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Lay-off and earnings-related daily allowance

A lay-off is a situation in which the employment relationship otherwise remains in force, but the employer unilaterally decides to reduce your working hours and, as a result, also your salary. During a lay-off, you may be entitled to earnings-related unemployment allowance, provided that the general conditions for payment of the allowance are met.

In practice, a layoff may involve either a full suspension of work or a reduction in working hours, which directly affects the employee’s pay. When faced with a layoff, many people have questions such as what a layoff means in practice, how much income a laid‑off employee receives, how the waiting period for unemployment benefits is determined, and when the employer must give notice of the layoff. This page provides clear answers to these questions as well as instructions on how to apply for earnings‑related unemployment allowance during a layoff.

What does a lay-off mean?

A layoff refers to a situation in which the employer temporarily suspends work and the payment of wages, even though the employment relationship otherwise continues as normal. An employer may lay off an employee, for example, for production‑related or financial reasons, or when the amount of work available temporarily decreases.

Can a fixed-term employee be laid off?

An employer generally may not lay off an employee who is employed under a fixed‑term contract. An exception applies when you are working as a substitute for another person; in such cases, you may be entitled to earnings‑related unemployment allowance if the layoff would also apply to the person you are substituting.

By contrast, an employee in a fixed‑term public service employment relationship may be laid off if the reason is production‑related or financial.

If you are unsure about your rights or the grounds for the layoff, your trade union can assist you in assessing your situation.

Different types of lay-offs

There are several different ways in which a layoff can be implemented, so this page presents all the different types of layoffs. An employer may lay off an employee either for a fixed period or indefinitely. A layoff may be carried out on a full‑time or part‑time basis, for example by reducing the employee’s daily or weekly working hours.

In every layoff situation, the most important first step is always to register as an unemployed jobseeker. (siirryt toiseen palveluun)You can register in advance, but no later than on the first day of the layoff.

In layoff situations, working hours are assessed on a calendar‑week basis. A calendar week refers to the period from Monday to Sunday of the same week (for example, the period from Tuesday to the following Monday does not constitute a calendar week). In order for entitlement to earnings‑related unemployment allowance to arise, the employee’s working hours during a calendar week must not exceed 80% of the full‑time working hours for that job. In practice, a layoff may be implemented in one of the following ways:

Full-time layoff

For the period in question, there may be entitlement to full earnings‑related unemployment allowance.

A calendar week begins on Monday and ends on Sunday. A layoff lasting from Monday to Friday is also considered a full‑time layoff if:

The entitlement to unemployment allowance for an employee fully laid off from full‑time work is determined in the same way as for a fully unemployed person. During a full‑time layoff, there may be entitlement to full earnings‑related unemployment allowance.

Kokoaikatyöstä kokonaan lomautetun oikeus työttömyyspäivärahaan(siirryt toiseen palveluun, avautuu uuteen ikkunaan) määräytyy samalla tavalla kuin täysin työttömän. Kokoaikaisen lomautuksen ajalta voi olla oikeus täyteen ansiopäivärahaan.

Shortened workweek

Reduction of weekly working hours, i.e. a shortened workweek. This refers to a situation in which the employer reduces the working hours of an employee who normally works full time by one or more full working days within a calendar week. However, the layoff does not last for the entire calendar week. In such cases, earnings-related unemployment allowance may be paid in full for the days on which the employee is laid off.

However, the number of hours you work during a calendar week must not exceed 80% of the working hours of a full-time employee as applied in the sector. If the number of hours worked exceeds 80% of full-time working hours, you are not entitled to earnings-related unemployment allowance for that calendar week. The situation for other weeks falling within the application period is assessed separately.

Application details

If you have been laid off on a shortened workweek, always record your employment status in your daily allowance applications by full calendar weeks so that the unemployment fund can verify the working hours for each week.

You must record your employment status by calendar weeks also when you apply for allowance for a calendar‑month period based on a layoff and the month begins or ends in the middle of a calendar week.

