In a strategic push towards enhancing employment, formalization, and social security, the Ministry of Labour & Employment, Government of India, has launched a game-changing initiative — the Employment Linked Incentive (ELI) Scheme 2025. Announced in the Union Budget 2024-25, this scheme promises to generate over 3.5 crore jobs over the next two years while also boosting youth employability and workforce stability.
Let’s dive into how this visionary scheme benefits both employers and employees and how you can make the most of it.
What is the ELI Scheme?
The Employment Linked Incentive (ELI) Scheme is a flagship programme aimed at:
- Generating sustainable formal employment.
- Encouraging first-time employment seekers.
- Reducing the cost of job creation for employers.
- Extending EPFO (Employees’ Provident Fund Organisation) coverage for social security.
Registration starts from 1st August 2025.
Key Objectives
- Incentivize the creation of over 3.5 crore jobs by July 2027.
- Formalize employment through EPF coverage.
- Promote financial literacy among young workers.
- Focus on manufacturing sector by offering extended benefits.
Part A – Incentives for First-Time Employees
Eligibility:
- Employees registering with EPFO for the first time.
- Monthly gross salary of up to ₹1 lakh.
- Employment must be sustained for at least 6–12 months.
- Employers must file ECR (Electronic Challan cum Return) for the period.
Incentive:
- One month’s wage (Basic + DA), up to ₹15,000.
- Paid in two instalments:
- 1st instalment after 6 months of continuous service.
- 2nd instalment after 12 months + completion of a Financial Literacy course.
Payment Mode:
- Direct Benefit Transfer (DBT) to the employee’s Aadhaar-seeded bank account.
- Second instalment partially placed in a savings instrument for future withdrawal.
Part B – Incentives to Employers
Eligibility:
- Establishments registered with EPFO (including exempted).
- Minimum hiring requirement:
- 2 additional employees (if existing staff <50).
- 5 additional employees (if staff ≥50).
- Employment must be sustained for at least 6 months.
- Employers must regularly file ECR.
Incentive Structure:
| EPF Wage Slab (per employee) | Employer Incentive/Month |
|---|---|
| Up to ₹10,000 | ₹1,000 |
| ₹10,001 – ₹20,000 | ₹2,000 |
| ₹20,001 – ₹1,00,000 | ₹3,000 |
- Incentives are applicable for 2 years across all sectors.
- Manufacturing sector gets extended benefits up to 4 years.
- Direct payment to employer’s PAN-linked bank account.
Benefits of the ELI Scheme
For Employees:
- Structured on-the-job training.
- Improved employability.
- Social security through EPF registration.
- Access to financial education and long-term saving habits.
For Employers:
- Reduction in cost of hiring and retention.
- Enhanced workforce productivity and stability.
- Financial incentive to support job formalization.
Final Thoughts
The ELI Scheme marks a critical milestone in India’s employment ecosystem. With its twin focus on youth inclusion and business support, it sets the stage for a stronger, formalized, and productive workforce.
If you’re an employer, this is the right time to hire responsibly and reap incentives. And if you’re a job seeker, this scheme could be your gateway to financial stability and social security.
Stay Compliant with Experts
Navigating through EPFO filings, ECR compliance, and scheme eligibility checks can be complex. At M.S. Sankhla & Co., we offer end-to-end Compliance Audit and Inspection Services to help your organization make the most of government initiatives like ELI while staying fully compliant with labour laws.
