Refund provision likely to be removed under ELI schemes

The government could remove onerous provision such as refund of subsidy proposed on employers if the beneficiary employee quits the job within one year of joining. Instead, it may simply discontinue the incentive to employer, officials said.

“The idea is to come up with a scheme structure that can be easily implemented and outcome oriented for which the sense of ownership is needed both by the employers and the employees,” said a senior government official, who did not wish to be identified. Besides, the government may introduce certain conditions to the continuation clause in the benefits if the employees move from one eligible organisation to another.

The labour and employment ministry is holding stakeholder consultations before it firms up the three employment-linked incentive schemes, announced in the budget, to be implemented by the Employees’ Provident Fund Organisation (EPFO).

Under Scheme A, the government will reimburse one month’s wages, up to ₹15,000 in three instalments, as a subsidy to people entering the workforce for the first time. Scheme B, which focuses on bulk hiring of first-timers in the manufacturing sector, will entail the government reimbursing 24%, 24%, 16% and 8% of the wages, to be equally shared between the employees and the employers, provided the employers hire 50 or 25% of the baseline of their employee strength under the EPFO and retain them for at least 12 months.Under Scheme C, the government will reimburse the employers’ share of the EPFO, up to ₹3,000 per month for two years. It will be applicable to establishments that hire additional two employees if their headcount is less than 50, and five employees if the headcount is more than 50 employees. Currently, Scheme A and Scheme B have a refund clause applicable to employers. Industry has suggested that the provision be removed, arguing that the exit of any employee is not in the control of employers. It has been batting for simpler compliance under these schemes. “We want to ensure that the framework is simple and easy to comply with so that employers do not feel hassled to onboard the scheme,” the official said.

The three schemes are part of the PM’s package of five schemes and initiatives to facilitate employment, skilling and other opportunities for 41 million youths over a five-year period with a central outlay of ₹2 lakh crore.