The Finance Ministry’s Employee-Linked Incentive scheme may get Cabinet approval today (Tuesday, July 1, 2025).
Under this scheme run by the Labour Bureau, if employees of the informal sector join the Employees’ Provident Fund Organisation (EPFO), the government will give them incentives.
What is Employee-Linked Incentive scheme?
The government announced this scheme in Budget 2024. Under the scheme, the government aims to provide one month’s wage to all new employees entering the workforce in formal sectors.
As per the government statement at the time of the scheme launch, the direct benefit transfer of one month’s salary in 3 instalments to first-time employees, as registered in the EPFO, will be up to Rs 15,000. The eligibility limit will be a salary of Rs 1 lakh per month.
“The scheme is expected to benefit 210 lakh youth,” she said.
In Budget 2024, Finance Minister Nirmala Sitharaman stated that the scheme would incentivise additional employment in the manufacturing sector, linked to the employment of first-time employees.
An incentive will be provided at specified scale directly both to the employee and the employer with respect to their EPFO contribution in the first 4 years of employment.
Sitharaman had stated that the scheme was expected to benefit 30 lakh youth entering employment and their employers.
The employer-focused scheme will also cover additional employment in all sectors, the Union Finance Minister said at the scheme’s announcement.
All additional employment within a salary of Rs 1 lakh per month will be counted.
As per the scheme, the government will reimburse employers up to Rs 3,000 per month for 2 years towards their EPFO contribution for each additional employee.