Monthly deductions to the Employee Provident Fund (EPF) are routine for most workers in India. While foreign workers in India currently contribute to the pension savings scheme, the Supreme Court will now examine whether the law mandating their participation is valid.
The Supreme Court on Thursday issued a notice to the Union government on a plea filed by South Korean multinational LG Electronics challenging the requirement for foreign employees to enroll in the Employees’ Provident Fund Scheme, 1952. Administered by the Employees’ Provident Fund Organization (EPFO), it is a compulsory retirement savings scheme for employees in the organized sector and requires contribution from both the employer and the employee.
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LG moved the Supreme Court after the Delhi High Court in November 2025 upheld the rules and ruled that the central government has the power to extend the EPF scheme to foreign nationals working in India. The High Court dismissed petitions filed by LG Electronics and airline SpiceJet, both of which challenged these provisions.
However, only LG Electronics has appealed to the Supreme Court so far. SpiceJet did not join the appeal.
Email queries to LG Electronics and SpiceJet remained unanswered till press time.
Paragraph 83
The dispute centers on clause 83 of the EPF scheme, which was introduced through government notifications issued in 2008 and 2010, which created a special provision for “international workers”.
International worker generally refers to a foreign national working in an establishment in India where the EPF Act applies.
As per the rules, foreign employees working in India have to contribute to EPF unless they qualify as ‘excluded employees’. This exemption generally applies to workers from countries that have a Social Security Agreement (SSA) with India and are already contributing to their home country’s social security system.
In the absence of such an agreement, foreign employees working in India have to contribute to the EPF irrespective of their salary.
This differs from Indian employees whose mandatory EPF contributions count up to the statutory wage ceiling ₹15,000, though both the employer and the employee may choose to contribute for higher salaries.
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Companies that employ foreign workers say the rule is unfair. They argue that the EPF Act itself does not differentiate between Indian and foreign employees, but the new provisions have created a separate category of “international workers” and imposed stricter requirements on them.
According to the companies, this violates the principle of equality as foreign employees have to contribute to the EPF regardless of their salary, while Indian employees are covered only up to ₹15,000 salary cap.
They also argue that the rule creates difficulties for expatriates who come to India for short assignments that often last only a few years. Since EPF funds can usually be withdrawn only at retirement or earlier in limited circumstances, companies say the requirement is becoming a burden for such workers.
A ten-year-old dispute
The dispute dates back more than a decade. In March 2011, the EPFO issued a notification asking SpiceJet to deposit provident fund contributions for its foreign employees.
The EPFO later issued a summons in March 2012 directing the airline to provide records so that the authorities could determine the provident fund charges. SpiceJet subsequently approached the Delhi High Court in 2012 challenging both the EPFO action and the government notification.
Almost a decade later, LG Electronics India filed a similar petition in 2021 raising the same legal challenge.
Since both the petitions related to the same issue, the Delhi High Court heard them together. In its November 2025 ruling, the court upheld the government’s notification and said the EPF provisions for international workers were legally valid.
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The Supreme Court observed that foreign employees can be considered a separate category as they usually work in India for a short period of two to five years, while Indian employees usually work till retirement. Because of this difference, the court said that requiring foreign employees to contribute to the EPF regardless of salary was reasonable.
The court also ruled that such a classification does not violate the constitutional right to equality because the law allows for reasonable distinctions between different categories of workers.
LG Electronics has now approached the Supreme Court to hear the matter. The result will be closely watched by companies employing foreign workers in India. If the court upholds the existing rule, foreign workers will continue to contribute to the EPF regardless of salary, potentially increasing compliance costs for companies.
