Job alternation compensation
The current Act on Job Alternation Leave has been valid as of 1 January 2016. Job alternation leave is primarily agreed with the employer, but job alternation compensation is applied from the unemployment fund,
The length of job alternation leave is usually at least 100 uninterrupted calendar days and a total of no more than 180 calendar days. Job alternation leave cannot be split into periods but must be taken continuously.
Conditions for claiming job alternation compensation
Job alternation leave is an arrangement whereby
- an employee takes a job alternation leave in accordance with an agreement made with their employer
- the employer hires a person registered as an unemployed job seeker with the TE Office for the duration of the leave
The total working hours of the employee(s) hired for the duration of the job alternation leave must be at least equal to the regular working hours of the employee taking the alternation leave. The law sets requirements for the duration of the substitute’s unemployment. For more information, please contact the Employment and Economic Development Office (TE Office).
You must make a written agreement with your employer for taking a job alternation leave. The job alternation agreement must be submitted to the TE Office before the start of the job alternation leave. In addition, you must provide the TE Office with a copy of your substitute’s employment contract and your pay certificate for the last 13 months (with any unpaid periods itemised). The TE Office will assess your eligibility for job alternation leave as well as the effect of your or your family’s possible business activities and issue a statement on the matter to the fund.
You can take job alternation leave if:
- you have a minimum of 20 years of employment history in pension-insured work prior to the start of your job alternation leave (see Amount of job alternation compensation and required employment history)
- you are in full-time employment (more than 75%) with a continuous service relationship with the same employer for at least 13 months immediately preceding the start of the job alternation leave.
The 13-month period may include a maximum of 30 calendar days of unpaid absence, including unpaid periods due to family leave, such as paternity leave. Layoffs, study leaves and unpaid days taken for attending to a position of trust also count as days of unpaid absence, even if you receive a compensation for these days in lieu of pay.
Absences resulting from illness are not counted as unpaid absence days.
There is a maximum age limit for an employee to take job alternation leave. The alternation leave has to be started at least three years before the age limit for the old-age pension determined by the National Pensions Act is met. The maximum age limit does not apply to those born before 1957.
Required employment history
You must meet the 20-year employment history condition before you start your job alternation leave.
It is advisable to establish your employment history at the start, as the Employment and Economic Development Office can issue a statement on the job alternation leave and you can start the leave before the unemployment fund investigates the preconditions for the payment of a job alternation compensation. If it is found that your employment history is insufficient, the benefit will not be paid. It is especially important to determine your employment history in advance if you are uncertain whether you meet the minimum 20-year work requirement.
You must request the assessment of your employment history from the Unemployment Fund for Education and Science yourself. You can do this via electronic communication via Openetti, by letter or by email. You should state your date of birth, the planned time of starting the job alternation leave and your current home address. The unemployment fund will request your pension register data directly from the Finnish Centre for Pensions (ETK) in order to calculate the employment history required by the Act on Job Alternation Leave.
All the work covered by an employee’s or self-employed person’s pension insurance that you have carried out after turning 18 years of age counts towards your employment history. Up to 31 December 2006, the employment history is calculated on the basis of the employment duration information in the pension registers, including work carried out before turning 18. From 1 January 2007, the employment history accumulates on the basis of annual earnings, not on the basis of the duration.
Work carried out abroad can now be counted as part of the employment history for the purposes of job alternation leave. However, this only applies to work performed in another EU/EEA country or some other agreement country. In addition, work carried out as a posted employee for a Finnish employer is counted in the employment history regardless of the country of employment. Work carried out in another EU/EEA country must be verified with a certificate provided by an authority in the country of employment. If you have been a posted worker, the employment details are in the register of the Finnish Centre for Pensions.
When determining the sufficiency of the employment history, periods of time considered comparable to work include periods during which you have been on family leave (maternity, paternity or child-care leave) insofar as you have not earned a pension during the family leave. Military or non-military service is also counted into the employment history. Periods of time comparable to work, such as family leave and military or non-military service, may account for a maximum of one quarter of the employment history, i.e. five years.
