Budget 2024: Union Finance Minister Nirmala Sitharaman on Tuesday announced three employment-linked incentive schemes for employers and employees based on enrolment in the Employees' Provident Fund Organisation (EPFO), as part of the government's efforts to boost hiring.
These three schemes, including Scheme A (one month's salary for freshers), Scheme B (job creation in manufacturing), and Scheme C (support to employers), have been proposed to benefit first-time employees as they enrol in the EPFO.
“Our government will implement the following three schemes for employment -linked incentive as part of the Prime Minister's package — enrollment in the EPF, focus on recognition of first-time employees, and support to employees and employers scheme,” FM Sitharaman said in her Budget 2024 today.
“Direct Benefit Transfer of one month's salary in three instalments to first-time employees as registered in the EPFO will be up to ₹15,000. The eligibility limit will be a salary of ₹1 lakh per month,” she added.
Scheme A: Under this scheme, first-timers will get one month's wages as a subsidy of up to ₹15,000 as they have a learning curve before they become fully productive. It applies to all sectors and all persons newly entering the workforce (EPFO) with a wage/salary of less than ₹1 lakh per month. FM Sitharaman announced that the subsidy will be paid to the employee in three instalments. To avail this, the employee must undergo a compulsory online Financial Literacy course before claiming the second instalment. Subsidy needs to be refunded by the employer if the employment to the first timer ends within 12 months of recruitment. This scheme will be applicable for two years.
Scheme B: Under this scheme, all corporate and non-corporate employers with a three-year track record of EPFO contribution will be eligible. It is applicable for substantial hiring of first-time employees in the manufacturing sector. The employer must hire at least the following number of previously non-EPFO enrolled workers — 50 or 25% of the baseline.
Scheme C: This scheme applies to an employer who increases employment above the baseline (the previous year’s number of EPFO employees) by at least two employees (for those with less than 50 employees) or 5 employees (for those with 50 or more employees) and sustains the higher level, and for employees whose salary does not exceed ₹1,00,000 per month. It is pertinent to note that new employees under this part need not be new entrants to EPFO. Under this, for two years, the government will reimburse EPFO employer contribution [up to] ₹3,000 per month to the employer for the additional employees hired in the previous year. It does not apply to those employees covered under part B.
