How will the earnings-related allowance change at the end of the year?

If all amendments proposed to Parliament by the government are ratified, the Act on Unemployment Security will change on 1 January 2017 more than it has for a very long time. The following summary describes how the amendments as we understand them will affect the right to earnings-related allowance, should they be ratified. 

Amendments affecting the determination of the right to earnings-related allowance and the amount and duration of the allowance:

1. The maximum length of the daily allowance period will be shortened from 500 to 400 or 300 days, depending on the length of the unemployed member’s work history. 

• The amendment applies to the maximum period of daily allowances starting after 1 January 2017. Maximum periods that have started in 2016 will not be shortened on the basis of this amendment. 
• The amendment also applies to situations in which the maximum period has started in 2016, but the member has fulfilled the employment condition again after this.  
• Government proposal 113/2016 vp

2. The waiting period will be lengthened from five weekdays to seven. 

• The amendment applies to waiting periods beginning on or after 1 January 2017. 
• Government proposal 113/2016 vp

3. The right to an increased component paid on the basis of a long work history will be revoked. 

• This applies to employment relationships terminating on or after 1 January 2017. 
• If the employment relationship terminates by 31 December 2016, the increased earnings component paid on the basis of a long work history can still be paid within the transition period ending on 30 June 2017.
• Not many members of the Teachers’ Unemployment Fund have received this increased component, since fixed-term employment or service relationships do not entitle to the increased component regardless of length. 
• Government proposal 113/2016 vp

4. The increased component paid for the duration of employment promotion measures will be cut from 58/35% to 55/25%. 

• The amendment will apply to the payment of such increased components with immediate effect from 1 January 2017. In other words, the amendment also applies if use of the service on the basis of which the increased component is being paid had begun before the entry into force of the amendment. 
• Government proposal 113/2016 vp

5. In the future, pay-subsidised work will count less against the employment condition

• Pay-subsidised work will not be fully counted against the employment condition for earnings-related daily allowance. As a rule, only 75% of the employment relationship’s duration in weeks will be counted against the employment condition. 
• i. As an exception to this rule, each week of pay-subsidised employment would still accumulate against the employment condition in certain cases in which a municipality has been obligated to employ a person.
• According to the government proposal, the objective is to encourage pay-subsidised employees to seek employment on the open job market during and after the pay-subsidised employment.
• Government proposal 209/2016 vp

6. The provisions on adjusted allowance will be changed for certain cases of employment through entrepreneurial activity

• The maximum adjustment is for 2 weeks of full-time entrepreneurial activity. 
• This amendment applies to cases in which the entrepreneurial activity in itself prevents accepting paid employment with terms normally applied on the labour market, but the obstacle in question is short-term, i.e. no longer than 2 calendar weeks.
• This amendment will apparently not have a significant impact on the situations of Teachers’ Unemployment Fund members, since the most common form of entrepreneurial activity amongst our membership is part-time entrepreneurship, which is already eligible for an adjusted allowance.
• In the future, according to the proposal, such entrepreneurial activity would not be counted against the waiting period, however, and a period of part-time entrepreneurial activity lasting, for example, 2 weeks could postpone the start of the waiting period.
• The amendment will apply to periods of entrepreneurial activity beginning on or after 1 January 2017.
• Government proposal 209/2016 vp

7. Pay cuts for production-related or financial reasons will not decrease the earnings-related daily allowance

• This change applies to cases in which a “survival agreement” has been made at the workplace for financial or production-related reasons, and the agreement specifies a decrease in pay without a reduction in working hours.
• This regulation is based on the “competitiveness agreement.”
• Workplaces resorting to such agreements must follow the appropriate negotiation procedure, and the agreement must be made in writing.
• The amendment would enter into force on 1 January 2017.
• Government proposal 209/2016 vp

Amendments applying specifically to independent studies

1. The increased component paid for the duration of independent studies will be cut from 58/35% to 55/25%. 

• The amendment will be applied to the payment of increased components immediately on 1 January 2017, even if use of the service on the basis of which the increased component is being paid had begun before the entry into force of the amendment. 
• Government proposal 113/2016 vp

2. The expense allowance (EUR 9 or 18/day) will no longer be paid for independent studies to recipients of earnings-related daily allowance

• The amendment applies to subsidised independent studies when the right to an earnings-related daily allowance on the basis of the studies begins on or after 1 January 2017.
• The expense allowance could still be paid if the studies have begun on 31 December 2016 or earlier.
• Government proposal 209/2016 vp

3. The subsidised period will be extended to a maximum of 48 months, but only if the studies are aimed at completing basic studies

Changes to the labour-policy obligations of daily allowance recipients and to the consequences for reproachable action (TE offices will provide additional information)

1. The provision on the travel-to-work area will be repealed in its entirety. 

• In the future, the regional obligation to accept employment will be defined in terms of travel time, and only the travel time will influence the assessment of justified reasons for resignation.
• The amendment would enter into force on 1 January 2017.
• Government proposal 210/2016 vp

2. Regional mobility, or the time a daily allowance recipient is obligated to use for commuting

• A person is entitled to refuse employment and, in some cases, resign from employment, if the duration of his or her daily commute would exceed 
• i. an average of 3 hours per day for full-time employment; and 
• ii. an average of 2 hours per day for part-time employment.
• If this average commute time is not exceeded, refusing employment can result in a suspension period without allowance.
• The amendment would be applied to cases in which the unemployed person has refused employment or resigned on or after 1 January 2017. 
• Government proposal 210/2016 vp

3. As the provision on the travel-to-work area will be repealed, the possibility to resign without losing the right to an earnings-related daily allowance would no longer exist if the place of employment is located outside the travel-to-work area. 

