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The government has introduced a huge benefit to the PF (Provident Fund)!
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This benefit will be offered to crores of employees as well as employers of this nation.
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Freshers as well as experienced employees will receive it.
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The government will be transferring benefits worth around INR 1,07,000 crore to employees and employers.
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Freshers have received a huge bonanza in this.
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The government will offer their 1-month salary.
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Apart from this, up to 24% incentive of their salary will be provided by the government.
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Also in the case of experienced employees, the government will provide benefits of around INR 1,000 in the PF.
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This scheme is so huge and so important,
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that after almost 2 years, I am compelled to create another video on PF.
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Even though the channel name is Labour Law Advisor,
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But we mostly create videos on Personal Finance, that you know.
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In any case, which benefits will be received in this scheme?
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What will be their eligibility criteria?
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What is my personal opinion on these topics?
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I will share detailed information about all of this in this video.
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My name is Rishabh Jain AKA Jagruk RJ.
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And you are watching your favourite channel Labour Law Advisor.
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If you still haven't subscribed to the channel until now,
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then click on the 'subscribe' button.
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Click the 'like' button of the video too.
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Priority to employment and skilling.
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An initiative to facilitate employment, and skilling for 4.1 crore youth...
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will provide 1 month's wage to all persons newly entering the workforce...
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based on enrolment in the EPFO (Employees Provident Fund Organisation), an incentive will be provided.
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This employer focus scheme will cover additional employment in all sectors.
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In order to encourage employment and skilling, the government has introduced up to 5 schemes.
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In which, three schemes, Schemes A, B and C will be implemented under EPFO (Employees Provident Fund Organisation).
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Apart from that, one scheme is for internship,
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And another scheme is for ITI (Industrial Training Institutes) development.
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Today, our focus is on EPFO scheme A, B and C's coverage.
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Whose enrolment period is of 2 years and benefit period would be around 3-6 years.
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There is an estimate that approximately 2.9 Crore employees will benefit from it.
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The total benefit amount would be INR 1.07 Lakh Crore.
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Two times previously, the government had introduced such similar schemes through EPFO.
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which were quite successful.
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In August 2016, the Government introduced the Pradhan Mantri Rojgar Protsahan Yojana(PMRPY).
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In which, one part of PF was to be given by the government.
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Almost 1 crore workers benefitted from this scheme.
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And overall the benefit of INR 9,200 Crore.
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The government transferred it.
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Under EPFO, another similar scheme was introduced by the government.
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In December 2020, whose name was Atmanirbhar Bharat Rojgar Yojana (ABRY).
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In this, both employees and employers were transferred the benefit.
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Almost 10,000 Crore and in total 60L workers received benefit from it.
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Now, the scheme introduced by the government is almost 10 times greater than both the schemes.
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The scope of benefit has also been increased.
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Because, both the schemes were restricted upto INR 15,000 salary.
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But the scheme that will be introduced now.
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In all the three schemes, the salary criteria has been increased from INR 15,000 to INR 1L per month.
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So firstly let's understand the details of Scheme A.
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Scheme A: First timers.
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This scheme will provide 1-month wage to all persons newly entering the workforce,
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in all formal sectors.
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So firstly let's understand, what are the benefits of Employment Linked Incentive Scheme A?
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It's primary benefit is one month's salary of INR 15,000 as a subsidy.
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The government will provide.
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Because, the government considers any company that gives a chance to a fresher,
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they have a learning curve and against that,
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the government would like to incentivise the company.
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By the way If there is a learning curve above that,
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then the government should incentivise the employer.
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Here the employee is receiving the incentive, which I didn't really understand.
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It is kind of a joining bonus.
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But the employee is incentivised.
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How does it benefit the employer? I don't understand.
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This subsidy of INR 15,000.
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This will be done in three installments to the employee.
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How will they be paid in three installments?
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As far as I know, maybe in the employee's EPFO account in part payments of INR 5,000 will be transferred.
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Over the period of 1 year or 2 years, or any other detail.
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we will understand about this scheme ahead.
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It is expected that almost 1 crore people will be covered in this scheme,
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And this scheme will run for 2 years.
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It means, the one who will register towards the end of 2 years. He will receive the benefit up to 3rd year.
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Hence the benefit period of this scheme is 3 years.
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Now, let's understand the scheme's eligibility criteria and conditions.
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The first scheme is for all sectors, whether it's an IT company or a manufacturing company.
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Whichever company that gives the opportunity to freshers.
