Nov 19, 2020Stimulus 3.0: Government Announces Provident Fund Contributions For New Eligible Employees
The Union Finance Minister Nirmala Sitharaman has announced, on November 12, 2020, another set of stimulus measures under the Atmanirbhar Bharat Rozgar Yojana to encourage economic growth which has been hit by the COVID-19 pandemic. The measures include a new scheme (Scheme) that propose to benefit all establishments registered with the Employees’ Provident Fund Organisation (EPFO) and which employ new employees or give employment to those who lost their jobs between March 1, 2020 and September 30, 2020.
Set out below are the key points under the Scheme:
• Beneficiaries under the Scheme:
1. New employees joining EPFO registered establishments on a monthly wage of less than INR 15,000;
2. EPF members drawing a monthly wage of less than INR 15,000, who made an exit from employment during the COVID-19 pandemic between March 1, 2020 to September 30, 2020 and are employed on or after October 1, 2020.
• Eligibility criteria for establishments to avail of benefits under the Scheme:
1. Establishments that are already registered with the EPFO, adding new employees compared to the reference base of employees that it had in September, 2020 will be covered under the Scheme if they add:
(a) a minimum of 2 new employees, if the reference base is 50 employees or less;
(b) a minimum of 5 new employees, if the reference base is more than 50 employees.
2. Establishments registering with EPFO after commencement of the Scheme to get subsidy for all new employees on a monthly wage of less than INR 15,000.
• Details of the subsidy support from the Central Government:
1. The Scheme will be effective from October 1, 2020 and will be operational till June 30, 2021;
2. As per the Scheme, for establishments with an employee strength of up to 1,000, for two years the Central Government will contribute the employer’s and employee’s share of provident fund contributions at the rate of 12% of the wages, totalling 24% of wages. For establishments employing more than 1,000 employees, for two years the Central Government will provide only the employee's provident fund contribution at the rate of 12% of the wages. Further, the above mentioned subsidy will be directly credited into the Aadhaar-seeded EPF account (UAN) of the employee.