EMPLOYMENT UPDATE
15 May, 2025
Issue No. 06/25-26
IMPACT OF THE DOUBLE CONTRIBUTION CONVENTION BETWEEN INDIA AND THE UNITED KINGDOM
INTRODUCTION
India has recently signed a Free Trade Agreement (FTA) and a Double Contribution Convention (“DCC”) with the United Kingdom. These agreements are expected to significantly boost trade between the two countries and have important implications for Indian companies and professionals working in the UK.
The DCC, in particular, is a welcome move. It offers major benefits for Indian employees temporarily assigned to the UK by Indian companies. By reducing social security deductions, the DCC can lower the overall cost of international assignments and make Indian service providers more competitive in the UK market.
WHAT IS THE DOUBLE CONTRIBUTION CONVENTION?
The Double Contribution Convention is an agreement that prevents Indian professionals from paying social security contributions in both India and the UK when working abroad temporarily. Under the DCC, Indian employees who are sent to work in the UK for up to three years do not have to contribute to the UK’s National Insurance system if they are already contributing to India’s social security schemes, such as the Employees’ Provident Fund (EPF).
This helps avoid duplication of payments and ensures that employees continue to receive social security benefits in their home country. Employers also benefit, as they can save on additional payroll costs, making international postings more cost-effective.
IMPACT OF THE DCC
The exemption from paying UK social security contributions for up to three years will lead to substantial financial savings for Indian businesses and professionals. This will not only enhance the competitiveness of Indian service providers in the UK but also create more job opportunities. The UK, being a major hub for digital, financial, and professional services, offers vast opportunities for India’s skilled workforce. With its advanced digital infrastructure, the UK is an attractive destination for Indian talent, particularly in IT and other knowledge-based sectors. The DCC further strengthens these prospects by making short-term assignments more affordable and financially viable. Previously, Indian employees working in the UK had to contribute to the UK’s National Insurance without being able to claim any long-term benefits upon returning to India. The DCC addresses this issue by allowing Indian workers to continue contributing only to India’s EPF system, thus preserving their social security benefits while avoiding unnecessary deductions.
India already has Social Security Agreements (SSAs) with around 20 countries, but until now, not with the UK. The DCC fills this gap and marks a major development in international employment relations between the two nations.
Once the DCC becomes fully operational, companies that send employees to the UK or receive UK employees in India will have to review their assignment and mobility policies. Understanding the details of the DCC will be important to ensure compliance, maximize cost savings, and protect employee benefits.
CONCLUSION
The Double Contribution Convention is a significant step forward for India-UK relations. It will lower the cost of international assignments, prevent double social security contributions, and support the mobility of skilled professionals. As economic ties between India and the UK grow stronger, agreements like the DCC will play a key role in promoting cross-border employment and enhancing global business collaboration.
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