Earnings-related allowance

Earnings-related allowance is paid for the period of unemployment or temporary lay-off and for the period of employment promotion measures agreed in the plan for employment. Earnings-related allowance can be paid when you meet the labour market policy criteria and the membership and employment conditions. In addition, you must meet all the conditions for claiming unemployment benefits:

  • you are aged between 17 and 64 (up to the end of that calendar month when you turn 68 years, if you have been laid off);
  • you live in Finland;
  • you have registered as an unemployed job seeker with the TE Office;
  • you seek full-time employment; and
  • you are fit for work and available for the labour market. A person who is unable to work may be entitled to earnings-related allowance in the case of a prolonged incapacity for work if the maximum sickness allowance period has elapsed and the other conditions are met.

Information on earnings-related allowance

Can I claim earnings-related allowance?
When can you not claim the daily allowance?
What is the amount of my daily allowance?
For how long can daily allowance be paid?
Recalculation of daily allowance
Waiting period
Suspension period (or, karenssi)
How do social benefits affect the daily allowance?
Temporary changes to unemployment security due to corona epidemic

Can I claim earnings-related allowance?

In order to claim earnings-related allowance, you must be a member of the unemployment fund for at least 26 weeks and fulfil the employment condition of an employee during the membership. We will review the fulfilment of the membership and employment conditions when processing your application for the earnings-related allowance.

In addition, you must also meet the labour market policy criteria. The fulfilment of labour market policy criteria is reviewed at the TE Office, which will issue a binding statement regarding the matter to the fund.

Labour market policy criteria

Register as an unemployed job seeker with the TE Office. You register as a job seeker by filling in an electronic registration form (available only in Finnish) at the latest on the first day of unemployment or temporary lay-off. You can also register before the start of unemployment or temporary lay-off. After registration, the TE Office will contact you to agree on further measures and a possible personal meeting.

Membership and employment conditions

The employment condition is fulfilled when you have been in paid employment for at least 26 calendar weeks during the 28 months immediately preceding unemployment. The employment need not be continuous; you can also accrue weeks that count towards the employment condition in shorter periods over the review period of 28 months.

At a weekly level, the employment condition is fulfilled when

  • there are at least 18 working hours during a calendar week;
  • the work is done in an employment relationship and is subject to insurance, i.e. withholding tax and unemployment and social insurance contributions have been paid for it; and
  • the pay is in accordance with the collective agreement. If there is no collective agreement in the sector, the pay for full-time work must be at least EUR 1,252 per month in 2021.

Employment condition review period

The employment condition review period of 28 months may be extended for an acceptable reason by a maximum of seven years. Acceptable reasons for an extension include:

  • illness;
  • time during which you have claimed partial sickness allowance or reduced pay during sickness;
  • institutional care;
  • rehabilitation;
  • compulsory military service;
  • non-military service;
  • full-time study;
  • job alternation leave;
  • birth of a child;
  • care of a child under 3 years of age;
  • informal care or family care, unless considered minor in nature;
  • partial disability pension or part-time pension, if employment has amounted to less than 18 hours per week;
  • imprisonment; or
  • period of claiming combined support which does not fulfil the employment condition.

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When can you not claim the daily allowance?

Entitlement to earnings-related allowance is affected by, for example, social benefits that prevent the payment of the daily allowance, labour policy restrictions and restrictions related to the employment relationship. These may prevent the payment of the daily allowance completely.

Some social benefits decrease the earnings-related allowance. These benefits are deducted from the daily allowance at a monthly level, in which case a month is calculated to include 21.5 days. Social benefits that decrease the allowance do not affect the lapsing of the maximum period, but each day paid out reduced counts as one day towards the maximum period.

Periods and benefits that prevent the claiming of daily allowance

Below, we have compiled a list of the most common periods or benefits that prevent the claiming of daily allowance. The list is not exhaustive.

