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An Assignment on

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DEPARTMENT OF SOCIAL WORK

JAMIA MILLIA ISLAMIA

SUBMITTED BY: SUBMITTED TO:

    



M.A. (HRM) Sem IV Associate Professor

Roll No.09 HRM - 07 DEPARTMENT OF SOCIAL WORK

Enroll. No. 07-3808 JAMIA MILLIA ISLAMIA

Government Policy and International Workforce

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As per Provident Fund Act International Worker¶ means:

³(a) an Indian employee having worked or going to work in a foreign country with which India
has entered into social security agreement and being eligible to avail benefits under a social
security programme of that country, by virtue of the eligibility gained or going to gain, under the
said agreement;

(b) an employee other than an Indian employee, holding other than an Indian passport, working
for an establishment in India to which the Act applies;³

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± In an international firm, a PCN is a person whose
nationality is the same as that of the firm, but different from the country in which they are
working: for example, a Japanese manager working for a UK-based subsidiary of a
Japanese company.

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± In an international firm, an HCN is a person whose
nationality is the same as that of the country in which the company is operating: for
example, a UK manager working for a UK-based subsidiary of a Japanese company.


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± In an international firm, a TCN is a person whose nationality
is different from that of the firm, and of the country in which the firm is operating: for
example, a UK manager working for an Australian-based subsidiary of a Japanese
company.
|

Government Policy and International Workforce

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  an organization that sets up one or a few facilities in one
or a few foreign countries.

X 
 
     an organization that builds facilities in a number of different
countries in an effort to minimize production and distribution costs.

X   
   an organization that chooses to locate a facility based on the
ability to effectively, efficiently, and flexibly produce a product or service using cultural
differences as an advantage.

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X Gulture ± a community¶s set of shared assumptions about how the world works and what
ideals are worth striving for.

X Culture can greatly affect a country¶s laws.

X Culture influences what people value, so it affects people¶s economic systems and
efforts to invest in education.

X Culture often determines the effectiveness of various HRM practices.

X Cultural characteristics influence the ways members of an organization behave toward

one another as well as their attitudes toward various HRM practices.

X Cultures strongly influence the appropriateness of HRM practices.

X Cultural differences can affect how people communicate and how they coordinate their
activities.

Government Policy and International Workforce

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X Organizations must prepare managers to recognize and handle cultural differences.

X Recruit managers with knowledge of other cultures

X Provide training

X For expatriate assignments, organizations may need to conduct an extensive selection

process to identify individuals who can adapt to new environments.


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X Companies with foreign operations locate in countries where they can find suitable
employees.

X The educations and skill levels of a country¶s labor force affect how and the extent to
which companies wants to operate there.

X In countries with a poorly educated population, companies will limit their activities to low-
skill, low-wage jobs.

Economic System

X The economic system provides many of the incentives or disincentives for developing the
value of the labor force.

X In developed countries with great wealth, labor costs are relatively high. This impacts
compensation and staffing practices.

X Income tax differences between countries make pay structures more complicated when
they cross national boundaries.


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X The country¶s laws often dictate the requirements for HRM practices: training,
compensation, hiring, firing, and layoffs.

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X An organization that expands internationally must gain expertise in the host country¶s legal
requirements and ways of dealing with its legal system.

X Organizations will hire one or more host- country nationals to help in the process.



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In India, work permit applications can be submitted through one of two routes:

1. The applicant may apply to the Indian Embassy or High Commission in his or her country of
residence, or as is more often the case,

2. An Indian company offering a position of employment can begin the application process in
India on behalf of the candidate.

