Unemployment security glossary

Additional days

Earnings-related allowance can be paid after the maximum period has been met as “additional days” up to the end of the calendar month when you reach the age of 65 years.

A new change security scheme has been introduced from the beginning of 2023 for those who were born in 1965 or after. Change security will replace the right to additional days gradually by the year 2030.

You may be entitled to additional days if:

you were born between 1957-1960 and turned 61 before the maximum allowance period was reached

you were born between 1961-1962 and turned 62 before the maximum allowance period was reached

you were born in 1963 and turned 63 before the maximum period was reached

you were born in 1964 and turned 64 before the maximum period was reached

The age requirement is met also if you turn 61-64 on the same day that the maximum payment period ends.

A further requirement is that you have worked at least 5 years in the last 20 years.

The unemployment fund checks your entitlement to additional days when the maximum allowance period is reached.

The government has decided to remove the right to additional days in the future. This will apply for applicants, who were born 1965 or later.

Adjusted application

An application for a period during which the applicant has been in part-time work or has been paid wages from part-time work is processed as an adjusted application. The same also applies to situations with income from part-time business activity.

Adjustment

Wage income and income from part-time business activity are adjusted with daily allowances. As a rule, adjustment is done on a payment basis. This means that the daily allowance is affected by the wages and the working hours on which the wages are based and the pay date of which falls within the period being applied for.

Earnings-based adjustment is used in exceptional cases and means that the daily allowance for the period is affected by the hours worked in the application period and the wages received for them regardless of when the wages are paid.

Application period

The application period for unemployment allowance is as a rule a period of four calendar weeks (Monday - Sunday). If necessary, daily allowances can also be applied for in calendar month periods.

Casual work

Full-time work lasting no more than two weeks is considered casual work. You are entitled to adjusted daily allowances for a period of casual work in the same way as part-time work.

Certificate of additional days

If you have gone on to additional days of unemployment allowance, you are entitled to retire at the age of 62 years with no reduction for early retirement. If you want to apply for a pension, you must send the pension provider a certificate of the additional days. The fund can only issue the certificate when daily allowances have been paid for at least one day of the month preceding the start of the pension.

Earnings-related allowance

Benefits within the meaning of the Unemployment Security Act include labour market subsidy and unemployment allowance. When unemployment allowance is paid by an unemployment fund, it is called earnings-related allowance. Unemployment allowance paid by Kela is called basic unemployment allowance.

Earnings-related allowance consists of a basic component and an earnings-related component. The basic component is the same as basic unemployment allowance. The earnings-related component is 45% of the difference between the daily wage and the basic component. If the wage goes over a pivot point, the earnings-related component of the excess part is 20% of the difference between the daily wage and the basic component (see also “Pivot point”).

Employment-promoting service

The TE Office may direct you to an employment-promoting service designed to improve your employment opportunities. Employment-promoting services include  job search coaching, career coaching, labour market training and independent training. You can get an increased earnings-related component for the period of the services up to a maximum of 200 days. You are paid an expense allowance for days of participation (except for independent training).

Expense allowance

If you participate in employment-promoting services, you are entitled to a tax-free expense allowance. The expense allowance is paid for periods of services other than independent study. The expense allowance is paid for days of participation. The expense allowance is nine euros per day of participation.

Full-time work

In unemployment security, work where the working hours are more than 80% of full-time working hours is considered full-time. The working hours of a full-time employee are laid down in the collective agreement that you are covered by. If there is no collective agreement in your sector, full-time working hours are 40 hours a week, in accordance with the Working Hours Act.

Holiday compensation

Holiday compensation means monetary compensation paid by an employer for annual holiday not taken. Typically it is holiday days not taken at the end of an employment relationship that are paid as holiday compensation. Casual workers may be paid holiday compensation with every wage payment.

Holiday bonus

Holiday bonus is an additional payment made to employees in conjunction with holiday and is 50% of holiday pay.

Holiday pay

Holiday pay means wages paid for the period of annual holiday.

Increased earnings-related component

If you participate in an employment-promoting service forming part of your employment plan, an increased earnings-related component may be paid to you for the first 200 days. The increased earnings-related component is 55% of the difference between the basic component and your daily wage. Beyond the pivot point, 25% of the difference between the wage and the basic component is counted towards the earnings-related component. (see also “Earnings-related allowance” and “Pivot point”)

Independent study

Independent study means study supported by unemployment benefits and leading to a qualification that is not labour market training. Unlike other employment-promoting services, you cannot get expense allowance for the period of independent study. Daily allowances can be paid for a period of independent study for a maximum of two years.

Maximum amount

There is a maximum amount to adjusted daily allowances, which depends on the wages that your daily allowances are based on. Wages from part-time work and daily allowances may not in total be more than the underlying wages. In calculating the maximum amount, wages are taken into account in full amount.

Maximum working hours

Maximum working hours means the weekly or monthly number of hours laid down in the collective agreement for a full-time employee. If there is no collective agreement in the sector, maximum working hours are considered to be the 40 hours a week laid down in the Working Hours Act.

Membership condition

To get earnings-related allowance, you need to have been a member of the fund continuously for at least 26 weeks. Membership can accrue from membership periods in one or more funds. Membership is considered to have continued without interruption if there is a break of no more than 30 days between resignation from the previous fund and the date of joining the new fund.