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All those freshers will receive the benefit of the scheme.
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But only those people will receive benefit who are covered in the EPFO.
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Few of you might say that the EPFO's coverage limit, it is INR 15,000.
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But the voluntary coverage can be done on that.
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It is taken care of in this scheme.
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It is clearly stated that all those employees whose salary is up to INR 1L.
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They can receive the benefit of this scheme.
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That is If your basic salary or PF wage, If that is INR 1L.
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So you will be covered in this.
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The first installment of INR 15,000 will be directly given to the employee.
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But, for the second installment,
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To opt for that, the employee will have to complete a certain online financial literacy course.
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Maybe the employee will be informed through this portal itself.
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And it might be checked whether they have completed the video rate.
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And there could have a test in the end, whether they have completed the test or not.
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I believe it is a welcome initiative.
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Now there is a risky condition, about the subsidy received in this.
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It will need to be refunded If the employment ends within 12 months.
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If it ends within 1 year.
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And who will refund, the refund will be done by the employer.
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That means, the benefit will be provided to the employee.
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and who has to provide the refund If the employee leaves? The employer.
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So what is my opinion about this scheme.
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I think that this scheme will provide an additional liquidity of INR 15,000 to the employee.
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But will the additional liquidity be provided for real?
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But as far as I know, this benefit will be deposited in the employee's PF account,
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which will stay in the PF account.
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And If they leave the job after 1 year,
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even then he can withdraw the amount.
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Hence, liquidity will be given, but after sometime.
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We will get to understand the details once this scheme is implemented.
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Apart from this, 100% risk of the employers.
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Assume the work is not upto the mark after 6 months.
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Either the employer terminates the employee or the employee willfully resigns.
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And it happens a lot in the case of freshers, that worked for 5-6 months and then left the job.
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The benefit received in this case will have to paid by the employer entirely.
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In a way, this cost is additional expense on the employer to remove the employee.
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It could be possible that certain employers might write in their contract or bond,
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that If you leave before 12 months, then you will have to pay INR 15,000 to us.
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Let's see If that happens or not.
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But If you want to watch a detailed video on Employment Bond.
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The validity of Employment Bond and to what extent are it's terms and conditions valid as per the Indian Law?
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Then you can click on the 'i' button and watch our video.
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Let's head to Scheme 'B'.
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Scheme B: Job creation in manufacturing.
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This scheme will incentivise additional employment in the manufacturing sector.
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The scheme is expected to benefit INR 30L youth.
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The benefit received from this scheme will be for up to 4 years.
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And will be granted to both employers and employees.
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Partly to employee, partly to employer.
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50% will be provided to the employee, 50% will be provided to the employer.
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How much benefit will be provided?
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24% will be provided in the first year.
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24% of salary or wage.
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In this case, there is 1L. I will mention that ahead.
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But the benefit will be provided on 24% of INR 25,000.
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That means, how much benefit will be provided.
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If we derive 24% of INR 25,000,
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it comes to INR 6,000.
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That means, benefit of INR 3,000 will be given to the employee
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and INR 3,000 benefit will be given to the employer.
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In year 1 and 2, and in 3rd and 4th year.
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Benefit of INR 4,000 and INR 2,000 will be received.
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Pay attention that this subsidy is in addition to Scheme A.
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That means, If INR 15,000 benefit is received through Scheme A.
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Apart from that, this benefit will be given to the employees.
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And this scheme will be done for up to 2 years.
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That means, at the end of 2 years, If an employee enrols in this.
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then after the passing of 365 + 365 days.
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If an employee enrols on the last day, then he will receive benefits towards the end of 6th year.
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Hence the benefit year has been given up to 6 years.
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You know it's condition is a little tricky.
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It's condition is that If there is a manufacturing unit,
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hires substantial first time employees.
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Hires first time employees in huge numbers.
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They will receive this benefit.
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It means there is no benefit in IT sector, no benefit in trading.
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If you have a shop, then there is no benefit.
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You will only get benefit in the manufacturing sector.
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That means you will receive benefits in factories etc.
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It could be possible that the factory is new.
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If it's newly opened, then they can directly receive benefits for all employees.
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But If there is a factory, which is operational since years.
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What will happen in that case?
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Then a condition is given for that too.
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If that factory or manufacturing unit is a corporate entity.
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A corporate entity means If it's a Private Limited or LLP (Limited Liability Partnership).
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In that case, there is no criteria, they can simply gain the benefit.
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But, If they are a non corporate entity.
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It could be a partnership or a proprietorship.