"!#!  ----. /

It is clarified that basically there are two types of work related Visas, namely:-

Government Policy and International Workforce

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( to be fulfilled for grant of a Business visa are as follows:-
(i) The foreign national must have a valid travel document and a re-entry permit, if
required under the law of the country of nationality of the applicant.
(ii) The foreign national should be a person of assured financial standing. The foreigner
must submit proof of his/her financial standing and documentation in support of intended
business visit to India. Proof of his financial standing and expertise in the field of
intended business will be checked thoroughly by the Indian Missions while granting the
visa.
(iii) The foreign national should not be visiting India for the business of money lending or for
running a petty business or petty trade or for full time employment in India, etc.
(iv) The foreign national shall comply with all other requirements like payment of tax
liabilities etc.
(v) The Business Visa must be issued from the country of origin or from the country of
habitual domicile of the foreigner provided the period of residence of that foreigner in
that particular country is more than 2 years. If the period of permanent residence of the
applicant in the particular country is less than two years, the Mission / Post concerned
will issue Business visa only after personal interview, review of documentation and prior
clearance from the Mission where the applicant has permanent residence. Such cases
will be examined by the Missions / Posts on merits on case-to-case basis and, after
issue of Business visa, intimation will be sent to the Indian Mission / Post in the
applicant¶s country of origin.
(vi) The documents/ papers pertaining to proposed business activity such as the registration
of the company under the Companies Act, proof of registration of the firm with the State
Industries Department or the Export Promotion Council concerned or any recognised
promotional body in the relevant field of industry or trade etc. will be thoroughly checked
to decide the category of visa applicable to the foreigner.
(vii) The grant of Business Visa is subject to any instructions issued by the Government of
India on the basis of reciprocity with other foreign countries from time to time.

Government Policy and International Workforce

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A Business visa may be granted to a foreigner for the following purposes:-

(i) Foreign nationals who wish to visit India to establish industrial/business venture or to
explore possibilities to set up industrial/business venture in India.
(ii) Foreign nationals coming to India to purchase/sell industrial products or commercial
products or consumer durables.
(iii) Foreign nationals coming to India for technical meetings/discussions, attending
Board meetings or general meetings for providing business services support.
(iv) Foreign nationals coming to India for recruitment of manpower.
(v) Foreign nationals who are partners in the business and/or functioning as Directors of
the company.
(vi) Foreign nationals coming to India for consultations regarding exhibitions or for
participation in exhibitions, trade fairs, business fairs etc.
(vii) Foreign buyers who come to transact business with suppliers/ potential suppliers at
locations in India, to evaluate or monitor quality, give specifications, place orders,
negotiate further supplies etc., relating to goods or services procured from India.
(viii) Foreign experts/specialists on a visit of short duration in connection with an ongoing
project with the objective of monitoring the progress of the work, conducting
meetings with Indian customers and/or to provide technical guidance.
(ix) Foreign nationals coming to India for pre-sales or post-sales activity not amounting to
actual execution of any contract or project.
(x) Foreign trainees of multinational companies/corporate houses coming for in-house
training in the regional hubs of the concerned company located in India.
(xi) Foreign students sponsored by AIESEC for internship on project based work in
companies/industries.
(xii) Foreign nationals coming as tour conductors and travel agents and / or conducting
business tours of foreigners or business relating to it, etc.

Government Policy and International Workforce

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A Business Visa with multiple entry facility can be granted for a period up to five (5) years or for
a shorter duration as per the requirement. A stay stipulation of a maximum period of six (6)
months will be prescribed for each visit by the concerned Indian Mission keeping in view the
nature of the business activity for which such Business Visa is granted. In case Missions/ Posts
abroad, while issuing Business Visa, decide to prescribe a stay stipulation of maximum 6
months for each visit, a clear endorsement should be made stating 3*( 

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73In case no such
stay stipulation is being prescribed, a simple endorsement stating 3,(
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 (3 should be made. Indian Missions can grant Business Visa with 10 years validity and
multiple entry facility to the nationals of the United States of America. This visa should be issued
with the stipulation that the stay in India during each visit shall not exceed six (6) months. In
case business visa is granted for a period less than five years by the Indian Missions, the same
can be extended up to a maximum period of five years subject to following:

(a) The gross sales/turnover from the business activities, for which the foreigner has been
granted visa, is not less than Rs.1 crore per annum (to be achieved within 2 years of setting up
the business).

(b) First extension on business visa shall be granted by the Ministry of Home Affairs.

