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The pandemic and its effects on business in Finland.

COVID-19 Newsroom, News / 09.04.2020

Covid-19 forces changes to state financial aid for employers, employees and entrepreneurs

The Finnish labour market organizations have, on request by the Finnish Employment Minister, provided the Government with a number of proposals aimed at facilitating the lives of employers, employees and entrepreneurs who are currently, due to the Covid-19 outbreak, facing an unforeseen and though financial situation. The Parliament has supported many of these proposals and during the current week amendments to existing legislation as well as new acts have in this respect been approved by the Parliament, whereas some changes are still pending approval.

Below is a short overview of some of the financial aid measures approved this week or waiting to be approved by the Parliament in the very near future:

 

Temporary amendments to the Unemployment Security Act

Temporary amendments to the Unemployment Security Act include loosened requirements to receive unemployment security and making labour market support available for entrepreneurs:

  • Waiting period before being eligible for unemployment security waived

An unemployed jobseeker is generally allowed to unemployment security only after a waiting period corresponding to five full working days, starting from the date when the unemployed has registered him/herself as an unemployed jobseeker with the local Employment and Economic Development Office (TE-Office). According to the Government proposal, however, an unemployed jobseeker will be eligible for unemployment security from the date the unemployed jobseeker registers with the local TE-Office, i.e. the five-day waiting period will be waived. This would apply to all employment related allowances including earning-related allowance (FI: ansiopäiväraha), basic unemployment allowance (Fi: peruspäiväraha) and labour market support (Fi: työmarkkinatuki) The allowance payable for the five-day waiting period (during which unemployment security is normally not received) will be paid by the State even if the jobseeker would otherwise receive allowance from an unemployment fund.

The proposed temporary amendment is in counterbalance with the approved temporary amendments of Finnish employment laws enabling employers to observe shorter consultation and notice periods when temporarily laying off employees (please see our news on this topic here).Since the shorter layoff process weakens employees’ possibilities to foresee layoffs the above five-day waiting period is, in these circumstances, regarded unreasonable.

The temporary amendment is proposed to be retroactively in force from 16 March onwards until 6 July 2020.

  • Requirement on the duration of employment for a wage-earner to be eligible for unemployment security shortened

The requirement concerning the period of employment for wage-earners that is a condition for being eligible for unemployment security (earning-related allowance or basic unemployment allowance) (FI: Työttömyyspäiväraha) is shortened. The required period of employment would be 13 calendar weeks, instead of the 26 calendar weeks currently applied. For family members that do not own a family business but are employed by a family member entrepreneur the required period of employment is proposed to be shortened to 26 weeks instead of the current 52 calendar week requirement.

Also, in order to be eligible for earnings-related allowance the unemployed jobseeker is required to have been a member in an unemployment fund – the applicable time periods have been amended to at least 13 weeks, or six months in case of the unemployed having been employed by a family member entrepreneur. Basic unemployment allowance is payable to unemployed jobseekers not being members of any unemployment fund.

The temporary amendment is proposed to be retroactively in force from 16 March onwards until 6 July 2020.

  • Entrepreneurs temporarily eligible for labour market support

On 8 April 2020 the Parliament approved of an amendment to the Unemployment Security Act providing entrepreneurs financial aid by making them eligible for labour market support. Under the temporary amendment all entrepreneurs facing a decrease in demand due to the Covid-19 pandemic are eligible for labour market support and the eligibility is irrespective of the entrepreneurs’ business or form of business (self-employed or engaged in business through a company).

In order to be eligible for the labour market support (i) the entrepreneur’s  full time work with the business must have ended or (ii) the monthly income for each person engaged in the business must be less than EUR 1 089,67. A further requirement is that (i) and/or (ii) above must be due to the Covid-19 outbreak.

If applying for labour market support the entrepreneur must register him/herself as a jobseeker with the Employment and Economic Development Office (TE-Office). After this he/she can apply for the labour market support with the Finnish Social Insurance Institution (Fi: Kansaneläkelaitos). The labour market support amounts to EUR 33,66/per day and is subject to income tax and is paid for five-day periods at a time. Entrepreneurs fulfilling the eligibility criteria may apply for the labour market support retroactively i.e. from 16 March 2020 – the labour market support will be paid at most until 30 June 2020.

 

Level of Employer’s statutory employment pension contribution temporarily decreased

As originally proposed by labour market organizations, the level of employers’ statutory pension contribution is temporarily decreased by 2.6 percent points. The temporary act allowing the decrease was approved by the Parliament 7 April 2020.

In Finland the statutory earnings-related pension insurance contributions are paid partly by the employees and partly by the employer. The contributions are statutorily set and normally the total contribution is equal to 25.3% of the employee’s gross salary and the employee’s share of the contributions is either 7.15% or 8.65%, depending on the employee’s age. The temporary act allows a decrease of the employer’s statutory insurance contribution (in Finnish: TyEL) between 1 May and 31 December 2020 by 2,6 per cent points – the employee’s share of the pension insurance contribution remains unchanged. In addition, the pension insurance companies, to whom the pension contribution is typically paid on a monthly basis, are allowed to accept a postponement of up to three months of the payment of the employer’s pension contribution.

 

For further information, please contact:

Tuurna