Navigating Provident Fund Rules for Non-Indian Employees: What Are Your Experiences?

Dear All,

My company has hired a Japanese faculty member as an employee with a monthly salary and regular deductions like any Indian employee. I would like to know:

1. Is Provident Fund applicable for a non-Indian employee?
2. What do other companies do in this matter?
3. What is the salary structure for non-Indian employees then?

Thanks in advance; I appreciate your help.

Regards,
Anuradha

Hi!

"Is Provident Fund applicable for a non-Indian employee?"
Yes, as long as he/she is serving in this country, the laws of that country will be applicable to him/her.

Regards,
Shyamali

Dear Anuradha,

P.F. has to be deducted for all employees irrespective of whether they are foreign nationals. All employees who work in India and are paid a salary have to contribute towards P.F. Companies in Chennai follow this pattern. P.F. is deducted on their basic & da (if applicable) and on food allowance if paid as a part of the salary.

Regards, Anand.

Dear Radha,

Whoever it may be, if a person is stepping inside a company, he is bound by the rules of the company and the law. Moreover, according to the ESI Act, benefits are compulsory for employees who are going to work for a long time. For contract employees, the conditions are different.

Regards,
Ram

Dear Anu,

I work for an MNC, and we offer them a maximum of a 2-year contract. They are referred to as specialist consultants. The payment is consolidated. PF is not applicable if they have their social security in their country.

Regards,
Raghu

Dear All,

Thank you for your input. I can proceed with issuing an Appointment letter for the new employee. One more issue...

We have many female software professionals working as "Software Consultants":
1. Is Maternity Leave/Benefits applicable to them as it is for other women employees?
2. What do other software companies do in this matter?
3. Does it depend on the company to provide this benefit?

Please let me know ASAP.

Thanks again for your help! 😊

Regards,
Anuradha

There is no need for covering the expatriate employees under the PF scheme if they are covered by the social security scheme in their country, even if their salaries are paid by the local company.

Their salary structure would depend on whether the company is an MNC and there is a policy on expatriate salaries.

Regards,
Govardhan

Dear Anuradha,

First, please decide on the basis of the following:

1) The PF Act extends to the whole of India and is applicable if the employee is engaged in any organization within India. It does not matter whether the parent company or its employees' citizenship is from another country. Similarly, any Indian Company along with its employees operating outside India will be guided by the laws of the country.

For example, Infosys operating in the US is guided by US Labour Laws; similarly, IBM operating in India is guided by Indian Labour Laws.

2) As for Maternity Benefits, if located in India and covered by the Act, it applies. One request: please convince your Management to provide Maternity Benefits even if it is not applicable or covered irrespective of countries because it is one of the few legislatures that give and protect women from exploitation.

As a general rule, always remember, an organization is guided by the law of the country/region/state where it is located unless specified otherwise.

Regards,

SC

Name an expatriate who earns a basic salary of less than $150 USD. This individual must be a bonded laborer from Cambodia. Instead of focusing on deducting provident fund (PF) from expatriates, the Chartered Accountant (C.A.) of your company should prioritize paying income tax for them, as they earn their wages from India. I am not familiar with the payment of wage laws for expatriates in India. If anyone can provide this information on this forum for reference or email me at abyvas@gmail.com.

I have attached a breakup for you. We can add LTA and Sodexo to reduce his tax burden. Please take a look.