Own work

Own work means activity performed mainly other than for earnings purposes. For example, foster care, informal care or studying on a grant can be considered own work.

Part-time self-employed

In practice, any work that you invoice yourself or that is done on an assignment basis, and with no employers’ contributions deducted from earned income as in salaried work, is business activity. Work invoiced through an invoicing service company, courier services or co-operatives is also business activity.

If you have business activity, the TE Office gives the fund a statement on whether you are considered full-time or part-time self-employed. If conducting the business activity prevents you from taking full-time work, the business activity is considered full-time. Part-time self-employed persons can get earnings-related allowance. Your income from business activity is then adjusted in the same way as wages from part-time work.

Part-time work

In unemployment security, work where the working hours are no more than 80% of full-time working hours is considered part-time work. The working hours of a full-time employee are laid down in the collective agreement that you are covered by. If there is no collective agreement in your sector, full-time working hours are 40 hours a week, in accordance with the Working Hours Act.

Periodisation

If, say, you get a payment from your employer relating to the termination of your employment relationship, it prevents receipt of daily allowances for the period over which the payment is periodised. In periodisation, the payment made is divided by the daily wage in the employment relationship to give the number of days rejected.  Daily allowances are refused from the day following the date of the payment.

Post-protection

Post-protection safeguards your right to earnings-related allowance if you go from being a wage earner to being self-employed or from being self-employed to being a wage earner. During the post-protection period you can get daily allowances at the end of self-employment or paid employment even if you have not yet met the work requirement of your new situation. If you become a full-time self-employed person (or go from being self-employed to being an employee), you should always contact the unemployment fund to clarify the conditions for post-protection.

Protected amount

The protected amount means that part of wages from part-time work or income from business activity that does not affect the amount of earnings-related allowance. The protected amount is 300 euros a month or 279 euros in a four-week period.

Reduced working day

A lay-off is considered to be reduced working days if you have been laid off such that your daily working hours have been reduced and you still work five days a week. If you have been laid off with reduced working days, you are paid daily allowances adjusted on a payment basis (see also “Adjustment”).

Reduced working week

If you have been laid off from full-time work such that the working week contains full working days and lay-off days, the lay-off is considered to be reduced working weeks. Then daily allowances are paid in full for lay-off days and there is no entitlement to daily allowances for working days. A lay-off can also be a so-called mixed lay-off, where you have full working days, reduced working days and days fully laid-off. This type of lay-off is also considered to be a reduced working week and you get daily allowances adjusted on an earnings basis (see also “Adjustment”).

Renewal application

An application sent after the first application is called a renewal application. The processing time is shorter for renewal applications because wages are not determined and other bases for payment are not clarified.

Resetting days

Resetting days means a situation where the maximum payment period restarts when the work requirement is met (see also “Work requirement” and “Maximum payment period”)

Revised tax card

When you apply for earnings-related allowance, the fund uses the taxation information sent to the fund annually by the Tax Administration and based on wage income. In accordance with the Tax Administration’s guidelines, tax of at least 25 per cent is withheld from daily allowances if the tax information is based on wage income.

A revised tax card is a tax card for benefits that the tax office calculates for earnings-related allowance. The fund does not alter the percentages in a revised tax card – taxation is in accordance with the information on the tax card.

Suspension period (“karenssi”)

A suspension period means an unpaid period. The TE Office may impose a suspension period on you if, for example, you have resigned from your job or refused work without a valid labour policy reason. You cannot be paid daily allowances during the suspension period. The TE Office gives the fund a statement about this that the fund must comply with. The fund gives you a decision on the suspension period that you can appeal against.

Sometimes suspension period (“karenssi”) is used to refer to a waiting period (see below)

Unemployment pathway to retirement

The maximum payment period is the period for which you are entitled to get daily allowances. Depending on your situation, the length of the maximum payment period is either 300, 400 or 500 days. When the work requirement is met again, the maximum payment period restarts.

Wage subsidy work

Wage subsidy work means an employment relationship for which the employer has been granted wage subsidy for wage expenses. In unemployment security, wage subsidy work differs from a normal employment relationship in that it accumulates the work requirement more slowly than normal. 75% of a wage subsidy period accrues the work requirement. The remaining 25% is considered to extend the review period.

Waiting period

A waiting period means a time period at the start of a payment period for which daily allowances are not paid. The waiting period for unemployment allowance is a period equivalent to seven fully unemployed days. A waiting period is taken when the work requirement is met, unless it has been taken at the start of the previous payment period and within one year of the start of the new payment period.

Work requirement

You are entitled to earnings-related allowance when you have met the work requirement whilst a member of the fund. The work requirement is 26 weeks. Weeks with working hours of at least 18 hours and wages at least in accordance with the relevant collective agreement are taken into account for the work requirement. When the work requirement is met, the maximum payment period is reset. Your daily allowances are also calculated and a waiting period is set if these were not done at the start of the previous maximum payment period and it is less than one year since the start of the payment period.

Work requirement review period

Work done during the work requirement review period is counted towards the work requirement. The length of the review period is 28 months for wage earners. If you have been absent from the labour market for a valid reason, the review period can be extended by these periods. The review period can be extended by a maximum of 7 years. Examples of valid reasons are family leave, doing military service or sick leave.