Cross-border Payroll: International Workers and Social Security Agreements
The most expensive payroll mistakes involve someone crossing a border. Provident fund for international workers is contributed on full wages without the monthly ceiling, which makes it an order of magnitude more expensive than domestic coverage, and there is live litigation about whether that treatment is constitutional at all. Meanwhile the long-awaited agreement with the United Kingdom came into force on 15 July 2026, which changes the cost of a British secondment, but only where the certificate of coverage is actually in hand.
- Who is an international worker and what it costs
- The constitutional challenge that has not been resolved
- The twenty operational social security agreements and the certificate of coverage
- The India and United Kingdom agreement, in force since 15 July 2026
Coverage without a ceiling
An international worker is broadly a foreign national working in India for an establishment to which provident fund law applies, or an Indian employee who has worked or is going to work in a country with which India has a social security agreement. The commercially important consequence is that an international worker contributes on wages as defined under the Code, without the ₹25,000 monthly ceiling that limits contributions for domestic employees, unless excluded as a detached worker under an operative social security agreement or another specified bilateral arrangement. On a senior secondee's salary that is not a rounding difference.
The unresolved question
In April 2024 the Karnataka High Court struck down the international worker provisions of the former provident fund and pension schemes as unconstitutional, and that judgment has not been reported as stayed or reversed. But in November 2025 the Delhi High Court reached the opposite conclusion, and the conflict is now before the Supreme Court, whose interim protection extends to the petitioners rather than operating as a general stay. Meanwhile the Employees' Provident Funds Scheme 2026 and the Employees' Pension Scheme 2026 both preserve special rules for international workers. So the position to cost on, outside a case covered by the Karnataka judgment or by a specific court order, is contribution on statutory wages with no ceiling applied, unless an operative agreement exempts the person.
Twenty in operation, and what they do
A social security agreement does two useful things. It lets a seconded employee stay in the home country's system and be exempt from the host country's contributions for a defined period, evidenced by a certificate of coverage, and it lets periods of coverage in each country be totalised for benefit entitlement. Without one, a secondee often pays into both systems and draws a benefit from neither.
India has twenty operational agreements, per the retirement fund body's own list: Belgium, Germany, Switzerland, Luxembourg, France, Denmark, the Republic of Korea, the Netherlands, Hungary, Finland, Sweden, the Czech Republic, Norway, Austria, Canada, Australia, Japan, Portugal, Brazil and Quebec, the last being a sub-national agreement. Certificates of coverage for outbound postings are issued by the retirement fund body. The United Kingdom agreement, dealt with in the next section, took effect on 15 July 2026 and now sits alongside them.
In force since 15 July 2026
This is the item most likely to be misreported, so it is worth stating precisely. The agreement between India and the United Kingdom on social security contributions, sometimes called the double contribution convention, was signed at New Delhi on 10 February 2026 and entered into force on 15 July 2026, following the exchange of notifications required by Article 26. The retirement fund body operationalised it by circular dated 16 July 2026.
A qualifying employee posted from the United Kingdom to India on or after 15 July 2026 can remain covered exclusively by United Kingdom legislation, and so be exempt from Indian provident fund contributions, for up to sixty months under Article 8(1), provided a valid certificate of coverage remains in force throughout. Nationality alone does not confer the exemption, and an assignment already running on 15 July 2026 has its own transitional treatment.
The exemption is not automatic, and that is where the money is lost. It depends on an effective certificate of coverage, on the posting meeting the agreement's conditions, and on the transitional treatment where the assignment was already running on 15 July 2026. An employer that stops contributing before the certificate is in hand is in default. The order is: get the certificate, then change the payroll.
What to settle in advance
1. Establish which system the person stays in
This is an agreement question first and a payroll question second. If there is an operative agreement, get the certificate of coverage before the posting starts, not afterwards.
2. Price the provident fund exposure properly
Contribution on full wages without a ceiling, subject to the unresolved litigation above. Model it as a cost line before the assignment letter is issued.
3. Decide who employs, and where the payroll runs
Split payroll, shadow payroll and a straightforward host-country employment produce different tax, social security and permanent establishment consequences. It is a structuring decision, not an administrative one.
4. Get the tax residence position in writing
Withholding under section 392 of the Income-tax Act 2025 depends on residence and on treaty relief, and the answer often changes partway through the assignment.
5. Diarise the exit
Withdrawal, transfer and pension entitlement for a departing international worker are where the unresolved questions above become somebody's actual money.
Where to go next
Payroll Services
Back to the main payroll page: who we work with, how an engagement is put together, and how to reach us.
What the Labour Codes Did to Your Payroll
The commencement notifications read properly, the new statutory definition of wages and the fifty per cent rule, which Acts were actually repealed, and why the provident fund repeal is dated earlier than the rest.
Provident Fund, ESI and Gratuity: Rates, Ceilings and the Transition
Contribution rates and wage ceilings, the provident fund ceiling's rise to ₹25,000 on 17 September 2026, what changed for gratuity on fixed-term contracts, and how the new wage base feeds each of the three.
Salary TDS Under the Income-tax Act 2025
Two Acts running at once, the new section numbers, the slab and rebate position for FY 2025-26 and tax year 2026-27, the renumbered forms, and the quarterly calendar a payroll team has to work to.
Running Payroll Across States: Registrations, Professional Tax and Minimum Wages
Why a single national payroll process still breaks at the state line: the uneven rollout of state rules under the Codes, professional tax by state, minimum wage computation, and the registers and returns that stayed local.
Send an enquiry
If you have a secondment being planned now, the useful thing is to talk before the assignment letter is issued rather than after. Most of the cost is fixed by decisions made at that point.
This page is general information, not professional advice. Indian payroll law changed more between November 2025 and June 2026 than in the twenty years before it. The four Labour Codes commenced on 21 November 2025, central rules under them followed in May 2026, and the Income-tax Act 2025 replaced the 1961 Act on 1 April 2026. State rules under the Codes are still being notified and differ by state, so the correct answer for one employer is not automatically the correct answer for another. Take professional advice before acting on anything on this page. We are happy to be that adviser, but we do not act on a web page, ours or anyone else's, without one.