Calculating the rate of earnings-related daily allowance

A daily allowance calculator is available in the electronic services of Unemployment Fund Pro. The calculator provides an assessment on the amount of your earnings-related daily allowance. The only mandatory information is the field for monthly wages, where you should enter your monthly income from paid employment. The withholding tax rate on your tax card for wages should be entered in the field for withholding tax rate. Your daily allowance will be calculated when you click on the calculate button, and the clear button will clear the entered information.

Earnings-related daily allowance consists of the basic unemployment allowance (37,21 €) and the earnings-related part which is based on earned income. The earnings-related part is 45 percent of the difference between daily pay and the basic part and drops to 20 percent for income exceeding 3 534,95 € per month.

Earnings-related daily allowance cannot exceed 90 percent of the daily pay on which it is based, but the amount is always at least the amount of the basic unemployment allowance.    

The amount of earnings-related unemployment allowance is calculated on the basis of taxable wages for the period preceding unemployment. The calculation includes wages from the period during which the employment condition has been accumulated. Capital income is not taken into account. Five  working days are included in one working week when wages are taken into account in the calculation until September 1, 2024. Since the employment condition accumulates monthly from September 2, 2024, each calendar month considered for the employment condition always includes 21.5 days, regardless of whether the employment condition has been accumulated from full or half employment condition months.

Example: If the 12-month employment condition has been fully accumulated after September 2, 2024, for example, from October 1, 2024, to September 30, 2025, the wages from the months that meet the employment condition are summed and divided by the calculated working days, which is 258. If the employment condition has been accumulated, for example, so that it includes 10 full employment condition months and 4 half employment condition months, then the total wages from the months that meet the employment condition are divided by 301 (10 x 21.5 = 215 and 4 x 21.5 = 86 -> 215 + 86 = 301).

Graduation of earnings-related unemployment allowance

The graduation of earnings-related unemployment allowance means that the amount of the allowance decreases as unemployment lengthens. The level of the allowance first decreases by 20 percent after 40 payment days. When the allowance has been paid for 170 days, the amount decreases by 25 percent from the original full earnings-related allowance. Forty payment days correspond to about two months, and 170 payment days to about eight months. The reduction of the allowance applies to all recipients of the earnings-related allowance. It is also applied to adjusted allowances. However, the graduation is not applied to the basic allowance and labour market subsidy paid by Kela.

The graduation applies to all job seekers who have an employment condition length of 12 months. This means that wages paid for work done on or after September 2, 2024, have been considered in determining the level of the earnings-related allowance.

Who is not yet subject to the graduation?

The earnings-related unemployment allowance is not reduced in the following situations:

- The payment of the earnings-related allowance started before September 2, 2024, and the allowance period is ongoing.
- The employment condition was fully met by September 1, 2024. It does not matter if the payment of the earnings-related allowance starts on or after September 2, 2024, due to, for example, the allocation of holiday pay, a waiting period set by the employment authorities, or a deductible period.
- The employment condition is met through a 6-month obligation work.
Graduation applies in the above situations after the employment condition is met again based on a 12-month employment condition, and the maximum allowance period starts anew.

Example: You are working part-time and receiving an adjusted allowance. Your salary is 1 200 euros per month. The part-time work continues after September 2, 2024. You will be subject to the 12-month employment condition. You have accumulated five months of the employment condition by August 31, 2024, and one more month accumulates in September. The 12-month employment condition is met on March 31, 2025. The maximum period is reset, and the amount of the allowance is recalculated. At this point, you become subject to the graduation. If the part-time work continues, the earnings-related allowance is reduced after 40 full payment days.

Example: Earnings-related unemployment allowance has been paid from October 1, 2023, and will be paid until March 31, 2024. You start full-time work on April 1, 2024, and the employment lasts until October 31, 2024. The employment condition is 12 months because you have been working since September 2, 2024, and have earned at least 930 euros. Since the 12-month employment condition has not yet been fully met for the work done from April 1 to October 31, 2024, you are not yet subject to the graduation. The payment of the earnings-related allowance continues at the same level as before. You will become subject to the graduation after the 12-month employment condition is fully met.

Example: Earnings-related unemployment allowance has been paid from February 1, 2024. The payment continues at the same level until November 30, 2024. Full-time work begins on December 1, 2024, and lasts until December 31, 2025. The 12-month employment condition has been met, so the maximum allowance period starts anew. You now become subject to the graduation. The earnings-related allowance is reduced after 40 payment days.

