Blog Post

Employment-Linked-Incentive-Scheme-Guide-for-Employers-and-Employee-ELI
Sun Aug 31 2025

Employment-Linked Incentive Scheme (ELI) Guide for Employers and Employees

The Government of India has rolled out the Employment-Linked Incentive (ELI) Scheme under the PM Viksit Bharat Rozgar Yojana (PMVBRY) to boost formal job creation and strengthen workforce participation. This scheme is designed to benefit both first-time employees and employers who expand their workforce, while also encouraging greater formalization of India’s labor market.

Why the ELI Scheme Matters

Unemployment and informal work remain major challenges for India’s economy. With this scheme, the government aims to generate around 3.5 crore new jobs over two years (Aug 2025 – Jul 2027), of which nearly 1.9 crore are targeted at first-time job seekers.

The scheme directly addresses:

  • Youth entry into formal employment (through wage incentives and financial literacy).
  • Employer hiring costs (through monthly reimbursements for new jobs created).
  • Workforce formalization (by mandating EPFO registration and Aadhaar-seeded UANs).

Structure of the Scheme

Scheme A – For Employees

  • Eligibility: First-time employees with monthly wages up to ₹1 lakh.
  • Benefit: Incentive equal to one month’s EPF wage (capped at ₹15,000), released in two installments (after 6 months and after 12 months).
  • Condition: Completion of a short Financial Literacy Course and continued employment for 12 months.

Scheme B – For Employers

  • Eligibility: Employers hiring beyond their baseline headcount (average between 1 Aug 2024 – 31 Jul 2025).
  • Benefit: Up to ₹3,000 per new employee per month for 2 years (4 years for manufacturing firms).

Conditions:

  • Valid EPFO registration with 3-year compliance history.
  • Retention of each new hire for at least 12 months.
  • Mandatory registration under PMVBRY and accurate monthly EPFO filings.

Enrollment Process

For Employees

  • Generate & Activate UAN via UMANG App using Aadhaar Face Authentication.
  • Link Aadhaar & Bank Account with UAN for Direct Benefit Transfer (DBT).
  • Enroll under EPFO through employer’s ECR filing.
  • Complete Financial Literacy Course to unlock the second installment.

For Employers

  • Maintain EPFO Registration with minimum 3-year compliance.
  • Register on PMVBRY Portal with establishment details and baseline workforce count.
  • Submit Documents:
    • GST certificate
    • PAN-linked bank account
    • Undertaking: In case undue benefits are received by the establishment, they shall be refunded to the Government in full along with penal interest, if any.
  • Hire Above Baseline (2 minimum for firms <50 employees, 5 for ≥50).
  • File Monthly ECR Accurately with gross wages and contributions.
  • Receive Incentives: Employer incentive credited to PAN-linked account; employee incentive credited to Aadhaar-linked account.

FAQs on ELI Scheme

Q1. What if an employee leaves before completing 12 months?
➡️ The employer will not be eligible for incentive beyond the employee’s actual service period, and any wrongly availed benefit may need to be refunded.

Q2. Can employees without smartphones generate UAN?
➡️ Employees in remote areas can still generate UAN through alternative EPFO facilitation centers; however, the UMANG App with face authentication is the primary method.

Q3. Is the scheme applicable to contract workers?
➡️ Yes, as long as the worker is on the EPF rolls, meets wage criteria, and is not already an EPF member.

Q4. How will the incentives be paid?
➡️ Employees will receive DBT directly into Aadhaar-seeded bank accounts; employers will get reimbursements in their PAN-linked accounts.

Q5. What safeguards exist against misuse?
➡️ Employers must submit an undertaking agreeing to refund undue benefits with penal interest. EPFO cross-verifies Aadhaar, UAN, and wage data.

Q6. Is there a maximum incentive amount per employee?
➡️ Yes, for employees under Scheme A, it is capped at ₹15,000 (one month’s EPF wage). For employers under Scheme B, it is capped at ₹3,000 per month per employee.

Final Thoughts

The Employment-Linked Incentive Scheme represents a win-win for both job seekers and businesses. For employees, it offers a financial boost and entry into the formal workforce. For employers, it offsets hiring costs and encourages compliance.