violates the fundamental right to equality.

2. The subordinate legislation, i.e., EPF Scheme cannot go beyond and offer more benefits than the Parent Act (EPF Act).

3. There is discrimination between the Indian employees working in a non-Social Security Agreement country (who are not International Workers as per definition) and foreign employees from a non-SSA country working in India who are classified as International Workers. There is no rational basis for this classification nor there is reciprocity that compels to classify foreign employees from non-SSA countries as International Workers.

This judgement may impact the ongoing assessment proceedings, especially in the state of Karnataka, under Section 7A (for contributions), Section 7Q, and Section 14B (for interest and damages) of the EPF Act, 1952 for International Workers. As EPFO is evaluating the future course of action, the following questions remain:

a) How will this judgement impact the monthly PF contributions and the ongoing litigations under the EPF Act, 1952?

b) Will there be a timeline for the establishments or exempted PF Trusts to alter their compliances for International Workers?

c) What implications will this judgement have on the social security agreements between India and other countries?

 In the near future, this judgment may be challenged before a larger Bench of the same High Court and/or the Supreme Court of India. The decision of the Supreme Court/High Courts on this issue may have a significant bearing on the regulations for International Workers. In the interim, the employers including those with exempted PF Trusts may evaluate the impact on monthly compliances and litigations under the EPF Act, 1952. As per a PIB release dated May 07, 2024, the Employees’ Provident Fund Organisation has acknowledged this judgement of Karnataka High Court and they are evaluating the next course of action in response to this ruling.