If you take a new job alternation leave, you must have worked for five years (60 full calendar months) after the end of the previous leave. The unemployment fund checks that you meet the employment history condition from the register of the Finnish Centre for Pensions.
Restrictions to job alternation compensation
You are not entitled to a job alternation compensation for a period in which you are
- receiving pay from the employer that is a party to the job alternation leave
- in military or non-military service
- in full-time employment lasting more than two weeks with another employer
- you are engaged in full-time business activities
- you are receiving benefits under the Act on Unemployment Security
- you are receiving a sickness, maternity, paternity, parental, pregnancy or special care allowance under the Health Insurance Act, or you have been granted a leave due to pregnancy, childbirth or the care of a child
Job alternation compensation is not paid for a period during the alternation agreement for which no substitute has been hired. Job alternation compensation is paid according to the original plan, however, if the substitute’s employment ends in the middle of the leave for some reason, and the TE Office cannot provide another substitute.
While you are receiving job alternation compensation, you are not entitled to a study grant.
If you have previously been on job alternation leave, you can take a new job alternation leave after you have been employed for at least five years (60 full calendar months) after the end of the previous alternation leave.
Amount of job alternation compensation
The full amount of job alternation compensation is 70 per cent of the unemployment allowance to which you would be entitled during unemployment. Child increases are not taken into account.
The unemployment allowance used as the basis for the alternation compensation is calculated on the basis of your earned income during the 52 weeks or 12 full months preceding the job alternation leave, excluding holiday bonus and any holiday compensation. An amount equivalent to your statutory employment pension and unemployment insurance and sickness allowance contributions is also deducted from the cumulative pay. In 2023, the deducted percentage is 4,40 %.
Adjusted job alternation compensation
The gross earnings from part-time or occasional employment are taken into account in the payment periods of job alternation compensation during which the salary is paid to you. You must inform the fund of your employment as soon as it starts, using a change notification or by using our messages-fuction in Openetti. Inform also on an estimated payment date. When the salary is paid to you, send a copy of your payslip to the Fund.
If you have worked for your own employer, you must provide a certificate from the employer about your working days. You are not entitled to job alternation compensation for such days, but your job alternation leave will be spent and will then continue according to the original agreement. Work done for the same municipality/city is also considered as work for the same employer.
Income from part-time business activities (including ownership of a farm or forest estate) is adjusted, usually on the basis of the tax decision regarding your last confirmed personal taxes and the information in its breakdown. A labour policy statement is always required from the TE Office for business activities, so if you are self-employed or own a farm or forest estate, inform the TE Office of this in advance, before the start of your job alternation leave. If your business activities are full-time, you cannot receive job alternation compensation.
Effect of earned income on job alternation compensation
If your job alternation compensation is 70% of the unemployment allowance, 35% of your gross earnings will reduce the full amount of the job alternation compensation in the payment period. The standard entitlement is not applied to the adjustment of job alternation compensation.
In job alternation compensation the income is taken into account similarly as in earnings-related unemployment allowance, but the standard entitlement is not applied. One half of the income paid during the adjustment period is deducted from the full earnings-related unemployment allowance. You get the amount of your adjusted job alternation compensation by multiplying that amount by 0,7. Therefore, you can calculate amount of the adjusted job alternation compensation by using the following formula:
(full earnings-related unemployment allowance – adjustable income * 0,5) *0,7
Applicants full earnings-related unemployment allowance = 85,00e/day
Adjustable income in the adjustment period = 300e/month, that is 300e/21,5 = 13,95e/day
-> Adjusted job alternation compensation = (85,00e – 0,5 * 13,95e) * 0,7 = 54,62e/day
The full job alternation compensation is 70% of the full earnings-related unemployment allowance, that is: 85,00e * 0,7 = 59,50e/day
If the income is 300e/monthn, it deducts the full job alternation compensation by 35%, that is in total 300e * 0,35 = 105e/month.