Shortened workday

Reduction of daily working hours, i.e. a shortened workday. Under this type of layoff, the employer reduces your daily working hours on one or more days per week. In such cases, earnings‑related unemployment allowance is paid as an adjusted allowance.

If your daily working hours in full‑time employment are reduced due to a layoff and your pay decreases, you may be entitled to adjusted earnings‑related unemployment allowance from the unemployment fund. The same eligibility conditions for receiving adjusted allowance apply to you as to unemployed persons. Your working hours are reviewed based on the number of hours paid during the application period. If the number of paid hours exceeds 80% of full‑time working hours, you are not entitled to earnings‑related unemployment allowance for that period.

Mixed lay-off

If your layoff is implemented during the same calendar week both by reducing daily working hours and by laying you off for full working days, earnings‑related unemployment allowance is paid as an adjusted allowance for that week.

Whether the income you receive from work is taken into account based on the time the work was performed or the pay date depends on how the layoff has been implemented.

We will assess the situation on the basis of your application and its attachments.

Lay-off from part-time work

It is also possible to lay off an employee from part‑time work by reducing the working hours even further. The allowance is paid as an adjusted allowance regardless of whether daily working hours are reduced further or full working days are eliminated. If the layoff is full‑time, there may also be entitlement to full earnings‑related unemployment allowance.

If the method of layoff varies within a calendar week or the week includes another basis for adjustment, the allowance is always paid as an adjusted allowance for that week. A basis for adjustment includes, for example, wages paid for part‑time work or income from self‑employment.

If you are laid off full‑time but also have part‑time employment alongside full‑time work, you are likewise subject to adjusted allowance, and the income received during the application period is taken into account in your allowance.

Period comparable to a lay-off

Entitlement to earnings‑related unemployment allowance may exist not only during an actual layoff but also in situations that are considered comparable to a layoff.

What is period comparable to a lay-off?

Situations comparable to a layoff include cases where

  • the performance of work is prevented for reasons beyond the control of the employee or the employer (for example, a fire at the workplace or an exceptional natural event),
  • the suspension of work and payment of wages has been agreed upon at the beginning of the employment relationship (this applies, for example, to some classroom assistants and hourly‑paid teachers), or
  • a public official has been suspended from office.

Situations considered equivalent to a layoff are fairly common in the education sector among part‑time hourly‑paid teachers and classroom assistants, mainly due to the operating schedules of educational institutions. These include, for example, holiday periods of educational institutions during which the employer has no work to offer and does not pay wages.

Periods without teaching duties and without pay that are based on the institution’s established operating cycle must be recorded in the employment contract at the time it is concluded. Otherwise, the employer must follow the normal layoff procedure in order for a person working full time to be entitled to unemployment benefits during the employment relationship.

In some cases, so‑called voluntary unpaid leave or saving leave arrangements are used alongside layoffs. In such arrangements, the employee voluntarily agrees to take unpaid leave. Earnings‑related unemployment allowance is not paid for the duration of such voluntary or saving leave.

Remember to register as an unemployed jobseeker also in cases where the situation is considered equivalent to a layoff.

Public holidays during a lay-off

If you have been laid off either full‑time or on a shortened workweek and a separate public holiday compensation is paid in your sector, this may affect how many days of unemployment allowance can be paid for the week.

A public holiday compensation day during a layoff is counted as a “compensation day”. A maximum of five such days in total (unemployment benefit days, working days, waiting‑period days or compensation days) can be included in one week.

Example of public holiday compensation during a lay-off

Pekka is laid off for the period from 6 April to 10 April 2020, from Monday to Friday. Saturday and Sunday are normally unpaid days off for Pekka. However, the employer pays him a public holiday compensation based on full‑time employment for Good Friday on 10 April 2020.

Pekka is paid full unemployment allowance, but it is paid for four days only.