(c) Further extensions, if required, may be granted by the State Governments/ UT

administrations/ FRROs/ FROs on year-to-year basis subject to good conduct, production of
necessary documents in support of continued business activity and no adverse inputs, security
related or otherwise, about the foreigner.

(d) The period of extension shall not be beyond five years from the date of issue of the Business
visa.

(e) If the extension of Visa is denied by MHA/FRRO/FRO/State Government/ UT Administration,

the foreigner shall leave India forthwith on expiry of the period of validity of the visa.

Government Policy and International Workforce

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(i) The foreign national must have a valid travel document and a re-entry permit, if
required under the law of the country concerned.
(ii) Proof of financial standing and expertise in the field of intended business.
(iii) Documents/ papers pertaining to proposed business activity such as the registration
of the company under the Companies Act, proof of registration of the firm with the
State Industries Department or the Export Promotion Council concerned or any
recognised promotional body in the relevant field of industry or trade etc.

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An Employment Visa is granted to foreigners desiring to come to India for the purpose of
employment, subject to fulfillment of the following conditions:

(i) The applicant is a highly skilled and/or qualified professional, who is being engaged or
appointed by a company/ organization/ industry/ undertaking in India on contract or
employment basis.
(ii) Employment Visa shall not be granted for jobs for which qualified Indians are available.
Employment Visa shall also not be granted for routine, ordinary or secretarial/clerical
jobs.
(iii) The foreign national seeks to visit India for employment in a company/ firm/organization
registered in India or for employment in a foreign company/ firm/organization engaged
for execution of some project in India.
(iv) The foreign national being sponsored for an Employment Visa in any sector should
draw a salary in excess of US$ 25,000 per annum. However, this condition of annual
floor limit on income will not apply to:

(a) Ethnic cooks,

Government Policy and International Workforce

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(b) Language teachers

(Other than English language teachers) / Translators and (c) Staff working for the
concerned Embassy/High Commission in India. The application for Employment Visa
may be rejected by the Indian Mission/Post concerned in case the minimum annual
income benchmark of US$ 25,000 is not met, except in the case of the three
categories mentioned above.
There will be no need to refer such cases for consideration of the Ministry of Labour &
Employment for clearance. The guidelines issued by the Ministry of Labour & Employment vide
their OM no.DGET-M-26025/4/2009-MP (G) dated 8th September 2009 and the amendment
dated 22nd December, 2009 will no longer be applicable in view of these stipulations.
(v) The foreign national must comply with all legal requirements like payment of tax
liabilities etc.
(vi) The Employment Visa must be issued from the country of origin or from the country of
domicile of the foreigner provided the period of permanent residence of the applicant in
that particular country is more than 2 years.
(vii) The documents/ papers pertaining to the proposed employment, like the registration of
the company under the Companies Act, proof of registration of the firm in the State
Industries Department or the Export Promotion Council concerned, or any recognised
promotional body in the field of industry and trade etc will be thoroughly checked to
decide the category of visa that may be issued to the foreigner.

The name of the sponsoring employer / organization shall be clearly stipulated in the visa
sticker.

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Subject to the fulfillment of the conditions enumerated in Question B5 above, the following
categories of foreign nationals will also be eligible for Employment visa:-

(i) Foreign nationals coming to India as consultant on contract for whom the Indian
company pays a fixed remuneration (this may not be in the form of a monthly salary).
(ii) Foreign artists engaged to conduct regular performances for the duration of the
employment contract given by Hotels, Clubs, and other organizations.

Government Policy and International Workforce

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(iii) Foreign nationals who are coming to India to take up employment as coaches of national
/state level teams or reputed sports clubs.
(iv) Foreign sportsmen who are given contract for a specified period by the Indian
Clubs/organizations.
(v) Self-employed foreign nationals coming to India for providing engineering, medical,
accounting, legal or such other highly skilled services in their capacity as independent
consultants provided the provision of such services by foreign nationals is permitted
under law.
(vi) Foreign language teachers/interpreters.
(vii) Foreign specialist Chefs.
(viii) Foreign engineers/technicians coming to India for installation and commissioning of
equipment/machines/tools in terms of the contract for supply of such
equipment/machines/tools.
(ix) Foreign nationals deputed for providing technical support/services, transfer of know-
how/services for which the Indian company pays fees/royalty to the foreign company.