Therefore the difference between full job alternation compensation and adjusted job alternation compensation is: (59,50e – 54,62e) * 21,5 = 105e/month (in round numbers)
Job alternation compensation and social benefits
Some statutory benefits that you may receive during your job alternation leave, such as a child home care allowance from Kela, reduce the amount of your job alternation compensation.
Child home care allowance is a family benefit that is usually deducted from the allowance of the recipient of job alternation compensation. Child home care allowance is not deducted if the allowance is paid to your partner who cares for a child full-time at home and would consequently not be eligible for an unemployment benefit. If your partner is unemployed and the child home care allowance is paid to your partner, it will be deducted from your partner’s unemployment allowance.
Your job alternation compensation is not reduced by a housing allowance, social assistance, family caregiver support, child benefit or survivors’ pension.
You must inform the unemployment fund is you have received or applied for a social benefit.
Applying for job alternation compensation and payments
You can claim job alternation compensation from your unemployment fund via the Openetti online service or by posting a form that you can obtain from the TE Office or the fund’s website in the section Forms(opens in new window).
The application must be submitted within three months of the start of the leave. In contrast to earnings-related allowance applications, you can send the application for job alternation compensation to the unemployment fund in advance, before the start of the leave. The decision on your eligibility for a compensation and its amount can only be issued once your leave has started.
You do not need to submit follow-up applications after your first application, as you would for claiming an earnings-related allowance, but you must immediately inform the fund of any changes that affect the job alternation compensation (such as employment).
The application attachments must include a copy of your job alternation agreement and a pay certificate for 52 weeks or 12 full months preceding your leave, with your holiday bonuses and any unpaid periods and periods with partial pay due to an illness listed as separate items. You can only send your pay certificate when your salary for the month preceding your job alternation leave has been paid. If you or your family member are engaged in business activities, a copy is needed of the last confirmed tax decision and a statement from the TE Office that you are eligible for the compensation despite the business activities. If a tax decision is not yet available for the period of business activities, you must provide a copy of your bookkeeping for the period.
We will receive information about the salary and employment from the incomes register starting from 1.1.2020. This means that we will receive primarily information about the salary from the register. Basically, you do not need to send us a pay certificate with the application. Please notice that, if the register does not have the relevant information about your salary and employment, we will ask more information from your accountant or you about your salary and employment.
The TE Office will issue a labour policy statement to the unemployment fund, which will make a written decision on the matter and pay the compensation. Please contact TE Office and find out what attachments you need to supply to TE Office.
Taxation of benefits
Job alternation compensation is taxable income. The Tax Administration provides the fund with our members’ salary withholding tax information from 1 February. You do not need to send the tax card you receive at home to the fund. If you have joined the fund in the middle of the year, please check the ‘Personal information’ section of Openetti to make sure that we have received your tax information.
We use your salary withholding tax rate in the payment of the benefit. However, the percentage is at least 25%, even if your tax rate is lower.
If you wish, you can order a revised tax card for benefits, and the tax will be withheld according to the rate on this tax card.You can order a revised tax card for benefits in the online tax service MyTax. In the service, select ‘Unemployment Fund for Education and Science’ as the payer of the benefit, and your tax card information will be automatically received by the fund, usually on the next working day at the earliest. More information on taxation is available on the website of the Tax Administration(you move to another service).
Payment of job alternation compensation
Job alternation compensation is paid retroactively in periods of four calendar weeks. The first payment period can be for a shorter or longer period, depending on the processing situation. The compensation payment date is on the Wednesday in the week following the end of the payment period.
A payment period of one calendar month is used if you receive a monthly social benefit or you have earned income from part-time work or income from part-time business activities. In this case, the compensation payment date is two banking days after the last day of the month.
Extending the job alternation leave
If you wish to extend your job alternation leave, you must agree on this in writing, and the extension agreement must be received by the TE Office two months before the end of the originally agreed job alternation leave. You should also send a copy of the extension agreement to the fund.