Legislative changes approved

Topics

• Income security
• Law change

Parliament has approved amendments to the Unemployment Security Act. This includes a major amendment that changes the condition of employment that is the basis for income support. Other changes have also been adopted which will effectively cut income support.

The amendments will enter into force on 1.1.2024 and will be applied from the beginning of the year, in April and later also in September. The changes do not affect earnings-related benefits granted before the changes. The exception is the abolition of the child supplement and protection component, which will be abolished for everyone in April 2024.

Extension of the waiting period

For the start of entitlement to benefits, the waiting period is extended from five days of unemployment to seven days of unemployment. The change applies when the waiting period starts on or after 1.1.2024.

Periodicity of holiday compensation

The payment of holiday compensation at the end of a full-time job lasting more than two weeks will prevent the payment of unemployment benefit for the period for which the holiday compensation is to be spread. For example, if you are paid holiday compensation for a period of one month, we will not be able to pay income-related daily allowance for the same period.

This applies to employment relationships that end on or after 1.1.2024.

Abolition of child increase

Child increase to unemployment benefit is abolished. This will result in changes to the amount of the earnings-related allowance and the mobility allowance. Child increases will no longer be payable after 1.4.2024.

Abolition of the protection amount

The protected part of the adjusted daily allowance, i.e. the part of the income that is not taken into account in the calculation of the amount of adjusted unemployment benefit, will be abolished. The change will apply to application periods starting after 1.4.2024.

New working condition

The adopted draft law changes the employment condition for unemployment benefit, so that the employment condition will be determined by the insured income from paid employment. Currently, the working condition is based on working time per calendar week. At the same time, the working time of an employee will be extended from the current period of around 6 months to 12 months. At the same time, the provisions on the determination of the daily subsistence allowance will be amended to reflect the change in the condition of employment of an employee.

The Act will enter into force on 1.1. 2024 and will apply from 2.9. next autumn.

If the current employment condition is fully met by 1.9.2024, the entitlement to earnings-related daily allowance will be determined accordingly.  The new working condition will be replaced when the new working condition is fully met after 2.9.2024.

During the transition period, work can be counted towards the working conditions under the current and the new working conditions. The accumulation of the current working condition will then be converted to the new working condition.

There will be no index increase in unemployment benefit

Parliament has also approved a freeze on indices for the period 2024-2027. The basic unemployment benefit under the Unemployment Security Act, the increase part of the basic daily allowance and the amount of the child increase are not increased by an index. In the case of earnings-related unemployment security, this means that the basic part and the income limit of unemployment security will remain at the level of 2023.

However, the calculation of the daily allowance will change slightly at the turn of the year, as the percentage deduction from the wage on which the daily allowance is based will be reduced. The deduction is based on the employee’s earnings-related pension and unemployment insurance contributions and health insurance daily allowance contribution. The reduction this year is 4.4%. Next year the reduction will be 3.76%.

Updated 19.12.2023