Unemployment security vocabulary

Insurance condition

The insurance condition refers to the membership condition, which means that in order to receive earnings-related daily allowance you must have been a member of an unemployment fund for a minimum of 26 weeks and met the working condition during this period. 

Work requirement for the payment of earnings-related daily allowance (working condition)

In order to receive earnings-related daily allowance, you must have worked during your membership of the unemployment fund. This is referred to as the working condition. The working condition requirement is 26 weeks of work with working hours of at least 18 hours per week. In other words, you must have worked at least 18 hours per calendar week for a total of 26 weeks during your unemployment fund membership to be entitled to earnings-related daily allowance. The 26 weeks of work must be completed in the 28 months preceding unemployment. The work does not have to be continuous or performed under a single uninterrupted employment relationship and working weeks can also be accumulated from work such as temporary work. The working condition must be met during unemployment fund membership. The 28-month review period for the working condition can be extended for an acceptable reason. Acceptable reasons include full-time studies, unpaid sick leave, military service and care of a child under 3 years of age, among other reasons. The working condition is 34 weeks if you have not worked a single calendar week that meets the working condition since 29 December 2013.   

Earnings-related daily allowance

Earnings-related daily allowance is the same as unemployment allowance. Unemployment funds pay unemployment allowance as earnings-related daily allowance, while Kela pays unemployment allowance in the form of basic unemployment allowance. Earnings-related daily allowance is also referred to as unemployment compensation, even though unemployment funds no longer pay compensation, and the unemployment allowance and the earnings-related daily allowance are allowances. Earnings-related daily allowance is available to unemployment fund members who meet the requirements for the payment of earnings-related daily allowance, such as the membership and working conditions. Earnings-related daily allowance consists of the basic part and the earnings-related part which is tied to your earnings. The amount of the basic part is the same as full basic unemployment allowance paid by Kela (EUR 35,72 in 2022). The earnings-related part is 45 percent of the difference between daily earnings and the basic part. If your monthly earnings exceed EUR 3 393,40 the earnings-related part for the amount in excess of this limit is 20 percent. 
Daily pay is calculated on the basis of the average of earned income. The section on the amount of earnings-related daily allowance provides further information on how the amount of earnings-related daily allowance is calculated. You can calculate the estimated amount of your earnings-related daily allowance by going to the electronic services of the unemployment fund.

Child increase

A child increase may be paid on your earnings-related daily allowance. A child increase can be paid for dependent children under the age of 18. In 2022, the amount of the child increase is EUR 5,61 for one child, EUR 8,23 for two children and EUR 10,61 for three or more children. The child increase will not be paid on job alternation compensation.

5-day waiting period

The 5-day waiting period is a period corresponding to five workdays. The 5-day waiting period is always applied when applying for earnings-related daily allowance for the first time. The 5-day waiting period is also applied if you meet the working condition again and the new maximum payment period of daily allowance begins more than a year after the start of the previous maximum payment period. 
The waiting period is five business days if you are fully unemployed. If you are working part-time your “unemployed” hours count towards the 5-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 5 x 7.5 hours, i.e. 37.5 hours (=corresponding to two weeks and one day), to complete your waiting period.

Unemployment path to retirement

The unemployment path to retirement is an established concept in Finnish unemployment security. The unemployment path to retirement refers to a person’s right to additional days. In other words, payment of daily allowance beyond the normal maximum payment period (300 to 500 days). A member born between 1957 and 1960 will be paid unemployment allowance until the end of the month in which the member turns 65, if the member has turned 61 before reaching the maximum payment period. It is also required that the member was in paid employment, that accrued pension, for a minimum of five years within the last 20 years. If you were born between 1961 and 1962 you may be entitled to additional days if you turned 62 years of age before reaching the maximum daily allowance payment period. You must also have a minimum of five years of employment history in pension-insured work in the 20 years prior to meeting the working condition. If you were born 1963 you may be entitled to additional days if you turned 63 years of age before reaching the maximum daily allowance payment period. You must also have a minimum of five years of employment history in pension-insured work in the 20 years prior to meeting the working condition. If you were born 1964 you may be entitled to additional days if you turned 64 years of age before reaching the maximum daily allowance payment period. You must also have a minimum of five years of employment history in pension-insured work in the 20 years prior to meeting the working condition. If you were born 1965 or after, you are not entitled to additional days.

The purpose of additional days is to allow you to transfer from earnings-related daily allowance to old-age pension. If you do not wish to transfer to old-age pension, even if your age would allow it, we can pay you earnings-related daily allowance up to the age of 65. For anyone born in 1965 or later, the age for old-age pension will be over 65 and the maximum period for the payment of earnings-related daily allowance will change in accordance with the age limit for old-age pension, and earnings-related daily allowance will be paid until it is possible to transfer to old-age pension.

If a member is already on additional days, their days will no longer be reset and their rate of earnings-related daily allowance will not be recalculated, even if the member is employed and meets the 26-week working condition while on additional days.

