PF Provisions for International Worker / Expat
We have condensed below some important points regarding PF treatment of an international employee and also expectations from client which are mentioned at the end of the mail body.
Who is an International worker:
An International Worker (IW) is any employee who is a foreign national working in India (i.e. a person holding other than Indian Passport commonly known as Expat) under an employer registered with the EPFO or an Indian national who is working in a foreign country.
Accordingly, every international worker employed with an establishment to whom the EPF Act applies must become a member of the provident fund (PF) from the first date of his/her employment.
PF contribution Rate : The PF contribution rate for foreign workers registered with EPF (or IWs) is 12 percent of full salary instead of restricting it to 12 percent of Rs 15000/- like a domestic employee. The employer contributes an equal amount, with the sum of PF being 13 percent of the total wages of the employees. Thus, the benefit of restricting PF share to Rs 1800/- is not available for International Employee. Effectively, the PF contribution can be substantial for an International Employee as compared to an Indian National
IW Return
An employer is bound to file a specific return by 15th of the following month called ‘IW-1’with PF authorities every month even if there is even one International Employee engaged
Exemptions
IWs are exempt from contribution towards PF only if their home country has a social security agreement (SSA) with India and an employee produces COC(certificate of coverage) from home country.
Expected from Client –
1) Please check employees passport details while on-boarding employee. The name might appear Indian but a person could be holding a non Indian Passport and hence, the need to avail these details. The deciding factor is if the person is holding other than Indian Passport then he will be termed as an International Employee
2) Mention Employee status as an International worker in PF input if he/she fits in the definition of International worker. Also share passport details.
3)In case of an International worker is from SSA country then provide COC (certificate of coverage) if available or else PF will get deducted as mentioned above.
4) Further, kindly Fill Form 11 from each of the employee so that the same is documented for future reference, whether or not the said employee is Indian Employee or International Employee