Introduction

The Union finance minister (FM) while presenting the budget of 2016-17 had announced that the Government of India will pay the employee pension scheme contribution of 8.33% for all new employees enrolling with Employees' Provident Fund Organisation (EPFO) for the first 3 (three) years of their employment. As regards contribution to employees’ provident fund, payment of employer contribution by the Government of India was restricted to the textile (apparel and made-ups) sector.

With an objective to provide much needed impetus to generation of employment across sectors, the FM announced additional measures on the social security benefits in his 2018-19 budget speech. The FM had proposed that the Government of India, through EPFO, will cover employer contribution of 12% (twelve percent) of employees’ wages (under both, Employees Provident Funds Scheme 1952 and Employee Pension Scheme 1995) for the new employees joining establishments across all sectors for the next 3 (three) years. In furtherance of said proposal, the Ministry of Labour and Employment, Government of India has amended the guidelines issued under the Pradhan Mantri Rojgar Protsahan Yojana Scheme (PMRPY Scheme) through an office memorandum dated 12 April 2018.  

Highlights of the amendment to PMRPY Scheme:

  • The guidelines of PMRPY Scheme have now been revised to the extent that the Government of India will pay the applicable employer’s contribution (under both, Employees Provident Funds Scheme 1952 and Employee Pension Scheme 1995) with effect from 1 April 2018 for a period of 3 (three) years to the new employees and to the existing beneficiaries (ie employees who are already covered under the PMRPY Scheme) for the tenure served until the expiry of 3 (three) years coverage period.
  • The terminal date for registration of beneficiary through the establishment is 31 March 2019.

Eligibility to avail benefits of PMRPY Scheme:

All establishments registered with the EPFO can apply for availing benefits under the PMRPY Scheme subject to the following conditions:

  • Establishments registered with the EPFO should also have a Labour Identification Number allotted to them;
  • The eligible employer must have added new employees ie employees earning INR 15000 or less per month, who were not working in any establishment registered with the EPFO in the past and did not have a Universal Account Number issued by EPFO to the employees prior to 1 April 2016. The new employee must have a Universal Account Number issued after 1 April 2016 and must not have worked in any EPFO registered establishment in the past;
  • For new establishment coming into existence/getting registered with EPFO after 1 April 2016, the employer can avail of PMRPY Scheme benefits for all new eligible employees;
  • New employees earning wages more than INR 15,000 per month will not be eligible;
  • The establishments will continue to avail the benefit of employer contribution paid by the Government of India for the eligible new employees for the next 3 (three) years, from the date of acquiring a new Universal Account Number or 9 August 2016, whichever is later. However, such new employees must continue to be employed in an establishment registered with EPFO. If such new employee joins another establishment, then such establishment may avail the benefits under the PMRPY Scheme by registering the employee in the PMRPY Portal for the balance period.

Comment:

Pursuant to the union budget announcement, the Central Government’s decision to pay employer’s contribution towards employees' provident fund under the PMRPY Scheme, across sectors, would benefit the employers by reducing their payroll costs concerning new employees and existing eligible employees. This decision also appears to have the objective of encouraging and generating employment across sectors. The new employees will benefit from the coverage under the PMRPY Scheme while being employed in the organised sector besides having access to more employment opportunities.