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So in that particular case, the company must have EPFO registration of a minimum of 3 years,
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to be eligible for this scheme.
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How many new employees should you hire to avail this scheme.
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Employer must hire atleast the following number of previously non EPFO enrolled workers.
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Since we are talking about freshers,
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then freshers are not enrolled in EPFO.
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Hence, it's written non-EPFO enrolled workers.
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How many workers should you hire?
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Either you hire 50 workers or 25% of baseline.
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What is the meaning of baseline?
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Your average worker of the previous year, the EPFO retrieves that.
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Assume, on average, on certain months; there were 22, and on certain months there were 18.
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On an average, you had around 20 workers.
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Then your baseline will be fixed as 20.
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More than 20, If you hire 25% additional workers.
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That means If you hire more than 5 workers,
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your company will be eligible for this benefit.
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It's a simple condition, either you hire 50 employees...
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or hire 25% additional employees than your baseline.
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Whichever is the minimum amongst the two, that will be your eligibility criteria.
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or will become the eligibility criteria for your establishment.
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As per my assumption, If a new company is started during 2 years of this scheme.
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If a new company is opened, then all the workers will receive this benefit.
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Because their baseline is 0.
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That means all the workers will get benefit.
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Especially those workers who were not enrolled in EPFO.
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There are certain additional conditions.
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This 25% or 50 employees criteria.
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This is what the employer needs to maintain.
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Assume, the workers reduce from 50 to 48 or from 25% to 20%.
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You will stop receiving benefit.
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Whether it will restart or not, I can't say that.
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Because, the previous schemes that were introduced, If you go below a certain criteria for once.
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then in most cases, the benefit won't start again.
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Your benefit will lapse in the future.
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If it is reduced below a threshold in any month, then you will stop receiving the benefit.
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And you might not receive it in the future.
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The employee must directly work in an establishment.
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If you are hiring an employee through a contractor, even then it's not acceptable.
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And the wage limit that is given on up to INR 1L salary.
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All the employees that are been hired will receive this benefit.
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But you will receive this benefit upto INR 25,000.
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Assume, employee's salary is INR 50,000 on which he is deducting his PF.
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Even then he won't receive the benefit on his entire INR 50,000.
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It won't happen that 24% of INR 50,000 will be given by the government.
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No! Only 24% of INR 25,000 will be provided by the government.
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The maximum benefit that will be granted in any month against one employee...
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will be of INR 6,000.
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Hence, the last criterion that is added, which was added in Scheme A.
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If the employee leaves within 12 months,
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then the entire money will be refunded by the employer.
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Now the big question, which is still a question,
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I will ask you. Maybe you have an idea.
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A word is written here on top 'Incentive'.
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Now, this word 'Incentive'.
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Incentive is received when you are giving an additional amount above the salary.
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Does this 24%....
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When an employee works for the first time,
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then 12% PF is deducted and 12% is deposited by the employer.
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In total, it becomes 24%.
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As this 24% is given by the government,
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then 24% amount which wasn't deducted from the employee from his CTC.
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Will the entire amount be given by the employer in hand?
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Or else the benefit is only such,
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that the amount is incurred by the government instead of the employer.
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It remains to be seen.
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Because the previous COVID scheme of ABRY, in that,
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The amount that is given by the government must not be deducted from the employee.
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and the additional amount needs to be provided to the employee.
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That means, employee's in hand salary increased.
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In this case, 24% in hand salary will increase.
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or only the employer will benefit.
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And all this money will be deposited to PF by the government.
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It remains to be seen.
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Let's head to the last scheme, which is previously covered as well as fresh, both for the employees.
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Scheme C: Support to Employers.
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This Employer focused scheme will cover all additional employment,
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within a salary of INR 1L per month.
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The government will reimburse upto INR 3,000 per month,
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for 2 years towards the EPFO contribution, for each additional employee.
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Under this scheme, If an employer hires new employees,
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then the employer's share of INR 3,000.
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Upto INR 3,000 will be provided by the government.
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As you know, in EPFO, 12% is the employee's contribution
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and employer also has 12% contribution.
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This contribution of 12% which the employer used to do.
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Instead of the employer, he will receive the subsidy directly.
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And the amount will reduced in the challan. Since it's coming from directly from the government.
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Upto when will you receive the benefit? Up to 2 years.
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For that newly hired employee.
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But another condition has been added for bigger employers.
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If a company hires more than 1,000 new employees.
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In that case, the benefit will be granted for 4 years instead of 2.
