PM Rojgar Protsahan Yojana — Government Pays EPF for New Employees

Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) is a job creation incentive scheme launched by the Government of India in 2016. The core idea is simple: to encourage employers to hire more workers by reducing their hiring cost — specifically, the Employees' Provident Fund (EPF) contribution they must pay.

Under this scheme, the government bears the full 12% employer EPF contribution for every new, eligible employee for 3 years. This directly reduces the cost of hiring, making formal employment more attractive for businesses — especially MSMEs, startups, and small factories.

How Does PMRPY Work?#

Normally, when an employer hires someone, both the employer and employee contribute to the EPF:

• Employee pays: 12% of basic salary toward EPF
• Employer pays: 12% of basic salary toward EPF + EPS

Under PMRPY:

• Employee pays: 12% as usual (or 0% if enrolled under another sub-scheme)
• Government pays: The employer's full 12% contribution for 3 years
• Employer saves: Significant hiring cost, encouraging more formal employment

This effectively means a new employee costs the company significantly less, removing the biggest barrier to formal job creation.

Key Eligibility Conditions#

For the Employer:

• Must be registered with EPFO (having a valid EPFO establishment number)
• Must be registered on the PMRPY portal (linked to Aadhaar and EPFO)
• Must be GSTIN-registered (for most sectors)
• The employer's total employee base as of a reference date must be the benchmark; new hires beyond this count are eligible

For the Employee (New Hire):

• Must be a new entrant to EPFO — no prior PF/EPF history (new UAN)
• Monthly salary (basic + DA) must be ₹15,000 or less
• Must have a valid Aadhaar number linked to their UAN
• Must have a savings bank account seeded with Aadhaar

Benefits of PMRPY#

For Employers:

• Zero employer EPF cost for 3 years on new hires = significant savings
• Encourages converting informal/contract workers to permanent formal employees
• Especially beneficial for labor-intensive sectors like textiles, leather, food processing, construction

For Employees:

• Faster formalization — workers get PF, ESI, and other social security benefits
• Aadhaar-seeded UAN ensures portability of PF across jobs
• Better job security and access to organized sector benefits

For the Economy:

• Promotes formal job creation and reduces India's large informal labor sector
• Improves tax compliance and social security coverage

Sectors Covered#

PMRPY applies across all industries registered with EPFO, with special focus on:

• Textiles and garments
• Leather and footwear
• Food processing
• Electronics manufacturing
• Construction (through EPFO-registered contractors)
• MSMEs across all sectors

How to Register Under PMRPY (For Employers)#

Step 1: EPFO Registration

Ensure your establishment is registered with the Employees' Provident Fund Organisation (EPFO) and has a valid establishment ID.

Step 2: PMRPY Portal Registration

Visit the official PMRPY portal: pmrpy.gov.in

• Log in with your EPFO credentials
• Link your GSTIN and Aadhaar details
• Complete the employer profile

Step 3: Add New Employees

• When you hire a new eligible employee, register them on the EPFO portal
• Seed their Aadhaar with the new UAN
• Link their bank account for direct benefit transfer

Step 4: Monthly ECR Filing

• File your Electronic Challan cum Return (ECR) monthly as usual through EPFO
• The system automatically identifies eligible new employees
• Government's 12% contribution is credited directly to the employee's EPF account

Step 5: Claim Verification

• EPFO verifies the employee's eligibility (new UAN, salary under ₹15,000)
• Government subsidy is transferred to the employee's EPF account quarterly

Documents Required#

For Employers:

1. EPFO Establishment Registration Number
2. GSTIN (GST Registration Number)
3. Aadhaar of authorized signatory
4. Bank account details of establishment

For New Employees:

1. Aadhaar Card (mandatory)
2. Bank account linked to Aadhaar
3. Mobile number (for UAN activation)

Financial Impact — An Example#

Suppose a garment factory hires 50 new workers at a basic salary of ₹12,000/month each:

| | Without PMRPY | With PMRPY | |---|---|---| | Employer EPF per worker/month | ₹1,440 (12%) | ₹0 | | For 50 workers/month | ₹72,000 | ₹0 | | Annual saving | ₹8,64,000 | — | | Over 3 years | ₹25,92,000 saved | — |

This massive cost reduction makes a real difference for small and medium businesses operating on thin margins.

Current Status of PMRPY#

The scheme was operational from 2016–17 to 2019–20 as an active enrollment window. New registrations under the original PMRPY scheme have closed. However:

• Existing beneficiaries continue to receive benefits for their full 3-year period
• The scheme's framework has evolved into ABRY (Atmanirbhar Bharat Rojgar Yojana) launched during COVID-19 in 2020, which follows a similar model
• Employers should check the EPFO portal for the latest employment incentive programs

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Frequently Asked Questions#

1. Can a new startup register under PMRPY? Yes. Any EPFO-registered establishment, including startups, can register under PMRPY as long as they meet the eligibility criteria and hire new employees with no prior UAN.

2. What if an employee's salary exceeds ₹15,000 after a raise? The benefit applies based on the salary at the time of enrollment. If salary crosses ₹15,000 after joining, the employee may no longer qualify for new benefit cycles, but check with EPFO for specific rules.

3. Does the employee get their EPF benefits even if the government pays? Yes. The government's contribution goes directly into the employee's EPF account, just as if the employer had paid it. The employee's EPF corpus grows normally.

4. Is PMRPY still accepting new registrations? The original PMRPY enrollment window has closed. Employers should check ABRY (Atmanirbhar Bharat Rojgar Yojana) or contact their nearest EPFO office for current hiring subsidy schemes.

5. How is PMRPY different from ABRY? PMRPY targeted new employees with no prior UAN and was sector-agnostic. ABRY was launched during COVID-19 to incentivize re-hiring workers who lost jobs. Both follow the model of government paying EPF contributions, but with different eligibility windows and periods.