Meeting the employment condition and the graduated reduction of earnings-related unemployment allowance are closely linked. Each time the employment conditions are met and a new maximum payment period begins, the graduated reduction is reset and starts again from the beginning.
Accumulation and fulfilment of the employment condition
The employment condition is accumulated on a calendar-month basis. For a calendar month, either half or one full employment condition month may build up. The amount of wages paid during the calendar month determines whether half, one full, or no employment condition month build ups. If so-called insurable earnings of at least EUR 930 are paid during a calendar month, one full employment condition month build ups.
Holiday pay, holiday compensation and other non-established pay items are not included in insurable earnings. Half an employment condition month build ups if wages paid amount to at least EUR 465 but less than EUR 930. The employment condition is met when a total of 12 full employment condition months have build upd within a 28-month reference period.
Employment condition months may also build up for calendar months during which no work has been performed. In some cases, wages are paid in the month following the work. If an employment relationship ends in March and wages earned for work performed in March are paid in April, April build ups towards the employment condition even though the work has already ended. In some cases, pay supplements alone may also build up employment condition months.
The level of earnings-related unemployment allowance is subject to graduated reduction
Graduated reduction means that the amount of the allowance decreases once earnings-related unemployment allowance has been paid for a certain number of full benefit days.
- The first 40 benefit days are paid at the full allowance rate. .
- Thereafter, the allowance is reduced under the graduated reduction model to 80% of the full allowance. Allowance at 80% is paid for benefit days 41–170.
- After this, the allowance is reduced under the graduated reduction model to 75% of the full allowance, which is paid from benefit day 171 onwards.
For partially employed persons receiving adjusted earnings-related unemployment allowance, full benefit days build up more slowly in the maximum period calculation than for fully unemployed persons. Consequently, the graduated reduction affects adjusted allowance later. The graduated reduction begins once allowance has been paid for a period corresponding to 40 full benefit days.
Example:
- Your full earnings-related unemployment allowance is EUR 60 per day. You become partially employed and apply for adjusted allowance. Due to your wages, you receive EUR 30 per day in adjusted allowance for 20 days, totalling EUR 600.
- The paid allowance of EUR 600 corresponds to 10 days of full allowance (EUR 60 per day). Therefore, 10 days accumulate in both the maximum period calculation and the graduated reduction calculation, even though adjusted allowance is paid for 20 days.
- Because you receive only half of the full allowance, it takes a total of 80 days to reach the 40-day threshold for the graduated reduction.
The graduated reduction always applies to the full allowance. Once the reduced allowance amount (80% or 75%) has been calculated, the effect of earned income, business income or other benefits is deducted. This results in the graduated reduction, i.e. reduced, adjusted allowance.
Re-fulfilment of the employment condition
When entitlement to earnings-related unemployment allowance begins, accumulation of a new employment condition also starts. Each time 12 full employment condition months have build upd, the employment condition is met again. The allowance amount is then recalculated and a new maximum payment period begins. If the allowance has been subject to graduated reduction, the graduated reduction is also reset at that point. The graduated reduction then starts again from the beginning: the first 40 benefit days are paid at the full allowance rate, followed by 80% for benefit days 41–170 and 75% from benefit day 171 onwards.