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Validity of an Employment visa will be as follows:-

(i) A foreign technician/expert coming to India in pursuance of a bilateral agreement between

the Government of India and the foreign government, or in pursuance of a collaboration
agreement that has been approved by the Government of India, can be granted an Employment
visa for the duration of the agreement, or for a period of five years, whichever is less, with
multiple entry facilities.

(ii) In the case of highly skilled foreign personnel being employed in the IT software and IT
enabled sectors, the Missions/Posts can grant Employment visa with validity up to 3 years or
the term of assignment, whichever is less, with multiple entry facility.

(iii) A foreigner coming to India for employment not covered in (i) or (ii) above can be granted
Employment visa with validity up to two years or the term of assignment, whichever is less, with
multiple entry facility.

Government Policy and International Workforce

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(iv) In the case of Employment Visa issued for a period of 180 days or less, registration is not
required with FRRO/FRO. The Missions/Posts may issue multiple entry Employment Visa for a
period of 180 days or less.

(v) However, if the Employment visa is valid for a period of more than 180 days, it should carry
an endorsement to the effect that the E-visa holder must register with the FRRO/FRO
concerned within 14 days of arrival.

(vi) On registration, the FRRO/FRO concerned may issue Residential Permit for the validity of
the visa period. However, if there is any change in the residential address, the foreign national
concerned shall immediately report the change of address, in writing, to the FRRO/FRO
concerned.

(vii) The Employment visa may be extended by the State Governments / UTs / FRROs / ROs
beyond the initial visa validity period, up to a total period of 5 years from the date of issue of the
initial Employment Visa, on an year to year basis, subject to good conduct, production of
necessary documents in support of continued employment, filing of Income Tax returns and no
adverse security inputs about the foreigner. The period of extension shall not exceed five years
from the date of issue of the initial Employment visa.


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(i) The foreign national must have a valid travel document and a re-entry permit, if
required under the law of the country concerned.
(ii) The foreign national must submit proof of his/her employment of contract or
engagement by the company / organization, etc. in India.
(iii) The foreign national must submit documentary proof of his educational qualifications
and professional expertise.
(iv) The foreign national must submit documents/ papers pertaining to the proposed
employment, like the registration of the company under the Companies Act, proof of
registration of the firm in the State Industries Department or the Export Promotion
Council concerned, or any recognised promotional body in the field of industry and
trade etc.


Government Policy and International Workforce

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A new concept of µInternational Workers¶ has been introduced which includes expatriates
(foreign citizens) working for an employer in India and Indian employees working overseas.

As per the Notification dated 1 October 2008 µInternational Worker¶ means:

³(a) an Indian employee having worked or going to work in a foreign country with which India
has entered into social security agreement and being eligible to avail benefits under a social
security programme of that country, by virtue of the eligibility gained or going to gain, under the
said agreement;
(b) an employee other than an Indian employee, holding other than an Indian passport, working
for an establishment in India to which the Act applies;³

The International Workers are required to join the scheme from 1st November 2008. Relief has
been provided in case of an µExcluded Employee¶ which primarily refers to an IW coming from a
country with which India has entered into an SSA.
In this article, we have discussed the implications only with respect to the second category of
International Workers i.e. foreign nationals working in India.

As per the Notification dated 1st October 2008 µExcluded Employee¶ means
³an International Worker, who is contributing to a social security programme of his/her country of
origin, either as a citizen or resident, with whom India has entered into social security
agreement on reciprocity basis and enjoying the status of detached worker for the period and
terms, as specified in such an agreement.³
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The International Workers (other than excluded employees) are required to contribute 12% of
their salary to the Indian Provident Fund scheme. Further, the employers are also required to
match an equal amount i.e. 12% of salary as their contribution to the scheme.
G 

Every employer is required to file a return in the specified form, giving details of the International
Workers including their nationality, basic wage, etc. within 15 days of the commencement of the
scheme (i.e. 15th October 2008). The employers are also required to file a µNIL¶ return in case
they do not have any IW working with them.