You can estimate the impact of the graduation on your earnings-related allowance on the TYJ website.

Earnings-related unemployment allowance is paid at a reduced rate until the end of the allowance period (300/400/500 days), unless you meet the employment condition again before the maximum allowance period ends. The level of the earnings-related allowance returns to 100 percent and is paid in full for the first 40 payment days when the 12-month employment condition is met and the maximum allowance period starts anew.

Example: Your employment ends on October 15, 2024. You receive holiday compensation at the end of your employment, which delays the start of your unemployment allowance entitlement by 10 working days. After the holiday compensation period, a seven-day waiting period is set, so the payment of the earnings-related allowance begins on November 8, 2024. The allowance is paid for 40 payment days, after which the first reduction is made. The reduced earnings-related allowance is paid for 50 days, after which you start a fixed-term full-time job. The employment lasts for 14 months, after which you apply for the earnings-related allowance. Since the employment condition has been met again, the maximum allowance period and the reduction counter start anew. The earnings-related allowance is paid in full for 40 payment days before the first reduction is made.

The reduced earnings-related allowance consumes the maximum allowance period (300/400/500 days) in the same way as the full earnings-related allowance consumes the maximum period.

When an adjusted allowance is paid, the maximum period counter runs more slowly. If an adjusted allowance of 1 000 euros gross is paid for a month, and the full earnings-related allowance is 70 euros per day, the maximum period counter runs for 14 days for that month. In this case, the reduction counter also runs for 14 days. Thus, the 40 payment days are filled more slowly with the adjusted allowance compared to paying the full earnings-related allowance.

Graduation and additional aays of earnings-related unemployment allowance

Graduation is not applied if the payment of the earnings-related unemployment allowance started before September 1, 2024 and if you are entitled to additional days and their payment begins after the maximum allowance period ends.

Example: The payment of the earnings-related unemployment allowance started on April 1, 2024. Based on your age and work history, you are entitled to additional days of the earnings-related allowance when the maximum period ends. Graduation does not apply to you because the payment of the earnings-related allowance started before September 2, 2024. If you receive the earnings-related allowance for the maximum period and the payment of additional days begins, the earnings-related allowance is paid in full for the entire period of additional days.

If you are entitled to additional days but become employed and meet the 12-month employment condition before the payment of additional days begins, you are subject to graduation.

Example: The payment of the earnings-related unemployment allowance started on April 1, 2023. Based on your age and work history, you are entitled to additional days of the earnings-related allowance when the maximum period ends. However, you start a job on October 1, 2024, before the payment of additional days begins. The employment lasts until September 30, 2025. You have met the 12-month employment condition, so the maximum allowance period starts anew, and a waiting period is set. You are also subject to graduation. The earnings-related allowance is reduced by 20% after 40 payment days. When the allowance has been paid for 130 days since the previous graduation and a total of 170 days since the payment of the earnings-related allowance started, the allowance is reduced by 25% from the original amount. The payment of the earnings-related allowance continues at 25% reduced from the original level. If you do not become employed again and you will receive additional days of the earnings-related allowance, the earnings-related allowance is paid at a reduced rate until the entitlement to additional days ends.

If you are not yet entitled to additional days but this requires one-time employment, you are subject to graduation.

Example: The payment of the earnings-related unemployment allowance started on April 1, 2023. You are not yet entitled to additional days of the earnings-related allowance. In order to be entitled to additional days, you must become employed once and meet the employment condition so that the maximum period counter resets and starts anew. You work for 12 months and meet the employment condition, after which the maximum allowance period is reset, and the level of the earnings-related allowance is recalculated. The allowance days, as well as your age and work history, now qualify you for additional days, but you are also subject to graduation.

The impact of graduation on adjusted allowance

If the earnings-related unemployment allowance is reduced during the period of adjusted allowance, this is done by first reducing the full allowance. After this, the adjusted income is compared to the reduced allowance.

Example: The full earnings-related allowance is 70 euros per day, and the work income is 860 euros per month. The adjusted allowance is 50 euros per day and averages 1 075 euros gross per month. The adjusted allowance is calculated by considering half of the work income. This amount is then divided by 21.5 to get the amount to be deducted from the full allowance (860 € / 2 = 430 € -> 430 € / 21.5 = 20 € -> 70 € - 20 € = 50 €). The adjusted allowance consumes the maximum allowance period by approximately 15 full days per month (1 075 € / 70 €).

