Edited: 02.05.2019 - 12:43

Adjustment of earnings-related unemployment allowance changed on 1 April 2019

The basis for the adjustment of earnings-related unemployment allowance changed in the beginning of April 2019. The biggest change pertains to people who are working part-time, in full-time employment of no more than two weeks in
duration, who have income from entrepreneurial activities, are self-employed, or who are working reduced hours due to temporary lay-offs. However, people who are working a shorter work week due to temporary lay-offs will continue to
receive the adjusted allowance as before. The type of reduction to the working hours is determined in the lay-off notice.

Previously, earnings were considered in the adjustment of earnings-related unemployment allowance for the period (4 weeks or one month) during which the work was undertaken. This meant that, for example, the payment for work done in March was considered in the application for March, no matter when the salary would be paid. If the payment of the salary was significantly delayed, applicants may have had to wait for their allowance, as the salary information would not have been immediately available.

After the change, adjusted earnings-related unemployment allowance may be granted to people who are receiving income from part-time work, full-time employment of no more than two weeks in duration, entrepreneurial activities or self-employment. The basis for the adjustment is the date when the salary is received, not when it is earned. The payment date of the salary determines whether the allowance will be adjusted or not.

The change in legislation will also bring about entirely new situations. Please be aware of the new legislation if you are applying for adjusted unemployment allowance for any period after 1 April 2019. Any part of the application pertaining to the time before April will be processed according to the old rules.

Full allowance while working

A person who is working part-time and expecting the salary in the following month may find themselves in a situation where they are receiving full unemployment for a month during which they are working. This means that the salary is considered in the adjustment during the month when it is paid.

Example 1: Part-time employment begins on 1 May 2019, and the salary for May will be paid in June. No salary is paid in May, so the allowance will be paid in full for May, even though the applicant is working part-time during that month.

Example 2: The part-time work will continue in June, and the salary for May will be paid in June. The application for June will be adjusted according to the salary for May, as it is being paid in June. The salary for June will be paid in July,
and will in time be used to adjust the allowance for July.

Calculating working hours

A person is eligible for adjusted earnings-related unemployment allowance if they are working 80% or less of the maximum full-time working hours in the field. However, the change in legislation will also bring about changes to this
calculation of working hours. The working hours may be calculated based on the hours of the previous month.

The number of working days in each month will no longer have an effect. Instead, the hours will be calculated with the assumption that each month has 21.5 working days. For this reason, the unemployment allowance application for a person working close to 80% hours may be rejected if the working hours are calculated based on the hours of the previous month (see Example 5).

Example 3: The applicant works part-time, and always receives the monthly salary in the following month. If the allowance is adjusted based on the salary for the previous month (cf. Examples 1 and 2), the working hours will also be calculated based on the hours for the previous month. The applicant has worked 110 hours in May. The maximum number of hours for June is 7.5 * 21.5 = 161.25 hours (the coefficient is 21.5 even though June has 20 working days), of which 80% is 129 hours. This means that the applicant is eligible for adjusted earnings-related unemployment allowance for June (110 is less than 129).

Example 4: If there are days in the month during which the applicant is not eligible for earnings-related unemployment allowance, these days will not be included when calculating maximum full-time hours for the month. For example, if an
applicant receives sickness allowance in June and is only eligible for earnings-related unemployment allowance for 12 days, the working hours will be calculated based on these 12 days. This means that the maximum number of hours
for June would be 12 * 7.5 = 90 hours. If the applicant has worked 110 hours in May (as in Example 3), the application for earnings-related unemployment allowance for June will be rejected based on the number of working hours. In this case, the applicant will not be granted earnings-related unemployment allowance even if they have been entirely unemployed for 12 days.

Example 5: The applicant works 6 hours per day. The salary is always paid in the following month. The working hours will be calculated based on the hours for the previous month, and the coefficient 21.5 will be used when calculating the maximum number of working hours. This means that the maximum number of hours will be 21.5 * 7.5 = 161.25 hours, of which 80% is 129 hours. The number of hours completed in the previous month will be compared to this figure. If the
applicant worked 22 days during the past month at six hours per day, the number of working hours will be 132, and the application for unemployment allowance will be rejected based on the working hours (132 is more than 129). If the applicant worked 21 days during the previous month, the total hours will be 126, and the applicant is eligible for earnings-related unemployment allowance based on working hours (126 is less than 129). This means that the result may be different even when the daily working hours are the same.

No work and no allowance

There may also be situations in which a person is no longer employed, but may also not be eligible for earnings-related unemployment allowance for that month.

Example 6: Part-time work ends on 31 May 2019. The salary has always been paid in the following month – so in this case, the salary will be paid in June. The applicant is entirely unemployed in June. However, full unemployment allowance cannot be paid for June, when the salary for May is paid. If the applicant has worked many hours in May, or received a high salary, the application for June may be rejected completely based on either criterion.

Lay-offs

The change in legislation also pertains to people whose daily working hours have been reduced due to temporary lay-offs. However, the payment of the adjusted unemployment allowance will continue as before if the working hours have been reduced on a weekly basis. The type of reduction to the working hours is determined in the lay-off notice. In cases of temporary lay-offs, the working hours will be calculated by each calendar week.

If the salary is paid during a period when the applicant is not eligible for earnings-related unemployment allowance, the income will not be considered in the adjustment

Salaries paid during a period when the applicant is not eligible for earnings-related unemployment allowance will not be considered in the adjustment. For example, if the applicant is on sickness allowance or on a waiting period at TE Services and receives the salary during that time, the salary will never be considered in the adjustment of the earnings-related unemployment allowance.

However, the salary will be considered in the adjustment in the following exceptional cases:

- The applicant’s job search at TE Services is not valid.
- The date when the applicant’s salary is paid falls on the same dates as the waiting period.
- The person is under an obligation to work.

In such cases, the salary is considered in the adjustment even if it is paid during a period when the applicant is not eligible for the earnings-related unemployment allowance.

Example 7: The applicant is in part-time employment and is applying for adjusted earnings-related unemployment benefit for May. The applicant is on sickness leave and receives sickness allowance for the period 25–31 May 2019, and is not eligible for earnings-related unemployment allowance for this period. The salary is paid on 31 May 2019. As the date of payment falls on a period during which the applicant is not eligible for earnings-related unemployment allowance, the salary will not be considered in the adjustment. The applicant will receive full earnings-related unemployment allowance for May (for the days during which they are eligible).

If the salary for the part-time work is always paid in the following month, this salary will never be considered in the adjustment if the applicant enters full-time employment.

Example 8: Part-time employment ends on 31 May 2019. The salary for the part-time work will be paid in June. The applicant begins full-time work on 1 June 2019, and does not apply for unemployment benefit for June. The salary paid for part-time work in May will never be considered in the adjustment.

The same work may fulfil the activity requirement twice

After the change in legislation, the same work may be considered to fulfil the criteria for activity two times.

Example 9: If the applicant has many working hours in May, they will fulfil the criteria for activity. The salary for the work in May is paid in June. If the application for June is rejected on the basis of the working hours or salary in May, the monitoring of the activity requirement for that period will be discarded and a new period will begin.

The working requirement will be monitored as before, based on the period when the work is done

The working requirement will be monitored as before. This may lead to a situation in which the applicant must wait for the last salary slip when the working requirement is fulfilled, if the salary is paid in arrears. In such cases, the salary information must be available before the earnings-related unemployment allowance can be redetermined.

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