Employers are also required to file monthly returns (within 15 days of the close of the month) in
the specified forms furnishing necessary details.
› › 
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Government Policy and International Workforce

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India had earlier signed an SSA with Belgium and France and has recently signed Social
Insurance Agreement with Germany. It is understood that India is in the process of signing
SSAs with the US, Australia, Netherlands, Czech Republic, Spain, Portugal, Switzerland,
Norway, Sweden and other countries.

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` Employees on an assignment up to specified periods (Belgium and France ² 60 months;
Germany ² 48 months with an extension of 12 months) are exempt from making social
security contributions in the host country provided they continue to make social security
contributions in their home countries.
` Employees on assignment for more than the specified period and making social security
contributions under the host country laws will be entitled to export the benefits under the SSA
to the home country on completion of their assignment or on retirement. However this is not
provided under the Social Insurance Agreement with Germany.

The Additional Central Provident Fund Commissioner (µACPFC¶) has also issued certain
clarifications with respect to these amendments and the Ministry of Labour has posted
responses to Frequently Asked Questions (µFAQs¶) on their website clarifying the position
relating to the International Workers.

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!
 
 The payment of benefits in case of an IW holding other than an Indian
passport and coming from a country with which India has signed an SSA, shall be as per the
provisions of the SSA.
G

 
 p  All expatriates, except expatriates from Belgium
(as the SSA with Belgium is effective from 1st September 2009) but including expatriates
coming from France and Germany and holding foreign passports are required to contribute to
the Indian Provident Fund schemes as the SSAs with these countries are not yet effective.

   !    
   ! !   ›  For the IW (holding
other than an Indian passport) coming from a country with which India has no SSA, the
withdrawal of benefit under Employee Pension Scheme shall be based on the principle of
reciprocity.

Government Policy and International Workforce

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Further, the quantum and manner of computing salary on which the contributions are to be
based is also contentious. For example, in cross-border movement of employees, there could
be different employment arrangements and services could be rendered in different jurisdictions,
salary could be paid in different countries and also at times, by more than one employer. A
question arises in all such arrangements on whether salary paid by the overseas entity would
need to be taken into account for this purpose. If the IW is employed by the Indian
establishment to which the PF Act applies and is rendering services in connection with the
establishment in India, then a point that may need further examination is whether only the Indian
salary which is covered by the Indian employment contract is to be considered. While, the FAQ
has confirmed that total salary will have to be considered for PF, the legal position would need
to be examined.
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In certain cases, the Double Taxation Avoidance Agreements between countries provide
exemptions to employees from double taxation of salary income in both countries, if the
prescribed conditions are satisfied. Typically, these would be ² duration of stay in India should
be less than 183 days during the relevant period and the remuneration is paid by, or on behalf
of, an employer who is not a resident of Indiai.e. implying that the overseas entity should be the
employer.

Accordingly, in cases where the above-mentioned short-stay exemption is claimed, the

overseas entity is considered as the employer for Income-tax purposes. As per the FAQ, PF
would be payable by the Indian entity in its capacity of µemployer¶ irrespective of the duration of
stay in India. This would imply that the Indian entity is the employer for PF purposes. As a
result, different positions would be adopted for the same individual under the Income-tax law
and Provident Fund regulations and this may give rise to disputes and litigation.

   

There are also issues around withdrawal of the balance at the end of the assignment. When an
IW completes his assignment in India and leaves India to continue his employment abroad, he
would be permitted to withdraw the accumulated PF balance.
However, the employer¶s contribution to the Pension Scheme (i.e. 8.33 per cent of INR 6,500)
can be withdrawn only subject to satisfying certain prescribed conditions such as :
` Eligible service of 10 years or more and retirement on attaining the age of 58 years;

Government Policy and International Workforce

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` Early pension if rendered eligible service of 10 years or more and retirement or otherwise
cessation of employment before attaining 58 years.

