Employment Linked Incentive(ELI) Scheme

The Employment Linked Incentive (ELI) Scheme is a government initiative announced in Budget 2024–25 to generate formal employment by offering financial support to both employers and first-time employees. To avail the ELI scheme benefits, employees must enrol in EPFO and meet Aadhaar-bank seeding requirements. 

The EPFO has extended the deadline for UAN activation and Aadhaar seeding to 30 June, 2025 for employees joining in FY 2024–25.

What is Employment Linked Incentive Scheme?

The Budget 2024 has announced the launch of 3 schemes to boost employment and hiring in the formal sector, known as ‘Employment Linked Incentive’ schemes. These schemes provide benefits to employers and first-time employees who have enrolled in the EPFO (Employees Provident Fund Organisation).    

The 3 Employment Linked Incentive (ELI) Schemes are as follows:

• Scheme A - First-time employment 
• Scheme B - Job creation in manufacturing 
• Scheme C - Support to employers 

These 3 schemes will focus on recognising first-time employees and providing support to employees and employers. 

Coverage and estimated outlay of the Employment Linked Incentive Scheme

The table below provides the details of the 3 Employment Linked Incentive Schemes:

How will EPFO enrolment benefit the First-time Employment Scheme?

EPFO enrolment and activation of UAN is mandatory to receive the subsidy under the first-time employment scheme. A subsidy of up to Rs.15,000 will be provided to only those newly joined employees who have enrolled with the EPFO. Thus, the first-time employment scheme applies to all newly joined employees in the formal sectors, where employers provide EPF benefits to an employee. 

EPFO has provided the deadline of 15 March 2025 for all newly joined employees in the current financial year to activate their UAN (Universal Account Number) and link their Aadhaar with bank account to receive the benefits provided under the first-time employment secheme and the job creation in manufacturing scheme.

Click here to know the detailed steps for activating UAN online.

Click here to know the steps for seeding/linking Aadhaar with bank account.

First-time Employment Scheme in India 

The first scheme under the 3 employment linked incentive schemes is the first-time employment scheme. Under this scheme, all newly joined employees in the formal sector will receive a direct benefit transfer of one month's salary in 3 instalments of up to Rs.15,000 when they are enrolled in the EPFO. 

However, employees must undertake a compulsory online Financial Literacy course before claiming the second instalment. The eligibility to receive one month’s salary of up to Rs.15,000 is enrolment in the EPFO and a salary of up to Rs.1 lakh per month. 

The features of this scheme are as follows:

• Applicable to newly joined employees in all sectors.
• Applicable to all persons who have newly joined employment, drawing a wage or salary of less than Rs.1 lakh per month and enrolled in the EPFO.
• The subsidy of up to Rs.15,000 will be paid to the employee directly in 3 instalments.
• The employees will mandatorily undergo a Financial Literacy course before receiving the second instalment.
• The employer will refund the subsidy to the employee if the employment ends within 12 months of recruitment.
• The scheme will be applicable to an employee for 2 years after enrolment with the EPFO. 

The First-time employment scheme is expected to benefit around 210 lakh youth over 2 years. Under this scheme, first-time employees will have a learning curve before becoming fully productive. The subsidy provided under this scheme assists employees and boosts the hiring of first time employees by the employers.

Job Creation in Manufacturing in India 

The second scheme under the employment linked incentive scheme is the job creation in manufacturing scheme. This scheme is aimed at substantial hiring of first-time employees in the manufacturing sector. The incentive under this scheme is given in addition to the subsidy provided under the first-time employment scheme. 

An incentive will be provided at a specified scale to the employee and the employer directly with respect to the EPFO contributions made in the first 4 years of employment. The incentive will be paid partly to the employee and partly to the employer for four years as follows:

The features of this scheme are as follows:

• Applicable to first-time employees in the manufacturing sector.
• All employers, both corporate and non-corporate, with a three-year track record of EPFO contribution will be eligible. 
• Employers must hire at least 50 previously non-EPFO enrolled workers or 25% of the baseline of non-EPFO enrolled workers (the previous year’s number of EPFO employees), whichever is lower. 
• Employers must maintain the threshold level of enhanced employment throughout, failing which they will not receive the subsidy.
• Employees must work directly for the entity that pays them salary or wage, i.e., an in-sourced employee.  
• Employees with a wage or salary of up to Rs.1 lakh per month will be eligible, subject to the EPFO contribution.  
• For employees whose wages or salaries exceed Rs.25,000 per month, the incentive will be calculated at Rs.25,000 per month.  
• The employer will refund the subsidy to the employee if the employment ends within 12 months of recruitment.
• The scheme will be applicable to an employee for 2 years after enrolment with the EPFO.

This scheme will incentivise additional employment in the manufacturing sector and is expected to benefit 30 lakh youth joining employment and their employers. 

Support to Employers 

The third scheme under the employment linked incentive scheme is the support to employers scheme. This employer-focussed scheme will cover every additional employment within Rs.1 lakh salary per month in all sectors. 

The features of this scheme are as follows:

• Applicable to an employer who:
  • Increases employment above the baseline (the previous year’s EPFO employees number) by at least 2 employees (for entities with less than 50 employees) or 5 employees (for entities with 50 or more employees) and sustains the higher level
  • Employees salaries should not be more than Rs.1 lakh per month
  • New employees need not be newly enrolled to EPFO
• The government will reimburse EPFO contributions paid by the applicable employers for the additional employees hired in the previous year up to Rs.3,000 per month for 2 years.
• When the employer creates more than 1000 jobs, the following will apply:
  • Reimbursement will be done quarterly for the previous quarter
  • Subsidy will continue for the third and fourth years on the same scale as employer benefit provided under the job creation for manufacturing scheme
• This scheme is not applicable to employees covered under the job creation for manufacturing scheme.
• The subsidy in this scheme is provided in addition to the subsidy provided under the first-time employment scheme. 
• This scheme is applicable for 2 years after joining employment.

This scheme is expected to incentivise additional employment of around 50 lakh persons.  

Under the 3 newly announced employment linked incentive schemes in Budget 2024, the government will provide subsidies and incentives to employees and employers. This will boost the hiring process by employers and also provide benefits to employees, thus increasing employment opportunities for the youth.

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How to Link Aadhaar with UAN 
How To Find PF Account Number? 
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