Types of employment have diversified in both form and content. There is an increasing number of jobs where working hours vary and which do not involve a traditional employment relationship. As new technology solutions emerge, they bring about entirely new type of work. However, many jobs still remain where work is conducted full-time and under an employment relationship, bound to a specific time and place.
In the current diverse landscape of working life, unemployment benefits should be geared towards meeting the core purpose of earnings-related unemployment security: quick return to the job market for the jobseeker. While it is important that the security is at a level sufficient to get by, the current discussion on the topic is focused on how to arrange the security in a way that encourages recipients to find full-time employment.
The unemployment security system is designed to help people find full-time employment as quickly as possible. However, full-time employment is by no means a given in this day and age. In many industries, part-time employment is already more of a rule than an exception. A part-time job can help bring you continuity in your working life and make it easier to transition between jobs. The current earnings-based income security system is designed to encourage people to also accept part-time and occasional work during their unemployment. And in many industries, part-time employment is already more of a rule than an exception.
What is part-time work?
In terms of unemployment security, part-time work is any work conducted under an employment relationship where the working hours stipulated in the employment agreement do not exceed 80% of a full-time employee’s maximum working hours, as applicable to the sector.
You can be eligible for adjusted daily allowance if the following criteria are met:
- part-time employment with no more than 80% of the working hours of full-time employment
- your daily working hours have been shortened due to lay-off
- you have full-time employment for a maximum period of two weeks
- part-time entrepreneurship
- full-time entrepreneurship for a maximum period of two weeks
- the employer unilaterally turns your employment into part-time employment
Your work is deemed occasional when your full-time employment lasts a maximum of two weeks. This makes you eligible for adjusted daily allowance. The term intermittent work is used when referring to fixed-term employment in general. Fixed-term employment can be full-time or part-time.
Zero-hour contracts and other contracts where the amount of working hours are variable rather than fixed (e.g. 0–40 hours/week or 10–30 hours/week), as well contracts where the employee is called to work as needed, are called contracts with variable working hours. An employee can request a contract with variable working hours to accommodate their studies or if they otherwise so prefer. The employer, however, can only offer a contract with variable working hours when the amount of work they have available actually varies.
If an employee chooses to shorten their working hours on their own accord, they are not eligible for unemployment benefit.
However, you can be eligible for adjusted unemployment benefit when working under a zero-hour contract if the hours offered are very limited.
How does part-time employment affect earnings-related allowance?
The amount of adjusted daily allowance is calculated by adjusting your earnings-related allowance with the income from your part-time employment. 50% of your paid income reduces the amount of your earnings-related allowance. The total of your income earned and your adjusted daily allowance cannot exceed the salary on which the allowance is based. At minimum, your adjusted earnings-related allowance equals Kela’s adjusted basic unemployment allowance you would be entitled to.
Example:
- Kathy’s full earnings-related allowance = €60/day
She takes a part-time job with a salary of €600/month
(The salary is paid monthly, making a calendar month her application period for the earnings-related allowance.)
- 50% of her paid income reduces the amount of her daily allowance.
€600/month ÷2 = €300
- To arrive at the daily figure for the share of her salary that affects the calculation, it is divided by the average number of working days in a month:
€300/month ÷ 21.5 days/month = €13.95/day
- Therefore, her adjusted daily allowance amounts to €60/day – €13.95/day = €46.05/day
- Adjusted daily allowance is paid for each weekday of the adjustment period.
The example month includes 23 weekdays, giving Kathy the following options in terms of her earnings (taxes not included):
- Her salary, if she chooses not to apply for earnings-related allowance: €600/month
- Her earnings-related allowance, if she does not take a part-time job: €60.00/day x 23 days = €1,380/month
- Her salary + earnings-related allowance, if she applies for adjusted earnings-related allowance:
€600/month + (€46.05/day x 23 days) = €1,659.15/month
How much is the adjusted earnings-related allowance?
The amount of your adjusted earnings-related allowance varies each month depending on how much you work and how much earned income you are paid. To be eligible for earnings-related allowance, the working hours your salary is based on must not exceed 80% of the maximum working hours in the industry. If you exceed the working hour limit of 80% for your adjusted daily allowance, you are not eligible for the benefit. For the months during which you do not exceed the hour limit, your salary and your earnings-related allowance are adjusted. You are therefore eligible for adjusted earnings-related allowance in addition to the income earned for your part-time employment.
When you receive adjusted daily allowance, payment-based method is used for adjustment. This means that the salary income you receive during your unemployment impacts your earnings-related allowance based on the time the salary is actually paid to you. During your application period, adjusted daily allowance is also paid to you for the days during which you work. To get an estimate on the amount of your adjusted daily allowance, use the daily allowance calculator.
If you receive adjusted daily allowance, the days included in the maximum period calculation accumulate slower than if you received full daily allowance. When calculating the maximum payment period, the amount paid out as adjusted daily allowance is converted to full earnings-related allowance days. The amount of full daily allowance and adjusted daily allowance have an impact on how days accumulate when paying out daily allowance adjusted to the maximum period.
How does staggering affect adjusted daily allowance?
In autumn 2024, a legislative amendment on the staggering of earnings-related allowance entered into force. When staggering is applied, your daily allowance decreases at certain milestones as the period during which you receive daily allowance continues. The amount of your daily allowance is reduced to:
- 80% of the original when you have received daily allowance for a period of 40 days (approx. two months), and
- 75% of the original when you have received daily allowance for a period of 170 days (approx. eight months).
The staggering of earnings-related allowance also applies to part-time employment. However, the 40 and 170-day milestones take longer to reach in part-time employment, because full earnings-related allowance days accumulate slower. To get an estimate of your staggered daily allowance and to see how it is affected when your earned income is deducted, use the daily allowance calculator.
Example of staggering for a recipient of adjusted daily allowance:
- Gary’s full daily allowance amounts to €60/day. He receives a salary of €430/month for part-time employment.
50% of his salary, i.e. €215, reduces his full daily allowance in the amount of €10/day (€215 ÷ 21.5 days).
- At the beginning of his unemployment, Gary’s adjusted daily allowance totals €50/day (€60/day – €10/day).
- If he is paid €50/day in adjusted daily allowance for a period of 20 days, totalling €1,000 (20 days x €50/day), his adjusted daily allowance takes a total of 17 days off his allowance period (maximum period) (€1,000 ÷ €60/day).
- When Gary reaches the 40-day milestone of his allowance period (maximum period), his daily allowance is reduced to 80%. From this point forward, his adjusted daily allowance is based on the reduced daily allowance, which is €48/day (€60/day x 0.80), rather than full daily allowance. After the first staggering, Gary therefore receives €38/day in adjusted daily allowance (€48/day – €10/day).
- If he is paid €38/day in reduced adjusted daily allowance for a period of 20 days, totalling €760 (20 days x €38/day), Gary’s reduced adjusted daily allowance takes a total of 16 days off his allowance period
(maximum period) (€760 ÷ €48/day).
- When Gary reaches the 170-day milestone of his allowance period (maximum period), his daily allowance is reduced to 75% of full daily allowance. From this point forward, his adjusted daily allowance totals €45/day (€60/day – €25/day).
- For Gary to again be eligible for unstaggered adjusted daily allowance, he must refulfill his employment condition, resetting the maximum period for earnings-related allowance.
