Government proposes changes to the adjustment of unemployment security

The Government has submitted a proposal to Parliament for amending, as of 1.1.2023, certain provisions of the Unemployment Security Act concerning the adjustment of unemployment allowance. Adjustment means that income from part-time work or work periods lasting less than two weeks, for example, is taken into account in the payment of earnings-related unemployment allowance. Please note that these legislative amendments are not yet in force. We will provide more information on the matter as we receive new information on the progress of the proposed amendments.  

Waiving the special adjustment period

A special adjustment period is used if the adjustment period needs to be shortened from the usual four weeks or one month. The adjustment period is shortened, for example, in cases where the period includes days for which there is no entitlement to earnings-related unemployment allowance. However, the specific adjustment period and the related imputed income have not been applied since May 2020. This temporary legislative amendment is in force until the end of 2022. The Government proposes that the special adjustment period and the imputed income be permanently abolished. The earned income paid during the adjustment period would be adjusted even if it is paid on a date for which there is no entitlement to earnings-related unemployment allowance. The earned income would no longer be mathematically adjusted, so it would be taken into account in the adjustment as the amount that was paid.  

Distribution of earned income over several months

If earned income is paid in one go for a period longer than one month, the earned income may affect the earnings-related unemployment allowance for several months. the Government proposal states that earned income would be divided into the payment month and subsequent months only if the employer has deviated from the usual pay period. In addition, the working hours on which the salary is based would be divided equally into the same number of application periods as for which the salary was earned.  

Review of working hours for persons laid off with reduced daily working hours

Adjusted earnings-related unemployment allowance can be paid if the working hours are no more than 80% of the maximum working time for a full-time employee. The working hours of those laid off with reduced daily working hours are examined one calendar week at a time. The Government proposes that the working hours review period would in future be the same as the adjustment period, i.e. four weeks or a month. The change would apply to situations where daily working hours have been reduced due to a lay-off or a reason comparable to a lay-off, or work has been prevented due to an industrial action that does not depend on one’s own terms of employment or working conditions.  

Assessment of working hours

If the employer has neither the opportunity nor the need to monitor working hours, the unemployment fund is usually unable to confirm that the conditions are met for receiving adjusted earnings-related unemployment allowance. In such cases, adjusted earnings-related unemployment allowance cannot be granted. The Government proposes that a provision on the exceptional assessment of working hours be added to the Unemployment Security Act. Employees would be entitled to adjusted unemployment benefit if it can be inferred from the nature and circumstances of their work that their working hours are no more than 80% of the maximum.  

Additional information

More information on the Government proposal can be found in Finnish on the website of the Ministry of Social Affairs and Health.