  • You have been set a waiting period;
  • You have been set a suspension period during which you are not entitled to unemployment benefits at the TE Office if you have resigned or refused work or training;
  • You receive a salary for the notice period or equivalent compensation from your employer;
  • You receive another financial benefit related to the termination of the employment relationship (e.g. severance package) from your employer;
  • You receive holiday pay for the annual leave period for full-time employment;
  • You claim old-age pension or early old-age pension;
  • You claim maternal, special maternal, paternal or parental allowance or special care allowance;
  • You claim sickness or partial sickness allowance;
  • You claim rehabilitation allowance or indemnity for loss or earnings under the rehabilitation provisions of accident insurance, motor insurance or the Military Injuries Act;
  • You claim full disability pension or rehabilitation allowance; or
  • You claim early retirement aid (farmers and agricultural workers).

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What is the amount of my daily allowance?

An earnings-related allowance is calculated from your earned income of at least 26 calendar weeks preceding unemployment. The weeks used to determine the daily allowance must fulfil the employment condition.

Income taken into account in the determination includes

• monthly or hourly pay;
• holiday pay for the annual leave period, pay during sickness and salary for the notice period;
• wage supplements, such as overtime compensation, evening work bonus, shift work bonus, contract bonus, midweek holiday compensation;
• performance-based pay, such as various incentives and bonuses;
• taxable fringe benefits; and
• pay received under pay security.

The determination does not take into account

• holiday bonus and holiday compensation;
• tax-free fringe benefit;
• financial benefit paid by the employer that is associated with the termination of employment relationship, or a so-called golden handshake;
• compensation equivalent to the salary for the notice period and indemnity;
• savings in a working hours bank or monetary compensation withdrawn from a working hours bank;
• pay for suspension periods; or
• income from options and dividends.

The daily pay used to determine the daily allowance is obtained by dividing the wages of the 26 employment weeks by the number of working days included in this period (5 days per week, i.e. 130 days). Days for which no wages have been paid due to an acceptable absence, such as unpaid sick leave, are not counted as working days.

If you have been in seasonal employment, your earnings-related allowance can be determined based on the earnings of the 12 months preceding unemployment. This requires that the amount of work done and thus the earnings have been considerably higher than usual.

A deduction equivalent to the employment pension, unemployment insurance and health insurance daily allowance contributions (TyEL deduction) is made from your monthly pay used to determine the daily allowance. This is 4.34% in 2021.

What does the amount of daily allowance consist of?

Daily allowance consists of the basic component and earnings-related component.

  • The basic component equals the basic unemployment allowance, which is EUR 33.66 per day in 2021.
  • The earnings-related component is 45% of the difference between daily pay and the basic component. If the pay is more than EUR 3,209.10 per month, the earnings-related component is 20% for the exceeding amount.

A child increase is also paid, amounting to

  • EUR 5.30 for one child under the age of 18 in your care;
  • EUR 7.78 in total for two children; and
  • EUR 10.03 in total for three or more children per day.

The child increase is paid for a maximum of three children.

You can use the daily allowance calculator to calculate an estimate of your incoming daily allowance. The exact amount of daily allowance will be defined in the decision issued by the unemployment fund.

When is increased allowance paid?

If you participate in an employment promotion measure, increased earnings-related allowance can be paid for a maximum of 200 days. Claiming an increased earnings-related component requires that the measure has been agreed upon in the plan for employment with the TE Office.

The increased earnings-related component amounts to 55% of the difference between the daily wage and the basic component. If the pay exceeds EUR 3,209.10 per month, the increased earnings-related component is 25% for the exceeding amount.

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For how long can daily allowance be paid?

You can claim daily allowance from the unemployment fund five days a week for 300–500 unemployment days.

The maximum period depends on your employment history and age:

 Employment history  Maximum period
 3 years or less  300 days
 Over 3 years  400 days
 Minimum of 5 years in employment during the previous 20 years and your employment condition is fulfilled after you have reached the age of 58  500 days

Fulfilling the employment condition again

If you fulfil the employment condition of 26 calendar weeks again, the maximum period starts from the beginning.

Earnings-related allowance is recalculated when the employment condition is fulfilled if more than one year has elapsed since the commencement of the previous maximum period. The commencement of the maximum period refers to the first daily allowance day paid out.

Earnings-related allowance will not be recalculated when the employment condition is fulfilled if the new maximum period begins within one year of the commencement of the previous maximum period and the allowance was calculated at that time.

