Obstacles to granting earnings-related daily allowance

There may be various obstacles to granting earnings-related daily allowance. Below you can find more information about what benefits or situations may prevent the payment of earnings-related daily allowance.   

Waiting period

Before the payment of earnings-related allowance can begin, a 7-day waiting period is applied and daily allowance is not paid for this period. The waiting period must correspond to seven workdays and must be completed within eight consecutive calendar weeks. If the first day of your waiting period is in week 8 (on Friday), the waiting period must end on week 15 at the latest. A maximum of five days per calendar week can be included in the waiting period. 

The waiting period is seven business days if you are fully unemployed. If you are working part-time your “unemployed” hours count towards the 7-day waiting period. For example, if you work 4 hours per day and 20 hours per week and a full-time working week in the sector is 37.5 hours, 3.5 hours per day and 17.5 hours per week can be counted towards your waiting period. This means that you need to accumulate a total of 7 x 7.5 hours, i.e. 52.5 hours (=corresponding to three working weeks), to complete your waiting period.

Holiday compensation

If you have worked full-time more than two weeks and you receive holiday compensation at the end of your employment relationship, this will postpone your right to the earnings-related allowance. Holiday compensation is paid for holidays that have not been taken during the employment relationship. If, for example, the amount of holidays compensation is equal to your one month’s salary, the earnings-related allowance is postponed by about a month. If the holiday compensation is paid for part-time work or for full-time work lasting no more than two weeks, the periodizing will not be done. But the holiday compensation is included in the salary when the adjusted allowance is paid.

Calculating the allocation period for holiday compensation

The periodizing of holiday compensation is done by comparing the holiday compensation to the daily wage, which is calculated based on the salary paid during the employment relationship. If the employment relationship has been long-term, the daily wage is calculated based on approximately 12 months of salaries. The calculation is mainly done according to the same principles as the daily wage that forms the basis for earnings-related unemployment allowance, but a reduction of 3.54 percent is not made from the daily wage, as is done in the calculation of earnings-related unemployment allowance.

For example, if the daily wage is 130 euros and you receive 1 300 euros in holiday compensation at the end of the employment relationship, the holiday compensation is divided by the daily wage (1 300 / 130 = 10), resulting 10 days. Earnings-related unemployment allowance is not paid for 10 days period from the end of the employment relationship. A maximum of five periodized days can be included in one calendar week. If a waiting period for unemployment allowance is required, it can only be taken after the periodized period for holiday compensation. However, a mandatory waiting period imposed by the employment officials runs concurrently with the periodized period for holiday compensation, as the mandatory waiting period is also set from the end of the employment relationship.

If, in addition to holiday compensation, a financial compensation related to the termination of the employment is paid when a full-time job lasting more than two weeks ends, these are combined and periodized from the end of the employment relationship.

Earnings-related daily allowance cannot also be paid if (the list is not conclusive)

• you receive holiday pay or holiday compensation on the basis of earned income from full-time work  
• you are not registered as a jobseeker
• you receive pregrancy allowance, special pregrancy allowance or parental allowance
• you receive old-age pension or early old-age pension (please note that this is not the same as partial early old-age pension) under the National Pensions Act or employment pension legislation
• you receive old-age pension based on full years of service
• you are completing military service or civilian service
• you are a full-time student (does not apply to short-term studies)
• you are under 18 years of age
• you have reached the age of 65. As an exception, earnings-related daily allowance may be paid after you have reached the age of 65 if you have been laid off or have been prevented from working due to weather conditions or collective action. The payment of daily allowance ends when you reach the age of 68 at the latest.

Right to earnings-related daily allowance may be lost due to absence from the labour market

You must be on the labour market to retain your right to earnings-related daily allowance. Being on the labour market means that you are in employment that meets the working condition, you are self-employed, or you are registered as an unemployed jobseeker. If you are outside the labour market for more than six months you may lose your right to earnings-related daily allowance, unless you have an acceptable reason for your absence, as referred to in the Unemployment Security Act. Your right to earnings-related daily allowance will not be restored until you have worked at least 12 months after your absence and met the working condition during this period. Acceptable reasons for being outside the labour market include, but are not limited to, taking care of a child under 3 years of age at home, full-time studies, military service and and sickness allowance or rehabilitation allowance period. Please note that a period for which you receive severance pay / a financial compensation is not an acceptable reason for being outside the labour market so you must register as an unemployed jobseeker when your employment relationship ends, even if you receive severance pay/financial compensation. Getting an additional pension is also not an acceptable reason for being outside the labour market. 

