Scheme for Reimbursement of ESI &EPF Contribution by the Employer for Creating New Employment in MSMEs.


1.0 Introduction:

            The Mission of the Industries Department for the 13th Plan period is economic development through enterprise creation and consequent employment generation.  The Department is taking steps for developing entrepreneurial culture among educated youth so that they can become job creators than job seekers. Thus there is an increased focus on employment creation. The department is implementing ESS flagship scheme for providing fiscal support to enterprises. But this is limited to manufacturing units. A new scheme has been prepared for the nano and household sector in the form of interest subvention for three years. This scheme applies to both manufacturing and units engaged in job work but will not be applicable to cases where any other assistance from Government of India or Government of Kerala is availed.

 It is in this background that a new scheme is being proposed for reimbursing the ESI and EPF contribution of employers for new employment created on or after 1.4.2017 for a period of three years. Thus this scheme is an incentive for the employers for their efforts to bring the employees under ESI and EPF cover thus ensuring social security for the employees.

2.0 Objectives:

1.    The scheme aims at reimbursing the ESI and EPF contributions of the employer in respect of new employment created on or after 1.4.2017 from the levels of employment as on 31.03.2017 for a period of three years.

2.    The scheme helps to create a better employer-employee relationship;

3.0 Entitlement of a successful applicant:

1.    The entitlement under the scheme is the reimbursement of 75% of ESI & EPF contribution of employers made on behalf of new employees in excess of the levels of employment as on 31.03.2017 which shall be paid for three years, subject to a maximum of Rs. 10,000/- per person per year and Rs.1,00,000/- per unit per year.

2.    This is applicable only to Micro, Small and Medium category units both in manufacturing and service sector who have filed EM Part II/Udyog Aadhaar Registration and have provided employment to at least 5 persons excluding the promoters. There will be no upper limit for the number of employees getting the benefit.

3.    The legal entity can be a Micro, Small or Medium unit with any constitution.

4.    Units undertaking activities specified in the negative list, as given in the annexure VI, shall not be eligible for this benefit.

4. 0 Powers of and Service Offered by the Sanctioning Authority.

1.      The power to sanction assistance under the scheme shall be vested with General Manager, District Industries Centre. The assistance is by way of reimbursement of 75% of ESI and EPF contributions made by the employer for new employment on or after 1.4.2017, for a period of three years.

2.      The basic documents required for determining the assistance is ESI and EPF statements duly authenticated by competent authorities.

3.      The application for assistance duly submitted in the appended format along with all the supporting documents should be scrutinized by the Assistant District Industries Officer at the District Industries Centre and further vetted and recommended by the Manager (Credit). The ESI and EPF documents should be get verified with the ESI and EPF office concerned.

4.      The Industries Extension Officer concerned or Assistant District Industries Officer at Taluk Industries office shall render all possible assistance in forwarding the application to the General Manager, District Industries Centre in case the applications are submitted through the IEO or Assistant District Industries Officer at Taluk Industries office.

5.      Strict timelines should be adhered to while processing and recommending the applications. In any case the applications received should be processed and sanctioned within 30 working days, the defective applications should be returned for correction within two working days of receipt of application. The application not eligible for assistance shall be rejected citing valid reasons for rejection within 10 working days of accepting the application.

5.0 Obligations to the Applicant Units.

1.   The applicant shall provide all the required details in the given format along with all supporting documents.       

2.   The applicant shall certify that all the information given is true and in the event of false declaration, the benefit shall be refunded with interest @14% per annum.

3.   The applicant unit shall certify that the number of workers for whom the benefit was given will be maintained for a minimum period  of five years and that the unit would make the employers contribution in respect of these employees towards ESI and EPF during this period.

4.   The applicant unit shall provide any details/documents deemed necessary to process the application at any stage of processing the application.

6.0 General Provisions.

1.   The employees whose claims are preferred shall be working in the enterprise as on the date of application and should have completed a minimum of one year continuous service with the entity.

2.   Only those cases whose monthly salary is disbursed through Bank account transfer, DD or Cheque are eligible for assistance.

3.   The GM, DIC should satisfy himself about the fact that the salary as stated has been credited to the bank account of the employee and a certificate is obtained to that effect.

7.0 Fund

The funds for the scheme will be sourced from the head of Account -2851-00-102-41(P) in which Rs 110 lakhs has been ear marked for the year 2018-19.

8.0 Appeals

The Directorate of Industries & Commerce is competent to dispose the appeals, if any in the prescribed proforma within 30 days from the date of issue  of orders of General Manager , District Industries Centre  as the case  may be. No appeal after this period is entertained. The decision of appellate authority shall be final.

9.0 List of Documents to be submitted along with the application

(i)   Application along with the declaration duly signed by the applicant in Annexure I

(ii)   Copy of Photo Identity Proof of the Promoter/Promoters

(iii)  Copy of Photo Identity Proof of the employees claimed

(iv)  Copy of EM part II/Udyog Aadhaar Registration

(v) Self attested copy of partnership deed/Memorandum and Articles of Association/Bye-laws in case of units other than proprietory

(vi) Self attested copy of registration certificate from Registrar of Company/Firm/Society of units other than proprietory

(vii) Self Attested copy of resolution towards applying for this assistance in case of units other than proprietory

(viii) Recommendation of ESI/EPF Authorities in Annexure II

(ix) Certificate from financial institution stating the payment of salary of the employees claimed in Annexure III


10.0 List of Annexure

I  Format of Application

II  - Recommendation /Approved statement from ESIC/EPF Authorities as the case may be.

III – Format of Certificate from Financial Institution

IV – Format of Proceedings to sanction the Startup Subsidy

V   Format of the Agreement for Startup Subsidy

VI - Negative List

VII –Format for Appeal



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