The Union Cabinet approved the Employment Linked Incentive (ELI) Scheme on July 1, 2025. It comes into effect from August 1, 2025, and will remain in force till July 31, 2027. The scheme aims to create over 3.5 crore formal jobs by incentivizing employers for new EPFO-registered hires.
What is the Employment Linked Incentive (ELI) Scheme?
The ELI Scheme is designed to boost formal job creation and help reduce reliance on informal work. To benefit from it, employees need to be registered with EPFO, have an active Universal Account Number (UAN), and ensure their Aadhaar is linked to both their UAN and bank account.
According to the Cabinet update from July 2025, all required steps must be completed by 30 June 2025. The incentive covers employment generated between August 1,2025 and July 31,2027.
The Three Schemes Under ELI:
The ELI initiative is structured into three parts:
- Scheme A: For first-time employment
- Scheme B: Focused on job creation in the manufacturing sector
- Scheme C: General support to employers hiring more workers
These are aimed at recognising fresh entrants into the workforce while supporting employers expanding their teams.
ELI Scheme Launch:
- Announced in: Budget 2024–25
- Enrolment window: 2 years
Scheme A: Incentive for Formal Job Creation under EPFO:
This scheme is meant for those entering the formal workforce for the first time.
- Benefit: Direct cash transfer of up to ₹15,000 in two parts:
- 1st instalment: After 6 months of continuous EPFO-enrolled employment
- 2nd instalment: After 12 months + Financial Literacy Course completion
- Salary Cap: ₹1 lakh/month
- Duration: Valid for 2 years from EPFO enrolment
Condition: If the employee leaves before 12 months, the employer must return the subsidy.
This is expected to help nearly 210 lakh young people join the formal workforce.
Scheme B: Enhanced Incentive for Manufacturing Sector Employment Expansion
This scheme rewards manufacturers for creating new jobs and retaining workers.
Eligibility:
- Employers must have at least 3 years of EPFO history
- Must hire ≥50 non-EPFO employees or 25% of baseline, whichever is lower
- Applies only to in-sourced workers
- Salary Cap: ₹1 lakh/month (but subsidy is calculated up to ₹25,000/month)
Duration: 4 years of benefits, if the employee is retained
Condition: Employer has to return subsidy if the employee exits before 12 months
Incentive Breakdown:
| Employee’s Monthly Salary | Incentive to Employer |
|---|---|
| ≤ ₹10,000 | ₹1,000/month |
| ₹10,001 – ₹20,000 | ₹2,000/month |
| ₹20,001 – ₹1,00,000 | ₹3,000/month |
Scheme C: Support to Employers (All Sectors)
This one applies to employers across sectors looking to expand their teams.
- Employers with fewer than 50 employees: must hire at least 2 new people
- Employers with 50 or more employees: must hire at least 5 new people
- Salary Cap: ₹1 lakh/month
- Employees do not need to be first-time EPFO enrollees
Subsidy Details:
- Upto ₹10,000: ₹1,000
- ₹10,001 – ₹20,000: ₹2,000
- ₹20,001 – ₹1,00,000: ₹3,000
- Duration: 2 years
- Employers creating over 1,000 jobs can get extended subsidies in Years 3 and 4
Note: This scheme does not cover employees already included under Scheme
It’s expected to support the hiring of around 50 lakh individuals across India.
Who is Eligible for the ELI Scheme?
- Employee’s monthly wage must be less than ₹1 lakh.
- Employee must be newly registered under EPFO.
- Aadhaar must be linked to both UAN and bank account.
- Employer must show net new job creation over their previous EPFO headcount.
- For Scheme B, employers in manufacturing must hire at least 50 non-EPFO workers or 25% of existing workforce, whichever is lower.
How to Apply for the ELI Scheme Online
For Employees:
- Activate your UAN on the EPFO Member Portal
- Link your Aadhaar with UAN and bank account
- Get enrolled in EPFO through your employer
- Complete the Financial Literacy Course (for second instalment under Scheme A)
For Employers:
- Maintain valid EPFO registration
- Have a 3-year EPFO track record (for Scheme B)
- Hire new employees as per the eligibility conditions
- Retain employees for at least 12 months to avoid refunding the subsidy
Under these three new employment-linked incentive schemes announced in Budget 2024, the government is aiming to make hiring more attractive for employers while giving financial support to employees. The goal is to create more formal jobs, especially for the youth, and encourage long-term employment in key sectors like manufacturing and services.
Disclaimer
The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. The content of this article is not intended to create and receipt of it does not constitute any relationship. Readers should not act upon this information without seeking professional legal counsel.