The current Finnish Government’s first set of unemployment security reforms will take effect at the turn of the year if the changes of the law are approved. The changes will affect the Unemployment Security Act, which also governs unemployment funds. The reformed act is due to take effect on 1 January 2024. Let’s review the key changes with Kaisa Tikka, Benefits Manager at A-kassa.
Which changes will take effect first?
Changes to the effect of holiday compensation and longer waiting periods will apply as soon as the new act enters into force. The child increment and adjusted protected part of earnings will be removed at the start of April. Changes to the employment condition will apply as of 2 September 2024, according to Kaisa Tikka.
In addition, the government has proposed freezing index increases for the years 2024–2027. In the case of earnings-related unemployment security, this means that the basic part of unemployment security will remain at the level of 2023. As a member of the unemployment fund, in addition to the basic part, you get an earnings-related part, which takes into account the salary before unemployment.
The changes will affect the amount of the earnings-related unemployment allowance. However, the earnings-related unemployment allowance available from the fund will still be higher than the basic daily allowance paid by Kela. In other words, members will continue to benefit from belonging to the fund.
What will be the impact of the change to the waiting period?
Before the fund can pay an earnings-related unemployment allowance, there is a waiting period in which no income security is paid. The waiting period is currently five days, but it will rise to seven days at the start of January. This means that the waiting period will be seven days instead of five days if the waiting period starts around 2024.
What does the “periodisation of holiday compensation” mean?
In future, annual holidays not taken before the end of the employment relationship will postpone the start of the earnings-related unemployment allowance by as many days as the holiday compensation corresponds to. In other words, any annual holiday that you have earned but not yet taken is considered before an earnings-related unemployment allowance can be paid, according to Tikka.
The holiday compensation will be periodized when the employment relationship ends on or after January 1, 2024.
Changes taking effect in April
Will child increments be abolished?
Yes. At the moment, child increments are paid for children under the age of 18. From the start of April, income security will no longer include increments for people with children.
In 2023, the child increment per day is EUR 7.01 for one child, EUR 10.29 for two children, and a total of EUR 13.29 for three or more children.
An extra increase was applied to the child increment for unemployment security in 2023, and this will be removed at the start of 2024. The elimination of the increase will reduce the child increment by EUR 25–48 per month, depending on the number of children.
What does the removal of the protected part of earnings for part-time workers mean?
The protected part of earnings is the amount of money you can earn without affecting your earnings-related unemployment allowance. At present, the protected part of earnings for part-time work is a maximum of EUR 300 per month. In other words, you can earn this much without it reducing your earnings-related unemployment allowance. As of April, there will no longer be a protected part of earnings – all income will be considered when calculating the earnings-related unemployment allowance.
Changes taking effect in the autumn
What will be the impact of the longer employment condition?
The employment condition is the time you need to be at work before you are entitled to an earnings-related unemployment allowance. Currently, 26 calendar weeks (half a year) of employment entitles you to an earnings-related unemployment allowance. The Government Programme proposes to extend the requirement to 12 months. According to our current information, this will take effect in September 2024.
Tikka says that in the future, employees should join the fund in good time to accrue enough employment to satisfy the employment condition. Learn more about membership.
What will be the effect of measuring the employment condition in earnings instead of time?
Currently, the employment condition accrues on the basis of working hours. The Government Programme proposes changing this so that the employment condition accrues on the basis of wages paid. This means that your entitlement to a daily allowance will not be based on the number of hours you worked before becoming unemployed. Instead, your earnings will be used to assess whether you worked enough before becoming unemployed. However, the details of this are not yet clear, so we cannot currently say what the impact of the change will be on our members.
According to our current information, this will take effect in September 2024.
Please note that the changes to the law are still being processed and may change.