The withdrawal also depends on the principles of reciprocity with the home country of the IW
where there is no SSA in place. Therefore, if the IW comes from the US, as an example, it
would depend on whether the US would allow to freely repatriate such balance for Indians on
completion of the assignments in the US.

Therefore practically, the withdrawal of the pension amount appears to be difficult.

 
Another important point that arises is that, most expatriates are generally equalised on income
tax and social security benefits, i.e. they would be guaranteed atleast the same net salary (after
tax and social security deductions) while on assignment in India as they earned in their home
country, prior to coming on assignment. On completion of the India assignment, the IW would
receive the refund which consists of the employer and employee PF contributions and the
interest thereon. As part of the equalization policy, the PF contributions may have been borne
by the employer and hence, the expatriate may now be obligated to repay the employer this
amount.

The PF Act protects the amount standing to the credit of any member in the Fund and states
that this amount shall not be capable of being assigned or charged and shall not be liable to
attachment under any decree or order of any Court for any debt or liability. Further, neither the
official assignee appointed under the Presidency Towns Insolvency Act 1909 nor any receiver
appointed under the Provincial Insolvency Act 1920 shall be entitled to or have any claim on any
such amount even though the employer may have funded the employee¶s PF contribution (in
addition to the employer¶s contributions). This poses problems of recoverability for the employer
especially since the amount involved may be significant considering it is nearly 24% of salary.

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As most assignments are typically for less than five years, the withdrawal of the PF amount
before completion of the five years may give rise to additional income tax implications.


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Emigration means the departure out of India of any person with a view to taking up any
employment (whether or not under an agreement or other arrangements to take up such
employment and whether with or without the assistance of a recruiting agent or employer) in any
country or place outside India.

As per the Emigration Act, 1983, certain categories of Indian passport holders require to obtain
"Emigration Clearance" from the office of Protector of Emigrants (POE) for going to certain
countries.

All Indian passports are divided into two categories. They carry the following endorsements as
per the classification they fall into:
ë Passports with endorsement: "Emigration Check Required" (ECR), and
ë Passports with endorsement: "Emigration Check Not Required" (ECNR)

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Not everyone travelling abroad needs to obtain Emigration Check Stamp.

Given below are the categories of the people who do not require obtaining Emigration Check
Stamp:

1. Persons going abroad in managerial capacity in : a. Hotels; b. Restaurants;

c. Tea-Houses; or d. Other places of public resort, possessing specialized degrees
in these fields. All Gazetted Government servants.
2. All income-tax payers in their individual capacity. These include agricultural income-tax
payers.
3. All professional degree holders like : Doctors holding MBBS Degree in Ayurved or
Homeopathy; Accredited Journalists; Engineers; Chartered Accountants; Cost Accountants;
Lecturers; Teachers; Scientists and Advocates, etc.
4. Spouses and dependent children (upto the age of 24 years) of all the above categories of
Persons.

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5. All persons who have been staying abroad for more than three years, (the period of three
years could be either at a stretch or broken) and spouses and children (upto the age of 24)
of such persons.
6. Seamen who are in possession of CDC and Sea Cadets.
7. All holders of Diplomatic / Official Passports.
8. Dependent children of parents whose passports are classified as ECNR.
9. Persons holding permanent Immigration visas, such as the visas of UK, USA and Australia.
10. Persons holding graduate or higher degrees.
11. Persons holding 3 years diploma equivalent to degree from recognized Institutions like
polytechnics.
12. Nurses possessing qualifications recognized under the Indian Nursing Council Act, 1947.
13. All persons above the age of 60 years

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The laws in regard PF are still evolving and there are a lot of open questions which need to be
answered. Realistically, the SSAs may take a long time before they are effective and until then
the cost of the assignment of the expatriates in India, along with the compliance requirements is
likely to increase.


Government Policy and International Workforce