Employment Linked Incentive Scheme: What Employers and Employees Must Know

The Government of India has launched a powerful incentive-based program to boost formal employment — the Employment Linked Incentive (ELI) Scheme — with a massive budget outlay of ₹99,446 crore.Let’s break down what this scheme offers, who is eligible, and how it could benefit both first-time employees and job creators.

What is the Employment Linked Incentive (ELI) Scheme?
Launched by the Ministry of Labour and Employment, the ELI Scheme aims to:
– Encourage formal employment
– Support first-time workers entering the EPFO system
– Reward employers creating sustained employment

Registration Window:
📅 From 1st August 2025 to 31st July 2027
This scheme is applicable to employers and employees registered under EPFO and is split into two parts:

Part A: Incentive for First-Time Employees
This part of the scheme is designed to encourage new workers to join the formal workforce for the first time.
✅ Key Features:
– Incentive equivalent to 1 month’s EPF wage (subject to a max of ₹15,000)
– Paid in 2 installments
– Applicable to first-time EPF account holders

This acts as a direct financial benefit to the employee upon UAN activation and formal onboarding into EPFO.
For this benefit, the employee must activate their UAN, link KYC (Aadhaar, PAN, Bank), and be employed under an eligible employer.

Part B: Incentive for Employers Creating Sustained Jobs
This section encourages employers to generate new and sustained employment opportunities.
✅ Key Features:
– Incentive of up to ₹3,000/month per employee
– Paid to employers for each new employee retained for at least 6 months
– Applies only if the new employee is added to the EPF system and the job is not a replacement

This makes the ELI scheme similar to a job creation subsidy, offering monetary support for every eligible employee brought into formal payrolls.
This can be a game-changer for MSMEs, startups, and labor-intensive sectors.

Example: How Much Incentive Can You Get?

Let’s understand both Part A (Employee Benefit) and Part B (Employer Benefit) of the Employment Linked Incentive (ELI) Scheme with two real-world salary scenarios:

Case 1: Employee with ₹10,000 Monthly Salary
Part A – First-Time Employee Benefit
EPF Wage = ₹10,000
Incentive = 1 month EPF wage
Total Benefit = ₹10,000 (paid in 2 installments)

Part B – Employer’s Incentive
Incentive = Up to ₹3,000/month
For 6 months = ₹3,000 × 6 = ₹18,000
Total Employer Benefit = ₹18,000

✅ Combined impact:
Employee gets ₹10,000
Employer gets ₹18,000
Total benefit: ₹28,000 for one formal job

Case 2: Employee with ₹1,00,000 Monthly Salary
Part A – First-Time Employee Benefit
EPF wage capped at ₹15,000
Incentive = 1 month EPF wage (max ₹15,000)
Total Benefit = ₹15,000 (paid in 2 installments)

Part B – Employer’s Incentive
Incentive = Max ₹3,000/month (same for all eligible new employees)
For 6 months = ₹3,000 × 6 = ₹18,000
Total Employer Benefit = ₹18,000

✅ Combined impact:
Employee gets ₹15,000
Employer gets ₹18,000
Total benefit: ₹33,000 for one high-paying formal job

Who Should Take Advantage of This Scheme?

• Employees (especially first-time workers):
  – Get a direct incentive of up to ₹15,000
  – Must activate their UAN and complete KYC
  – Should ensure employment is through a compliant EPFO-registered employer

• Employers:
  – Can avail monthly incentives for each new hire
  – Must ensure accurate reporting and compliance under EPFO
  – Should plan hiring strategies to leverage this scheme over the next two years

UAN Activation is the Key

To benefit from this scheme, both employees and employers must ensure that:
– UAN is activated
– Aadhaar, PAN, and bank details are correctly linked and verified (click here – To know how to update your KYC)
– EPF contributions are being made regularly through ECR

Check out our step-by-step guide on How to Activate Your UAN to make sure you’re eligible!

Timeline at a Glance

Final Thoughts

The Employment Linked Incentive Scheme is a forward-looking policy designed to boost formal employment, support job seekers, and reward companies that create sustainable jobs.
Whether you’re a first-time employee, a growing startup, or an MSME, this is your chance to benefit from the government’s push toward formalization and economic inclusion.

FAQs
Q. Do I need to apply separately to claim the ELI incentive?
Employees don’t need to apply individually — the benefit is routed via EPFO once UAN and KYC are verified. Employers must register under the scheme and ensure compliance.

Q. Can a person who has held a UAN before get the Part A benefit?
No. Part A is only for first-time EPFO entrants.

Q. Will this affect my existing PF account or contributions?
No, the scheme offers additional incentives — it does not change your regular PF structure.

Comment down below, Finright will answer your queries!
Read the official Notice from EPFO about the ELI Scheme.