When the adjusted allowance has been paid for 40 full payment days, the full earnings-related allowance is reduced. The new reduced earnings-related allowance is 56 euros per day (70 € x 0.8 = 56 €). The work income of 860 euros is now compared to the reduced earnings-related allowance by considering half of the work income. This amount is then divided by 21.5 to get the amount to be deducted from the reduced earnings-related allowance (860 € / 2 = 430 € -> 430 € / 21.5 = 20 € -> 56 € - 20 € = 36 €). The adjusted allowance is paid at 36 euros per day after the reduction, averaging 774 euros gross per month. The reduced adjusted allowance consumes the maximum allowance period by approximately 14 full days per month (774 € / 56 €). If the payment of the adjusted allowance continues, the full earnings-related allowance is further reduced after 170 days of the maximum allowance period. At this point, the full earnings-related allowance is reduced to 75 percent of the original amount (70 € x 0.75 = 52.5 €). The adjusted allowance is then paid at 32.5 euros per day (52.5 € - 20 € = 32.5 €).

Note that the reduced adjusted allowance and the adjusted work income can together be no more than the amount of the reduced earnings-related allowance that can be paid without deducting the work income for the month of the adjustment period.

You can estimate the impact of graduation on the adjusted allowance using the calculator available on the TYJ website.

The Impact of pensions and leaves on the calculation of earnings-related daily allowance

There are exceptional situations in the calculation of the earnings-related daily allowance. If you are on partial disability pension, the earnings-related daily allowance is calculated based on the salary from full-time work preceding the pension, provided that you were a member of the unemployment fund during this period. The same applies if you were on job alternation leave or partial parental leave before the unemployment or lay-off. In these cases, the earnings-related daily allowance is calculated based on the salaries paid prior to the leave.

A period of partial early old-age pension cannot be skipped over when calculating the amount of earnings-related daily allowance. This means that the amount of earnings-related daily allowance is calculated directly from the salary income prior to the lay-off or unemployment, even if you have been employed part-time.

Earnings used as a basis for calculating earnings-related daily allowance

Earnings-related daily allowance is calculated on the basis of established earned income. In addition to monthly or hourly pay, for example annual holiday pay, shift bonuses and overtime pay is calculated are also taken into consideration when calculating the amount of the allowance. 

Earnings subject to withholding tax may include wages, salary, remuneration, bonuses or compensations that cannot be taken into consideration when calculating the amount of daily allowance. These include annual leave compensation, holiday bonus and severance pay/support package, for example. Furthermore, earnings related to the termination of employment (e.g. performance incentives or motivation bonuses) are not taken into consideration when calculating the amount of daily allowance. Earnings not included in the calculation of daily allowance are deducted from the earnings subject to withholding tax before calculating the amount of the daily allowance. A one-off deduction of 3.54 percent is also applied. The deduction corresponds to employees’ pension insurance and unemployment insurance contributions and the daily allowance payment for health insurance. Please note that earnings related to the termination of employment may postpone the start of your right to daily allowance. For more information, see the section about obstacles for granting earnings-related daily allowance. 

Increased earnings-related daily allowance

Earnings-related daily allowance can be paid at an increased rate (increased earnings-related part) if you participate in employment promoting services organised by the unemployment authority, which have been agreed upon in your employment plan or a substitute plan. Increased daily allowance can be paid for a maximum of 200 days.

Please note that the increased part of the earnings-related allowance will be removed from the law starting from the beginning of 2025. The increased earnings-related allowance can still be paid for the duration of employment promoting services if the service starts no later than 31.12.2024. In this case, the increased earnings-related allowance can be paid until the end of the service, but for a maximum of 200 days. If the service is provided in periods, the increased earnings-related allowance will no longer be paid for the service period that starts on 1.1.2025 or later.

How much does the increased earnings-related part increase the normal earnings-related daily allowance? 

When calculating the amount of normal earnings-related daily allowance, the earnings-related part is 45 percent of the difference between daily pay and the basic part of 37,21 €, and 20 percent for income that exceeds 3 534,95 € (= 95 times the basic daily unemployment allowance). For increased daily allowance the corresponding compensation components are 55 percent and 25 percent.

Normal earnings-related daily allowance cannot exceed 90 percent of the earned income on which it is based, but this limit does not apply to increased daily allowance, which can be up to 100 percent of the earned income on which it is based.

You can calculate the estimated amount of your increased daily allowance by using the calculator available in our electronic services.