Employer’s obligation to pay wages and extra payments prevent the payment of earnings-related daily allowance

The unemployment fund will not pay earnings-related daily allowance for a period during which the employer has an obligation to pay wages. If you would be entitled to wages or compensation from your employer during your notice period, but you have given up this right either completely or you have agreed, for example, on a notice period that is shorter than the notice period required by law or agreement, you will not be paid earnings-related allowance for the period for which you would have been entitled to notice period wages or compensation for the termination of employment.   

The payment of earnings-related daily allowance is also prevented if your employer makes a payment to you (such as severance pay, financial compensation or motivation bonus) which can be considered to be made due to the termination of your employment. In such case, the unemployment fund divides the payment into periods on the basis of your income from your latest employment relationship. It does not matter what name the payment was made under or when the payment was made. For example, your employer may have made payments for several months before the end of your employment. If the payment is interpreted as a financial compensation, the unemployment fund will add monthly payments together and divide the whole amount into periods starting from the end of your employment. The periodizing of financial compensation is done by comparing the financial compensation to the daily wage, which is calculated based on the salary paid during the employment relationship. If the employment relationship has been long-term, the daily wage is calculated based on approximately 12 months of salaries. The calculation is mainly done according to the same principles as the daily wage that forms the basis for earnings-related unemployment allowance, but a reduction of 3.54 percent is not made from the daily wage, as is done in the calculation of earnings-related unemployment allowance. If you have also been paid holiday compensation in addition to a financial compensation, these are combined and periodized from the end of the employment relationship.

The above also applies if the employer is obliged to provide you with training or coaching under Section 13 of Chapter 7 of the Employment Contracts Act, but the money for the training is paid to you instead of training (e.g. as a training allowance). In this case, it is a financial compensation, so the amount of money is periodized as described above. If the employer neglects their training obligation and pays compensation for their neglect under Section 14 of Chapter 7 of the Employment Contracts Act, the compensation is not periodized.

Jobseeking must be kept active during the periodizing period because you must be available to the labor market to retain your right to earnings-related unemployment allowance after the periodizing period.

If you are employed during the periodizing period or if the work continues after the periodizing period long enough to meet the employment condition again, the level of earnings-related unemployment allowance is calculated based on this work when you start receiving the earnings-related unemployment allowance after the periodizing period and the end of the work.

If the employment officials have imposed a mandatory waiting period on you, it runs concurrently with the periodizing period of the financial compensation. However, the waiting period for earnings-related unemployment allowance can only be set after the periodizing period.

You must keep your jobseeking active during the period of financial compensation

You must keep your jobseeking active during the period of financial compensation, such as severance pay, because you must be available on the labour market to retain your right to earnings-related daily allowance after the periodizing period of financial compensation.

If you work at least 12 months during the periodizing of financial compensation or after and meet the working condition again, the rate of earnings-related daily allowance is calculated based on this work when you start receiving earnings-related daily allowance after the deferral period. 

Mandatory waiting periods imposed by the employment officials

The employment officials may impose mandatory waiting periods of varying lengths. Mandatory waiting periods are periods for which earnings-related daily allowance cannot be paid if you have influenced your own unemployment in some way. All calendar days are counted to mandatory waiting period. You can get more information about waiting periods and obligations related to applying for a work from the employment officials.  

A mandatory waiting period of 45 days may be imposed if you have resigned without an acceptable reason or have caused the termination of work by your own improper actions. If the employment would have lasted five days or less, the mandatory waiting period is 30 days. If you refuse work (you have been selected) that would have lasted more than two weeks the mandatory waiting period is 45 days. If the employment was supposed to last two weeks at most, the mandatory waiting period is 30 days. 

If you refuse a work training trial or other employment-promoting service without an acceptable reason, a reminder will follow from the first refusal or failure to comply. A 7-day mandatory waiting period will follow from the second and a 14-day mandatory waiting period will follow from the third refusal or failure to comply. The fourth refusal or failure to comply will lead to suspension of earnings-related daily allowance for the time being. The review period is 12 months.

If the earnings-related daily allowance has been suspended, it can be restarted after you have been working or have been in training for 12 weeks. If you participate in employment promoting services (e.g. labour market training, independent studies, a trial, job search training) earnings-related daily allowance is paid for the duration of the service even if the employment officials have imposed a mandatory waiting period for the same period. You can find more information about mandatory waiting periods by the employment officials on Job Market Finland.