Pay-subsidised work does not generally count towards the employment condition, which is required to be fulfilled in order to receive earnings-related allowance. Following the amendments to the Unemployment Security Act that have been in effect since September 2024, pay-subsidised work counts towards the employment condition only in specific situations.
The employment condition only accumulates from pay-subsidised work if the pay subsidy was granted for hiring someone with reduced work capacity or a long-term unemployed person aged over 60. In other situations, pay-subsidised work does not count towards the employment condition at all. This might come as a surprise to many.
What is pay-subsidised work?
A pay subsidy is a form of support designed to help unemployed jobseekers find employment. The employment authority can grant it to an employer to cover their salary costs when they hire an employee for pay-subsidised work. The purpose of pay-subsidised work is to help unemployed jobseekers find employment in the open job market and improve their professional skills. While the subsidy is granted and paid to the employer, its approval is always based on the kind of service the unemployed jobseeker needs.
Delayed accrual of the employment condition
For those with reduced work capacity and the long-term unemployed aged 60 or over, pay-subsidised work only begins to count towards the employment condition after the employment relationship has continued for 10 months.
- The first 10 months do not count towards the employment condition at all.
- The employment condition only begins to accrue from the 11th month onwards, provided that the salary is at least 465 euros per month.
- From the 11th month onwards, only 75% of the work counts towards the employment condition.
To meet the 12-month employment condition, a person in pay-subsidised employment must work longer than a person in regular employment. In practice, meeting the employment condition in pay-subsidised employment takes at least 26 months, i.e. 2 years and 2 months
It is important that jobseekers are aware of how pay-subsidised work affects unemployment security. This helps avoid any surprises down the line.
EXAMPLE:
The duration of the pay-subsidised work is 26 months, covering a period from January 1, 2025 to February 28, 2027. Salary is paid once a month during the month the work is performed, and the monthly salary is always at least 930 euros.
- There is no accrual towards the employment condition during the first 10 months, i.e. the period between January 1, 2025 and October 31, 2025.
- Accrual towards the employment begins with the 11th month, covering a period from November 1, 2025 to February 28, 2027. Of this 16-month working period, 75% counts towards the employment condition, equalling 12 months (16 x 0.75 = 12). The employment condition is fulfilled on February 28, 2027
(The periods that do not count towards the employment condition, i.e. the first 10 months and the 25% share that equates to 4 months, extend the 28-month reference period – i.e. the period during which the employment condition must be met.)
Pay subsidy provides a springboard
A pay subsidy is a benefit paid out to employers, designed to help unemployed jobseekers find employment.
It can be granted, for example, for full-time or part-time employment, fixed-term employment or apprenticeships.
Pay-subsidised work can provide a great pathway for transitioning back to working life, even if it does not always contribute to earnings-related security.