KUALA LUMPUR - The Delhi High Court has ruled that expatriates working in Indian establishments must join the Employees’ Provident Fund (EPF) and contribute based on their full salary.

According to CNBC TV18, the court upheld the validity of the government’s 2008 and 2010 notifications mandating provident fund coverage for international workers under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

Under the EPF framework, both local and foreign employees are covered by provident fund, pension, and insurance schemes, but expatriates must contribute on their entire salary without any wage ceiling.

Indian employees, by contrast, have their contributions capped at a salary limit of ₹15,000 per month, a difference that has long concerned employers hiring foreign staff for short-term roles.

Karma Management Global Consulting Solutions Managing Director and Chief Vision Officer Pratik Vaidya said the judgment confirms that international workers must contribute to the provident fund on their full salary.

“Employers will need to review payroll structures and assignment terms to ensure full compliance with the EPF Act,” he said.

Partner at The Chambers of Bharat Chugh Advocate Mayank Arora said the court found the rule constitutionally valid as it supports the EPF Act’s social security goals.

“All expatriate employees, except those covered under a Social Security Agreement (SSA) with India, must now be enrolled in the Provident Fund from the date of joining, regardless of salary or tenure,” he said.

He added that the ruling strengthens EPFO’s enforcement powers and heightens employer obligations, as contributions must be made on the full salary without any ceiling.

The decision is expected to affect payroll planning, assignment structuring, and global mobility policies for companies employing foreign nationals in India.

Organisations may face higher employment costs due to mandatory PF contributions on total salaries.

Vaidya noted that employers will need to reassess their compensation arrangements and compliance practices.

“The decision will have an operational impact on employers, particularly those engaging expats for short-term assignments,” he said.

For international workers, PF withdrawals are allowed only upon retirement at 58 or in cases of permanent disability, unless they come from countries with a Social Security Agreement with India.

India currently has such agreements with about 20 countries, including Germany, France, Belgium, Japan, Australia, and Canada.

With differing judgments from the Delhi, Bombay, and Karnataka High Courts, the issue is expected to be settled by the Supreme Court.

Until then, companies employing foreign nationals in India are required to comply with existing EPFO regulations.