If you fulfil the employment condition again during independent studies or labour market training, daily allowance will not be recalculated during the service.

When the maximum period is reached

Once the maximum payment period has elapsed, you can apply for a labour market subsidy from Kela. You will receive a written decision regarding the end of your entitlement to the earnings-related allowance with the last payment notice. Submit the decision to Kela or the TE Office.

Earnings-related allowance can also be paid after the maximum period if you are entitled to additional days.

Right to additional days

You may be entitled to additional days of earnings-related allowance if you were born

  • in 1955–1956 and have reached the age of 60 before the maximum period has elapsed; or
  • in 1957-1960  and have reached the age of 61 before the maximum period has elapsed
  • in 1961 or later and have reached the age of 62 before the maximum period has elapsed

In addition, you must have been employed for at least five years during the last 20 years. The right to additional days means that the earnings-related allowance can be paid out notwithstanding the maximum period up to the end of the calendar month during which you reach the age of 65.

You do not have to apply for additional days separately; we will review it automatically based on your application for earnings-related allowance.

After your entitlement to daily allowance has ended, you can apply for old-age pension. Those born before 1958 can, if desired, choose to retire on an old-age pension already at the age of 62 without an abatement of early retirement. In such cases, the member needs a certificate of additional days paid for the pension company. The certificate of additional days is requested from the unemployment fund when applying for daily allowance for the month preceding retirement. It is not possible to issue the certificate at an earlier date because the pension company needs the information concerning the additional days of the month preceding retirement. Those born in 1958 or later can retire on an old-age pension at the age of 63.

Note that the Finnish Government has decided in December 2020 that the right to additional days will be terminated in future. This will not affect those, who already have the right to additional days and the legislation will come to effect staggered. Read more here.

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Recalculation of daily allowance

When you have been in employment that fulfils the employment condition again for 26 calendar weeks during the review period of 28 months, and more than one year has elapsed since the commencement of the previous maximum period, the level of daily allowance is recalculated.

Your earnings-related allowance will not be recalculated when the employment condition is fulfilled again if the new maximum period would begin within one year of the commencement of the previous maximum period and the allowance was determined at that time. Even if daily allowance is not determined again (and no waiting period set), the maximum period starts from the beginning each time the employment condition is met.

At a weekly level, your employment condition is fulfilled when

  • there are at least 18 working hours during a calendar week; and
  • the pay is in accordance with the collective agreement. If there is no collective agreement in the sector, the pay for full-time work must be at least EUR 1,252 per month in 2021.

If you fulfil the employment condition during independent studies or labour market training, daily allowance will not be recalculated during the service.

Example, daily allowance is not recalculated

You will fulfil the employment condition again on 16 February 2018. The last time your daily allowance was calculated and a waiting period set was in February 2017, and the first paid day was and the maximum period started on 18 February 2017.

The first paid day of the new maximum period without a waiting period would be 17 February 2018, within one year of the commencement of the previous maximum period on 18 February 2017. Daily allowance will not be determined again and no waiting period will be set. The payment of daily allowance will be continued from 17 February 2018 with the allowance calculated in February 2017. The maximum period starts from the beginning.

 

Example, daily allowance is recalculated

You fulfil the employment condition again on 8 December 2019. The last time the daily allowance was calculated and a waiting period set was on 15–19 December 2018, but not a single day of daily allowance was paid out.

The first unemployment day is 9 December 2019. However, the payment of daily allowance did not commence in 2018, so the maximum period starting dates cannot be compared. A waiting period is reset from 9 December 2019, and the amount of daily allowance is recalculated. The maximum period starts from the beginning.

When you are a recipient of daily allowance, the unemployment fund counts the accrued weeks in employment. Therefore, you yourself do not need to monitor when you fulfil the employment condition again.

Protection rules for calculating a new daily allowance

When you fulfil the employment condition again during the maximum period, your level of daily allowance is at least 80% of the previous allowance. There is no 80% protection if the new employment condition is fulfilled only after the maximum payment period.

If you have reached the age of 58 and fulfil the employment condition, the amount of daily allowance will not change unless the pay calculated based on the new income information is higher than the previously calculated pay on which the daily allowance is based.