New application

You must submit a new application for earnings-related daily allowance to the unemployment fund when you are applying for the daily allowance for the first time or if more than six months have passed since you previously applied for daily allowance. For example, if you are employed for three months you can use the follow-up application to apply for daily allowance.

Follow-up application

Follow-up application refers to applications for earnings-related daily allowance that are filled in and submitted after the initial application. If you have submitted your initial application for earnings-related daily allowance via the electronic service system you will also need to fill in and submit your follow-up applications via the system. If you sent your initial application by post, you will receive a follow-up application by post in connection with each payment. You can always apply for earnings-related daily allowance using a follow-up application if there has been an interruption of no more than six months to your applications due to a reason such as employment. If you have not applied for earnings-related daily allowance in six months or more, you must submit a new application for earnings-related daily allowance.

Mandatory waiting period

Mandatory waiting periods are set by the TE Office and prevent the payment of daily allowance. The unemployment fund has no control over whether or not the TE Office sets a mandatory waiting period, because the periods are based labour policy. If the TE Office sets a mandatory waiting period it will provide the unemployment fund with a labour policy statement. The unemployment fund will then issue a decision to the member on account of the statement. You may then appeal the decision to the Social Security Appeal Board.

Employee

Wage and salary earners whose income is based on payment received for work carried out for another party. You can become a member of an employees’ unemployment fund only if you are an employee, and only employees can get unemployment security from an employees’ unemployment fund. Please note that working for a company owned by your spouse may be considered business activity and not employment. Further information on the subject is available in the section on entrepreneurship.

Resetting the maximum payment period

Every time you meet the 26-week working condition, the unemployment fund will reset the maximum number of days you can receive daily allowance. Every working week that consists of at least 18 working hours for which you receive pay in accordance with the applicable collective agreement counts towards the working condition. If the sector does not have a collective agreement the pay for full-time work must be at least EUR 1,283 per month (in 2022). The maximum payment period of earnings-related daily allowance will always be reset after you meet the 26-week working condition, even if the maximum period has not been reached. You must meet the 26-week working condition in the 28 months immediately preceding the start of your unemployment.

Adjusted daily allowance

The unemployment fund can pay you adjusted daily allowance if you are in part-time employment or you have income from part-time business activities, for example. More detailed requirements are available in the section on work and income while on earnings-related daily allowance. Adjusted daily allowance is paid in periods of either one month or four calendar weeks. The exempt amount applies to the payment of daily allowance, which means that earnings-related daily allowance is paid in full if your income is less than the exempt amount. The exempt amount is EUR 300 if the daily allowance is paid on a monthly basis. If the daily allowance is paid in periods of four calendar weeks the exempt amount is EUR 279. The amount of adjusted daily allowance is calculated by taking into consideration half of the amount of income in excess of the exempt amount. For example, if the earned income subject to withholding tax is EUR 1,000 per month, EUR 350 per month (EUR 1,000 - EUR 300 = EUR 700 -> EUR 700 / 2 = EUR 350) is deducted from the full daily allowance. EUR 350 is then divided by 21.5, which gives the amount to be deducted from your full daily allowance per day. In this case, the full earnings-related daily allowance would be reduced by EUR 16.28 (EUR 350 / 21.5 = EUR 16.28) per day. Your monthly pay and adjusted daily allowance can be no more than 100 percent, in total, of the earned income on which your daily allowance is based.    

Adjusted daily allowance and the maximum payment period

When receiving adjusted daily allowance, the accumulation of days towards the maximum payment period is calculated by dividing the adjusted daily allowance (gross) by the full earnings-related daily allowance. This gives the number of days that count towards the maximum payment period. For example, if the gross adjusted daily allowance paid by the unemployment fund is EUR 500 per month and the full earnings-related daily allowance is EUR 50, the accumulation of days towards the maximum payment period is slowed down by about 50 percent and approximately 10 days per month are counted towards the maximum payment period.

Pay subsidy work

Under certain conditions, an employer may be granted pay subsidy. 75 percent of working hours in employment supported by pay subsidy count towards the working condition. In order to meet the 26-week working condition in employment supported by pay subsidy the employment must last at least 35 weeks. However, pay subsidy work organised on the basis of the employment obligation accumulates days towards the working condition in full.   
For pay subsidy work to count towards the working condition the work must meet the pay and working hour requirements. 

Entrepreneur

A person working as an employee may be considered to be a full-time entrepreneur when determining their right to unemployment security. For example, if you work as a paid employee in a family company in which you have ownership you may be considered to be an entrepreneur from the perspective of unemployment security. For a more detailed definition on entrepreneurship, see the section on entrepreneurs.
A part-time entrepreneur may be entitled to daily allowance if the business activities are determined to be small enough in scale that they do not prevent the person from accepting full-time employment. The TE Office is always the body that determines whether business activities are full-time or part-time in nature.