The Hon’ble Delhi High Court, in the case of SpiceJet Limited v. Union of India and LG Electronics India Pvt. Ltd. v. Union of India, Writ Petition Numbers 2941 of 2012, decided on 04.11.2025, upheld the validity of the 2008 and 2010 Notifications introducing Paragraph 83 into the Employees’ Provident Fund Scheme, 1952 (hereinafter referred to as “EPF Scheme”), mandating full-salary provident fund contributions for International Workers (hereinafter referred to as “IWs”).
FACTS
SpiceJet Limited and LG Electronics India Pvt. Ltd. (hereinafter collectively referred to as “the Petitioners”) are establishments covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“hereinafter referred to as “EPF Act”). In the course of routine compliance scrutiny, the Union of India and the Employees’ Provident Fund Organisation (hereinafter referred to as “EPFO”), acting through the Regional Provident Fund Commissioner (hereinafter referred to as “the Respondents”), issued demand notices to the Petitioners directing them to deposit provident fund contributions in respect of their foreign employees, classified as IWs. The Respondents also issued summons under Section 7A of the EPF Act, requiring production of employment and payroll records to determine the PF dues payable for such employees.
The dispute arose pursuant to two notifications issued – Notification G.S.R. 706(E) dated 01.10.2008 and Notification G.S.R. 148(E) dated 03.09.2010 – whereby the Respondents introduced and subsequently substituted Paragraph 83 of the EPF Scheme. These notifications created a new statutory category of employees termed International Workers and laid down special provisions governing their mandatory PF enrolment and contribution.
Pursuant to these amendments, all employees holding foreign (non-Indian) passports and working for Indian establishments covered under the Act were required to become PF members from the first month of employment, unless exempt under a bilateral Social Security Agreement (hereinafter referred to as “SSA”). Unlike Indian employees who enjoy a statutory wage ceiling of ₹15,000 per month for mandatory PF contributions, International Workers were required to contribute PF on their entire monthly salary without any cap. Additionally, by virtue of Paragraph 69 as made applicable through Paragraph 83, IWs were permitted to withdraw PF accumulations only upon attaining 58 years of age, except in cases of permanent disability or limited exceptional grounds.
Contending that these provisions imposed an excessive, discriminatory, and constitutionally impermissible burden both on employers and expatriate employees, the Petitioners filed writ petitions before the Delhi High Court challenging the validity of the 2008 and 2010 notifications.
ISSUES
- Whether the classification between IWs and domestic employees under Paragraph 83 of the Scheme was arbitrary and violative of Article 14 of Constitution of India?
- Whether the restriction on withdrawal under Paragraph 69 was unreasonable or disproportionate in view of the shorter employment tenures of IWs in India?
CONTENTIONS OF THE PARTIES
The Petitioners argued that Paragraph 83 discriminatorily mandates provident fund contributions without any wage ceiling for International Workers, whereas Indian employees earning above ₹15,000 per month are exempt from compulsory PF coverage. This distinction, based entirely on nationality, was contended to be arbitrary and violative of Article 14.
They further submitted that Paragraph 69, which restricts withdrawal of PF accumulations until 58 years of age, is unreasonable for expatriates who typically work in India for short tenures of 2-5 years, leading to long-term locking of funds with no practical access.
The Petitioners contended that the EPF Act contains no nationality-based classification, and therefore such distinctions cannot be created through delegated legislation. The 2008 and 2010 notifications were thus alleged to be ultra vires.
Reliance was placed on the Karnataka High Court’s decision in Stone Hill Education Foundation v. Union of India, 2024 SCC OnLine Kar 49 which struck down similar provisions. The Petitioners submitted that, consequently, the demand notices and Section 7A summons issued by the Respondents were also unsustainable.
On the contrary, the Respondents contended that the impugned notifications constitute a valid exercise of delegated legislative power, and that International Workers form a reasonable and distinct class based on their mobility, employment tenures, and the international social security framework.
The Respondents submitted that the amendments were introduced to align India’s PF regime with its reciprocal obligations under SSAs, ensuring uniform treatment for Indian workers employed abroad.
The Respondents further argued that provident fund is a retirement-oriented benefit, and a uniform withdrawal age forms part of legitimate legislative policy.
The Respondents asserted that since the EPF Scheme validly applies to IWs, the demand notices and Section 7A proceedings were lawfully initiated and did not warrant interference
DECISION AND FINDINGS
The Hon’ble Delhi High Court dismissed the writ petitions and upheld the validity of the 2008 and 2010 notifications, as well as Paragraphs 83 and 69 of the EPF Scheme.
The Court applied the classical two-pronged test under Article 14, intelligible differentia and rational nexus as laid down in Union of India v. N.S. Rathnam & Sons, (2015) 10 SCC 681. The Court held that International Workers form a separate and discernible class, as they typically work in India for shorter periods, may be covered by bilateral SSAs, and do not face the same long-term retirement-related economic duress as domestic employees. The Court therefore concluded that the classification between IWs and Indian employees is reasonable and constitutionally valid.
The Court observed that the provisions relating to IWs have a direct nexus to the objective of the EPF Scheme, namely providing social security and facilitating alignment with international norms governing portability and reciprocation of benefits. The removal of the wage ceiling and the age-based withdrawal restrictions were held to be policy decisions integral to the Scheme’s architecture.
The Court expressly declined to follow the Karnataka High Court judgment in Stonehill Education Foundation case, finding that it did not adequately consider the broader social security context and India’s reciprocal obligations. Instead, the Court aligned itself with the reasoning of the Bombay High Court in Sachin Vijay Desai v. Union of India, Writ Petition No. 1846 of 2018 which upheld similar provisions as valid.
The Court held that the demand notices and Section 7A summons issued by the Respondents were lawful exercises of statutory authority and did not warrant interference.
AMLEGALS REMARKS
This judgment reinforces the validity of the policy framework governing International Workers under the EPF Scheme and affirms the legality of the 2008 and 2010 notifications. By upholding Paragraphs 83 and 69, the Court has strengthened India’s approach to cross-border social security and clarified the obligations of employers engaging foreign nationals.
However, the ruling also brings attention to the hardship faced by expatriates from countries without Social Security Agreements, who may be unable to withdraw their PF accumulations until the age of 58. This results in practical and financial challenges for both employers, who must contribute on the full salary without a wage cap, and employees, whose contributions may remain inaccessible for long periods.
With the Delhi and Bombay High Courts taking a view different from that of the Karnataka High Court, a clear judicial divergence now exists. A final resolution will likely emerge only from the Supreme Court. In the meantime, establishments, especially those operating within Delhi’s jurisdiction, should review their payroll structures, ensure PF compliance for International Workers, and assess any potential retrospective exposure arising from EPFO inquiries.
In case of any query, feel free to reach out to mridusha.guha@amlegals.com