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And based on which rate?
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Based on the rate mentioned in B.
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That means, in the first 2 years, 12% of salary.
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You will get upto INR 3,000.
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And in the 3rd and 4th year, you will get 8% to 4%.
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Upto INR 2,000 - INR 1,000 per employee per month.
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Now it's applicability criteria is a little relaxed.
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It is similar to the eligibility criteria in PMRPY.
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If it's a small company, i.e. If there are 50 or lesser employees.
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Then as per their baseline. It means compared to employees in the previous year,
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If they hire 2 more employees, then they will be eligible for this scheme.
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And If it's a big company, i.e. If there are more than 50 employees.
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On their baseline, If they hire 5 more employees,
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then they will be eligible.
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The most important thing is all those employees will receive benefits,
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whose PF wage is upto INR 1L.
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It means If you want you can enrol in PF of INR 1L.
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If you enrol, then your employer's share of INR 3,000, will be provided by the government.
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Your basic salary could be INR 1L.
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It's employer share of 12% becomes INR 12,000.
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In this case, the government gives INR 3,000.
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And the remaining INR 9,000 will have to be deposited by your employer.
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But you will be eligible in the scheme.
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The government has made it clear that it's not necessary for a new entrant in this scheme.
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But it could be possible that he previously had a number in EPFO.
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A UAN (Universal Account Number) number might be generated and he might have worked somewhere else.
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If they hire such an employee,
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even then they can get the benefit.
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It could be possible that he used to work previously in this company.
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He might have left and joined the company again.
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He must receive this benefit.
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The joining criteria of this scheme will be of 2 years.
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And the benefit period will be for 6 years.
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For companies generating more than 1000+ employment up to 6 years.
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And If they have generated less than 1000 employment, then up to 4 years.
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Now, let's talk about some problems here.
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Firstly, what problems can the employee face?
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Based on our experience with PMRPY and ABRY.
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On both cases, until we received the benefit.
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until then most of the employees who received the benefit.
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Some restrictions are levied on their PF amount withdrawal.
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Once the scheme is over, you can withdraw the money.
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But during the scheme, you can't withdraw the money.
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Government does it to save themselves from rigging.
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Few people fill their relative's name in this scheme so that they get the benefit.
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By not giving the salary, the benefit that the government is providing, they use that.
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The government might have introduced schemes to stop these schemes.
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There is another disadvantage here.
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Few employees have been locked.
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And for the longest time, certain employees didn't know the reason.
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Now it's understood that it was locked because,
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certain employees were employed somewhere else or their salary was more than INR 15,000.
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Now, it won't be unlocked until an inspector inspects it.
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And until he inspects and verifies it.
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Such employees can't claim for their refund.
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They can't take advance or do anything else.
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We have seen such cases in the past,
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whose EPFO's claim amount has been stuck for several years.
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Employer faces certain issues too.
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Firstly, under Scheme A, the entire risk is faced by the employer.
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Employee is receiving INR 15,000.
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But If he leaves before 12 months,
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then who will refund the INR 15,000? The employer will.
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Firstly, for the employer, the employee has left the job.
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Additionally, the employer has to pay INR 15,000. It's a double risk for him.
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The second problem is whoever ABRY's benefit, mostly inspection is conducted in the company.
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And a lot of detailing is asked in the inspection.
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It builds a fear in the employer.
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All these things are being asked after asking for the benefit.
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After this, Aadhar number of all the employees are being asked during the inspection.
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Aadhar number has already been uploaded on the PF portal.
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And there should be a facility that If someone needs...
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If an inspector or an authority needs, then they can download it.
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They should not harass the employer in any way.
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Due to all of these situations, there is a lot of fear in the industry.
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To opt for any of the government schemes.
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So I request all the establishments who are registering in this scheme.
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Please keep your compliance level super high.
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Properly maintain your employee records.
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And If you need any help...
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Then my parental company for the past several years,
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of more than 500 companies, has been managing their EPFO.
00:19:10
You can contact them on the following email id: pijain24@gmail.com
00:19:12
So guys, how did you like the video, tell us in the comments below.
00:19:14
What do you need the video on?
00:19:16
Do you want it on the Internship scheme or the government solar subsidy scheme?
00:19:20
Tell me in the comment below.
00:19:22
And If you are an HR or a payroll consultant, if you are watching our video.
00:19:26
We have 3 amazing courses for them,
00:19:28
which have helped 1000 HRs and payroll consultants.
00:19:32
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00:19:36
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