The Employees’ Provident Fund Organisation (EPFO) has extended the deadline for linking the Universal Account Number (UAN) under the Employment Linked Incentive (ELI) scheme to December 15, 2024, from the original deadline of November 30, 2024. The announcement was made on December 4, 2024, through an EPFO post on X (formerly Twitter) and a formal circular issued to employers. The extension provides additional time for employers to comply with the requirement, which is essential for employees to avail of the benefits under the ELI scheme.
The EPFO emphasized that it is crucial for employers to complete the process of UAN activation and Aadhaar seeding of bank accounts for all employees who have joined the workforce in the current financial year, starting with the most recent joiners. These actions are necessary to ensure that employees can benefit from the scheme, which aims to encourage employment growth and reduce the financial burden on employers, especially in the formal sector.
Key Components of the Employment Linked Incentive (ELI) Scheme
The ELI scheme, which was introduced as part of the Union Budget 2024, is designed to foster formal employment across various sectors by providing financial incentives to both employees and employers. The scheme has three distinct components:
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Scheme A: This component targets first-time employees entering the formal sector. Employees who are hired for the first time and earn up to Rs 1 lakh per month are eligible for this scheme. Under Scheme A, employees will receive one month’s salary (up to Rs 15,000) in three installments, transferred directly to their accounts via Direct Benefit Transfer (DBT). This initiative is designed to incentivize individuals to join the formal workforce by providing an immediate financial benefit that makes formal employment more attractive.
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Scheme B: Scheme B focuses on promoting job creation in the manufacturing sector, which has historically been a key driver of economic growth and employment in India. In this scheme, both employees and employers will receive financial incentives equal to their EPFO contributions for the first four years of employment. This financial support helps reduce the burden on employers and encourages them to hire more employees in the manufacturing sector, thus stimulating job creation in this critical area of the economy.
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Scheme C: Scheme C aims to support job creation across all sectors, with a particular emphasis on new employment opportunities. Under this scheme, employers will receive a reimbursement of up to Rs 3,000 per month for each new employee they hire, provided the employee earns a monthly salary of up to Rs 1 lakh. The reimbursement will be available for two years, which gives employers the financial flexibility to expand their workforce while reducing immediate costs. This component aims to create a larger pool of formal jobs across industries, ensuring that new employees receive the necessary support during their initial years in the workforce.
Broader Objectives of the ELI Scheme
The overarching objective of the Employment Linked Incentive scheme is to incentivize formal employment, particularly for first-time job seekers, while also easing the financial burden on employers. By offering direct financial incentives, the government aims to make formal employment more accessible and appealing, especially for individuals who may have previously worked in the informal sector.
In addition to providing immediate financial relief, the scheme encourages employers to formalize jobs by reducing the costs associated with hiring new employees. This will ultimately contribute to a more organized, transparent, and sustainable labor market, fostering greater economic growth in the long term. The scheme is expected to be a critical driver of the government’s broader goals of job creation, poverty reduction, and economic inclusion.
Importance of Linking UAN and Aadhaar for the Scheme
The process of linking the UAN with Aadhaar and bank accounts is a critical step for employees to access the benefits under the ELI scheme. UAN acts as a unique identifier for each employee and facilitates the seamless transfer of EPF contributions and other benefits. By linking Aadhaar and bank accounts to the UAN, the EPFO ensures that employees receive their benefits quickly and directly through DBT.
For employers, this process simplifies record-keeping and reduces the administrative burden of managing multiple systems. The extended deadline gives employers the necessary time to complete this process, ensuring that no eligible employee is left out from receiving their benefits under the scheme.
Potential Economic Impact
The extension of the deadline and the broader implementation of the ELI scheme are expected to have a significant impact on India’s employment landscape. The scheme directly addresses key challenges such as job creation, employee retention, and the formalization of the labor market. By incentivizing employers to hire and retain employees, particularly in sectors like manufacturing, the scheme helps reduce unemployment and underemployment, which has been a longstanding issue in the Indian economy.
Additionally, by offering direct benefits to first-time employees, the ELI scheme reduces barriers to entry in the formal sector, encouraging young workers and those from marginalized backgrounds to seek stable, formal employment. This, in turn, is expected to contribute to higher productivity, improved labor force participation, and enhanced economic growth.
Conclusion
The EPFO’s decision to extend the deadline for linking UAN under the ELI scheme reflects a proactive approach to ensuring that more employees benefit from the government’s efforts to stimulate employment. The ELI scheme’s financial incentives are a welcome boost for employers, particularly in sectors where job creation has been a challenge. As the deadline approaches, employers must take the necessary steps to ensure that their employees are enrolled in the system and that all required links are established.
Through the implementation of the ELI scheme, the government hopes to create a more robust and formalized labor market, reduce unemployment, and ultimately drive economic growth. By providing financial support to both employers and employees, the scheme aims to build a more sustainable and inclusive economy that benefits all stakeholders.