• In the future, if a person resigns due to the length and duration of his or her commute, the travel time will only be a justified reason for resignation if the length of the average commute exceeds 3 hours for full-time employment or an average of 2 hours for part-time employment.
• If the commute time is not exceeded, the resignation will result in a 90- or 60-day period without allowance (suspension period).
• The amendment will be applied if 
• i. the resignation has taken place on or after 1 January 2017; and
• ii. the resignation takes place within 3 months of the start of employment; or
• iii. the location of work changes during employment (a temporal connection to the change in work location is required).
• Government proposal 210/2016 vp

4. The period of time without compensation (suspension period) will be extended if the job-seeker refuses guaranteed employment

• At present, the suspension period for refusal is 60 days (30 days if the intended duration of employment is no longer than 2 weeks). 
• In the future, if a recipient of earnings-related daily allowance refuses employment for which he or she has been selected, the period of time without compensation would be 90 days. This provision would apply if, for example,
• i. the recipient of earnings-related daily allowance refuses to sign an employment contract; or
• ii. the person fails to appear at the workplace on the first day of employment.
• The 60- and 30-day suspension periods will still remain in use.
• In addition, for others than laid-off employees or persons unemployed for a comparable reason, the period without allowance would only begin 30 days after refusing employment.
• i. The amendment would let the job-seeker avoid the suspension period if he or she accepts employment within the 30-day period.
• The amendment will be applied to persons refusing employment on or after 1 January 2017.
• Government proposal 210/2016 vp

5. The obligation to accept full-time employment will be made stricter

• In the future, job-seekers will be obligated to accept full-time employment even if the pay minus the expenses incurred from accepting the position (in practice, the travel costs) would be less than the person’s earnings-related daily allowance. 
• However, job-seekers will have a three-month period of grace at the start of their unemployment, during which this provision will not apply.
• Refusing employment will lead to a period without allowance (suspension period) of 90, 60 or 30 days.
• The amendment will be applied to persons refusing employment on or after 1 January 2017.
• Government proposal 210/2016 vp

6. The obligation to use the job-seeker’s own car (if any) will be extended

• As a result of this amendment, if the recipient of earnings-related daily allowance owns a car or has access to his or her family’s car, the average commute time will be assessed according to travel time to the workplace by car.
• i. Recipients of daily allowance who do not own a car will not be obligated to obtain one.
• Refusing employment will lead to a period without allowance (suspension period) of 90, 60 or 30 days.
• The amendment will be applied to persons refusing employment on or after 1 January 2017.
• Government proposal 210/2016 vp

7. Unemployed persons will be obligated to participate in all services offered to them

• At present, the obligation applies to “employment-promotion services” exhaustively defined in the Unemployment Security Act (list). 
• In the future, this obligation would be extended to other services besides such employment-promotion services, provided that
• i. the service is obtained or purchased by the employment authorities; and
• ii. the purpose of the service is to improve the job-seeker’s possibilities of gaining employment.
• According to the government proposal, such services could consist of, for example, occupational or career guidance.
• The amendment will be applied to persons refusing employment on or after 1 January 2017.
• Government proposal 210/2016 vp

8. The new job or recruitment trial for assessing the job-seekers suitability will be adopted

• The maximum duration of the trial is 1 month.
• Job-seekers are entitled to earnings-related daily allowance for the duration of the trial, but not to an expense allowance or increased component.
• The trial is optional, i.e. refusing such a job trial would not result in a period without allowance.
• i. The suspension period would still apply to normal job trials.
• The provision will apply from 1 January 2017 to 31 December 2018
• Government proposal 209/2016 vp

9. Periodic interviews every 3 months

• Job-seekers should be interviewed after each three-month period of continuous unemployment. 
• The employment plan or another plan drawn up in its place would be revised at each interview.
• Government proposal 209/2016

Accepting employment will be supported with a new benefit, the mobility allowance

Unemployment funds will start paying a new benefit, the mobility allowance.

1. Mobility allowance will be paid to persons entitled to unemployment benefits who accept paid work with a minimum duration of 2 months and at least 18 regular weekly working hours.
2. In addition, at the start of employment, the daily commute must exceed 3 hours on average for full-time employment and 2 hours on average for part-time employment.
3. This benefit does not prevent the payment of adjusted earnings-related daily allowance or reduce its amount.
4. The benefit will have to be applied for before the start of paid employment.
5. The amendment would enter into force on 1 January 2017, and

• if a travel allowance application was submitted by 31 December 2016 and employment begins by 31 January 2017, mobility allowance will not be granted; rather, any potentially granted benefit will consist of a travel allowance not paid by the unemployment fund;
• if the application is submitted on or after 1 January 2017, any potentially granted benefit will consist of a mobility allowance paid by the unemployment fund; and
• if employment begins on or after 1 February 2017, regardless of when the application was submitted, any potentially granted benefit will consist of a mobility allowance paid by the unemployment fund.

6. Government proposal 209/2016 vp

Other amendments