If you are aged 57–59 and have fulfilled the employment condition doing work arranged on the basis of an employment obligation, the amount of daily allowance will not change unless the pay calculated based on the new income information is higher than the previously calculated pay on which the daily allowance is based.

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Waiting period

The waiting period (also known as personal liability period) is five days of unemployment on which you have been registered as an unemployed jobseeker with the TE Office. If you have working hours from part-time or casual work during the application period, the waiting period is a number of hours equivalent to five days.

Days from Monday to Friday are accepted as waiting days, and a calendar week may include a maximum of five waiting, unemployment and working days. The days making up the waiting period must accrue during eight successive calendar weeks. Time during which you are not entitled to daily allowance (e.g. during deferral of a financial benefit) cannot be counted towards the waiting period.

Midweek holidays can be counted towards the waiting period if you have registered with the TE Office before the midweek holiday and the employer is not obliged to pay midweek holiday compensation in a temporary lay-off situation.

In practice, there is no waiting period during employment promotion measures. The waiting period accrues simultaneously with daily allowance being paid out for the measure period.

If you are in part-time or casual employment, the waiting period is fulfilled once an unemployment period equivalent to five days of unemployment (in hours) has accrued.

Resetting of waiting period

A waiting period is set when you fulfil the employment condition and the maximum payment period starts from the beginning. However, a waiting period will not be set if you fulfil the employment condition and the new maximum period starts within one year of the commencement of the previous maximum period.

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Suspension period (“karenssi”)

If you have resigned without a valid reason or caused the termination of your employment, the TE Office will set a suspension period during which you are not entitled to unemployment benefits.

The TE Office will issue a binding statement regarding the suspension period to the unemployment fund, and you will not be entitled to daily allowance for the suspension period. An exception are employment promotion measures agreed upon with the TE Office during which daily allowance is paid out simultaneously with the suspension period.

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How do social benefits affect the daily allowance?

Benefits that prevent the claiming of daily allowance

Some social benefits prevent the payment of earnings-related allowance completely. Such benefits include:

  • Old-age pension  or early old-age pension;
  • Maternal, special maternal, paternal and parental allowance or special care allowance;
  • Sickness or partial sickness allowance;
  • Rehabilitation allowance or indemnity for loss or earnings under the rehabilitation provisions of accident insurance, motor insurance or the Military Injuries Act;
  • Full disability pension or rehabilitation allowance; and
  • Early retirement aid (farmers or agricultural workers).

Benefits that reduce the amount of the daily allowance

Listed below are some benefits that reduce the amount of earnings-related allowance. The list is not exhaustive.

  • Part-time pension (deducted from the member’s daily allowance at a monthly level);
  • Partial disability pension under employment pensions acts (deducted from the member’s daily allowance at a monthly level);
  • Child home care allowance (care allowance/care supplement). Child home care allowance is a family-specific benefit. The child home care allowance claimed by a partner is taken into account if the partner has earned income or does not care for the children personally. The child home care allowance claimed by a member is deducted from the daily allowance claimed by the member. Municipality-specific supplements are not deducted;
  • Daily allowance and industrial injury pension under the Employment Accidents Insurance Act;
  • Daily allowance under the Military Injuries Act;
  • Benefits under the Motor Third Party Insurance Act, except for the compensation of special costs and survivors’ pensions;
  • Farmers’ early retirement aid;
  • Old-age pension if you are under 65 years of age and your pension is not based on full years of employment. (Only applies to pensions granted before 2005. If you have been granted old-age pension after the pension amendments in 2005, you automatically cannot claim unemployment benefits, even if your pension is not based on full years of employment);
  • Pensions granted under Section 8(1) of the State Pensions Act, which are payable for occupations with a compulsory retirement age lower than the general retirement age;
  • Supplementary pension provided by the employer, exceeding the minimum requirements under the Employees Pensions Act;
  • Disability benefits received from another state;
  • Indemnity for loss of earnings under the Act on Compensation for Crime Damage; and
  • Compensation for loss of earnings (pension) under the Patient Injuries Act.