Provisions in some private‑sector collective agreements may result in no deduction being made from pay for a public holiday that falls during a layoff, because the public holiday is not considered a working day. In such cases, unemployment allowance is not paid for the public holiday.

In some private‑sector industries, the collective agreement provides that wages are not reduced for a public holiday occurring during a layoff, as the day would otherwise have been a day off.

In these situations, unemployment allowance is not paid for the public holiday, because the employee’s pay is not reduced.

Example from a sector where no public holiday compensation is paid

Annika has been laid off since 2 January 2020 and works only on Fridays. During the week from 6 April to 12 April 2020, Friday falls on 10 April, which is a public holiday.

In the sector in which she works, no separate public holiday compensation is paid. The employer deducts wages for four days from that week, as wages are not normally paid for public holidays either.

Because Annika does not lose income due to the public holiday (she would not have been paid for that day in any case), she is not paid unemployment allowance for 10 April.

Aloilla, joilla arkipyhistä ei makseta erillistä arkipyhäkorvausta, arkipyhä voi silti pienentää palkkaa, jos se osuu lomauIn sectors where no separate public holiday compensation is paid, a public holiday may still reduce pay if it falls during a layoff period. In such cases, unemployment allowance is paid as normal, and the public holiday does not affect the number of benefit days payable.

The occurrence of a public holiday during a layoff period therefore does not cause any exceptions in the payment of the benefit.

You can check the provisions on public holiday compensation in the applicable collective agreement, for example through your trade union.

Applying for the daily allowance during a lay-off

  1. 1

    Register as an unemployed jobseeker

    Register with the employment authorities as an unemployed jobseeker no later than on the first day of the layoff. You may also register as an unemployed jobseeker in advance.
  2. 2

    Submit the application retrospectively

    Apply for earnings-related unemployment allowance retrospectively no later than three months after the period concerned via Otenet. Your application must always cover at least one full calendar week, from Monday to Sunday, even if you were laid off for only one day during that week. Record the actual hours worked during the calendar week in your application on the specific days when the work was performed.

    Enter the hours worked or other activities during the week by editing the “Information for the claimed period” section of the application form. First, select your activity during the application period, and then click Continue to enter the selected details day by day in the calendar view. If any day is missing a selection, the application cannot be submitted.

    If you select that you were working on a given day, you must also enter the working hours for that day. Working hours therefore cannot be 00:00. On days when you did not work but were not laid off, you may select “unemployed.” If you do not wish to select “unemployed,” you can instead mark “Other reason, what?” and choose “off work” in the preselection. This will make “off work” available as a selectable option in the calendar view.

  3. 3

    Wait for the decision and payment notification

    If we need additional information from you, we will send you a request for further clarification before issuing a decision. We will primarily request additional information via a message in Otenetti. Please respond to the request for clarification as soon as possible.

What attachments are needed?

You can submit your application for earnings-related unemployment allowance even if you do not yet have all the required attachments or if the statement from the employment authority is still missing. Attachments to the application can always be supplemented retrospectively. We will request any necessary attachments from you during the processing of your application.

Attachments
  • A copy of the lay-off notice
  • A copy of the employment contract. If you perform part-time or occasional work for another employer during the lay-off period, please also attach the employment contract related to that work.
  • A copy of the payslip for the application period if you have had working days. If your employer applies a lay-off–related salary reduction (so-called lay-off deduction) only in the following month’s salary, please also attach that payslip to the application.

Lay-off and waiting period

Applicants often use the term suspension period when referring to waiting period. The waiting period equals seven working days of unemployment, during which unemployment allowance is generally not paid. A waiting period may also apply in lay-off situations before entitlement to allowance begins.

Changes in your lay-off

If you start receiving pay for the notice period, this must be reported to the unemployment fund immediately. The unemployment fund must also be informed if you have already received earnings-related unemployment allowance on the basis of a lay-off and the lay-off is cancelled, or if, for another reason, you receive salary retroactively for the lay-off period.

Please also always indicate in your application if you are on annual leave during the lay-off period.