How are you affected by the staggering of holiday compensation and changes to the employment condition?

Topics

• Income security
• Law change

The staggering in of holiday pay, the tying of income to the working condition and the extension of the working condition will change the rules of the earnings protection game. After the changes, the length of work history required to qualify for the daily allowance will be longer and the amount of the daily allowance will be calculated differently from today. Holiday compensations will also continue to delay the start of daily allowance payments.

Several changes to unemployment benefits have been agreed in the government programme. The forthcoming legislative changes will bring a wide range of tightening to the conditions and level of support for those in receipt of income support. The changes mentioned in this news item are likely to come into force during next year. For an up-to-date timetable of when the changes are likely to enter into force, click here.

Staggering the holiday compensation reduces the amount of the daily allowance in practice

In future, we will only be able to start paying the daily allowance after the holiday compensation has ceased to have an effect. At the end of the employment relationship, any untaken leave will be paid. For example, if you are paid a month’s holiday, we can only start paying you the daily allowance one month after the start of your unemployment. This is called ‘staggering’.

As in the case of the waiting period, this staggering does not reduce the total amount of daily allowance you receive if you remain unemployed for the entire maximum period. Typically, however, unemployment lasts for much shorter periods, so in practice the staggering of the holiday compensation will reduce the amount of the daily allowance you receive.

For example, if your earnings-related allowance is 80 € per day and we can pay you earnings-related allowance one month after the start of your unemployment due to the holiday compensation. The impact will be around 1,720 €, depending on the number of days of payment. 

The staggering of holiday compensation will only affect periods of unemployment that started after the change in the law.

The tying of income to the working condition can also affect the amount of daily allowance

The tying of income to the working condition means that the working condition is calculated in half and whole months according to the number of euros paid to you. In the future, you will no longer accrue your working time on a calendar week basis, as is currently the case.

The aim of the change is to make the employment condition more responsive to the changing labour market and the opportunities created by digitalisation. The aim is to make the change in such a way that it does not affect the amount of the earnings-related allowance. However, as the amount of the daily allowance is calculated on the basis of the euros accumulated in the working condition, the change may have some impact on the level of the daily allowance. It is estimated that on average the impact will be very small.

Compared to the current situation, the main impact of the change will be on those who have accumulated several and shorter periods of work. In euro terms, the change will reduce the amount of daily allowances payable from a few euros to a few tens of euros per month, depending on the situation. 

However, the tying of income to the working condition will have no impact on the amount of daily earnings-related allowances already being paid. It will only have an impact on the daily allowances that will start later, after the entry into force of the amendment.

The tying of income to the working condition and extension of the working condition will change access to income support

In practice, the tying of income to the working condition also changes the way in which working is eligible for income support. In certain situations you can currently access earnings-related benefits, but after the change you will not. Similarly, the reverse is also true; after the change, you can access earnings-related benefits even if you cannot now.

If you work occasionally, but for example 18 hours in one calendar week per month, you will accumulate one week of working time in that week. After the tying of income to the working condition, the wages earned during the 18 hours may not exceed the lower limit for the tying of income to the working condition, in which case you will not accrue any working time. 

If you work occasionally so that you exceed the lower limit for the tying of income to the working condition during the month, you will still accrue the working time requirement for earnings-related insurance after the change, even if you work less than 18 hours each week. Under the current rules, this kind of work does not accrue working time, but in future it would. 

The working time requirement will also be extended in the context of the tying of income to the working condition. Currently, six months of work is required to accumulate the working time condition, but in future it will be a year of work. Most claimants of the earnings-related allowance have worked for more than a year, so the impact of the change will be felt mainly by those starting their careers and possibly also by those who have been unemployed for a longer period. This means that it will take longer to receive the earnings-related allowance after the change than before.