Benefits that do not affect the daily allowance

The following benefits do not affect the amount of earnings-related allowance:

  • Child benefit;
  • Informal care support or family care support paid by the municipality (If you are an informal or family carer, you do not have an activity requirement. Report the support you have received to the unemployment fund);
  • Housing allowance;
  • Survivors’ pensions, also including assistance and supplementary assistance pensions;
  • Conscript’s allowance;
  • Social assistance under the Social Welfare Act;
  • Disability allowance;
  • Care allowance under the National Pensions Act;
  • Disability indemnity under the Employment Accidents Insurance Act, the component corresponding to the base interest of life annuity;
  • Life annuity and additional life annuity under the Military Injuries Act;
  • Extra war pensions;
  • War veterans’ pension;
  • Compensation of special costs under the Motor Third Party Insurance Act, Employment Accidents Insurance Act and Military Injuries Act;
  • Maternity allowance;
  • Adoption grant; and
  • Partial early old-age pension.

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Temporary changes to unemployment security due to corona epidemic

Check the table below, which includes all temporary changes to unemployment security and their expiration dates.

Change    In effect / concerns
Earnings-related allowance will be paid even for the five days self-liability period starting from the first day of unemployment or temporary lay-off.

Concerns the applications where self-liability period would have been set on 16 of March to 31 of December 2020.

For example, if the first self-liability day is 31 December 2020, the self-liability period may also expire in 2021 and the earnings-related allowance will be paid for the self-liability dates. self-liability period does not have to be completed within 8 weeks.

Earnings-related allowance can be granted already after three months work (13 calendar weeks). One has to be a member of an unemployment fund during that time. * Concerns the applicants, who would not otherwise fulfill the employment condition; have worked for at least one calendar week that accrues employment condition after 1 of March 2020, and; would be granted the earnings-related allowance on 31 of December 2020 at the latest. **
Maximum number of earnings-related allowance days (300-500 days) will not be counted during temporary lay-off. Concerns lay-offs that have started on 16 of March 2020 or after. The lay-off days will not be counted between 16 of March and 30 of June 2020.
Maximum number of earnings-related allowance days (300-500 days) will not be counted (in any circumstances). Maximum number of days will not be counted during 1 of July until 31 of December 2020.
Standard entitlement will temporarily be set to 500 euros per month. Concerns application periods that have started between 1 of June and 31 of December 2020.
(Update 5.1.2021: the parliament has accepted that the validity will continue until 31.3.2021.)
Mobility allowance can be applied for after two hours return commute, if you have started a full-time job. Concerns employment relationships that have started during 12 of June and 31 of December 2020.
(Update 5.1.2021: the parliament has accepted that the validity will continue until 31.3.2021.)
An entrepreneur can apply for labour market subsidy when income from business has decreased due to coronavirus. Labour market subsidy can be applied for from 16 of March until 31 of December 2020.
(Update 20.11.2020: the government has proposed that the validity will be extended until 31.3.2021.)
Entrepreneurship or studies will not be investigated in the TE Office, if you are temporarily laid-off. In effect from 16 of March to 31 of December 2020.
(Update 20.11.2020: The government has proposed that the studies of the laid-off should not be examined until 31.12.2021.)
Interviews of job seekers will partly be stopped in the TE Office. In effect from 16 of March to 31 of December 2020.
Right to unemployment security will exceptionally remain in the following cases:

  • – job seeker has not answered to questions related to the evaluation of need of service or drawn up a draft for employment plan in the TE Office’s online service
  • – job seeker has not fulfilled the employment plan of the TE Office
  • – job seeker has dropped out from a service that promotes employment due to coronavirus
  • – short-time studies have prolonged to over 6 months due to coronavirus
In effect from 16 of March to 31 of December 2020.
Until the end of the year, TE Office can make exemptions on how the independent studies of a job seeker have progressed and give extra time, if the studies have been delayed due to coronavirus. In effect from 1 of August to 31 of December 2020.

* For family members of an entrepreneur, the employment condition has been halved to 26 weeks.

** If the applicant still has unpaid basic unemployment allowance days left from Kela, the 13 weeks employment condition can be applied, when a working week has been counted in the employment condition after 1 of July 2020. This is because those applying for basic unemployment allowance were now included in the later change of legislation.

Source for table: tyj.fi

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