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Gradation of the earnings-related allowance

The earnings-related unemployment allowance will be gradated. This means that the amount of the earnings-related allowance will decrease:

  • to 80% of the full daily allowance after eight weeks of unemployment (after 40 days of benefits) and
  • to 75% of the full daily allowance after 34 weeks of unemployment (after 170 days of benefits).

If you receive an adjusted daily allowance, the number of days of benefit payments will accrue more slowly for the purpose of the gradation calculation. 

The earnings-related allowance will be gradated as of 2 September 2024 if the employment requirement, which is a prerequisite for paying the earnings-related allowance, includes work under the new income-based model in or after September 2024.

Who will be affected by the gradation?

  • Gradation will apply to employees whose daily allowances are determined based on the 12-month employment requirement after 2 September 2024. Therefore, if you are already receiving a daily allowance, gradation will only begin to apply to you once you have fulfilled a 12-month employment requirement. 

    The reduction in the earnings-related allowance applies to the earnings-related allowances paid to employees and self-employed people.

    Gradation applies to everyone who receives an earnings-related allowance, irrespective of whether the daily allowance is paid in full, adjusted, or reduced by the amount of a social benefit. Gradation also applies to earnings-related allowances payable based on additional days.

Vince’s work ends on 1 September 2024, and he applies for a daily allowance from 2 September 2024. His final salary is paid on the normal payday, 30 September 2024. The salary was earned from 1 August 2024 to 1 September 2024. Gradation does not apply to Vince because his salary was earned before the law took effect. Gradation will apply to Vince the next time he fulfils the employment requirement. In other words, gradation can apply in 12 months at the earliest.

Vince’s work ends on 25 August 2024. He is a jobseeker from 26 August 2024, and the applicable employment requirement is 26 calendar weeks. Payment of the daily allowance begins on 4 September 2024, after the seven-day waiting period.

Gradation does not apply to Vince because he fulfilled his 26-week employment requirement, even though payment of his daily allowance begins after 2 September 2024. The same procedure applies if payment of a daily allowance begins on or after 2 September 2024 for reasons such as the accrual of holiday remuneration or financial benefits.

Valo's employment ends on September 15, 2024, and he applies for earnings-related allowance starting from September 16, 2024. His last salary is paid on September 30, 2024.

Valo is subject to the gradation because the last salary was earned and paid after the law came into effect, i.e., after September 2, 2024, and he meets the 12-month employment condition.

Vince works part-time and has applied for a daily allowance from the fund since 1 June 2024. Vince applies for a daily allowance for 1 September 2024 to 30 September 2024 according to the normal application period.

Vince is paid the daily allowance as normal in September. Gradation does not apply to Vince because the employment requirement has not been fulfilled. Gradation will apply to Vince the next time he fulfils the 12-month employment requirement.

Vince’s work ends on 1 September 2024, so the applicable employment requirement is 26 calendar weeks. He spends several years out of the labour market for a valid reason. An earnings-related allowance is paid with no deductions if the entitlement to unemployment benefits begins no later than 1 September 2031. 

Gradation will apply to Vince the next time he fulfils the 12-month employment requirement.

If the payment of additional days begins before 2 September 2024, the gradation of earnings-related unemployment security will not affect the earnings-related allowance. The earnings-related allowance can be paid without gradation until the end of the calendar month when the applicant reaches the age of 65.

If the payment of additional days begins after 2 September 2024, the daily allowance will be paid according to the gradation until the applicant reaches the age of 65. Additional days do not cause the earnings-related allowance to be redetermined, even if the employment requirement is fulfilled. 

Vince has been paid a daily allowance since 1 October 2024, and gradation applies because the employment requirement was fulfilled according to the 12-month requirement. 

Vince’s full earnings-related allowance is €1,300 per month. Vince is fully unemployed, so the daily allowance will decrease by 20% after 40 days of benefits. After this, Vince’s daily allowance is €1,040 per month. 

Vince still applies for a daily allowance after 170 days of benefits, and his daily allowance is then 25% lower than the full daily allowance. After this, Vince’s daily allowance is €975 per month. 

 

In 2023, the average duration of unemployment for members of Super Unemployment Fund was 96 days, or about four and a half months. 

Here you can find the gradation calculator in Finnish:

Gradation calculator

 Effect of the gradual decrease in 2024 figures

 
Pay before unemployment Full earnings-related allowance Effect of the decrease to 80% after eight weeks
1500 € 1085 €  – 217 € to 868 €
2000 € 1300 €  – 260 € to 1040 €
2500 € 1516 €  – 303 € to 1213 €

Pay before unemployment

Full earnings-related allowance

Effect of the decrease to 75% after 34 weeks

1500 € 1085 €  – 271 € to 814 €
2000 € 1300 € – 325 € to 975 €
2500 € 1516 €  – 379 € to 1137 €

The amounts are before taxes. Earnings-related allowance is taxable income. (Table: tyj.fi)

 

When does the earnings-related allowance return to the full amount?

The earnings-related allowance returns to 100% (the full daily allowance) when the employee’s or self-employed person’s employment requirement is fulfilled again and the calculation of the maximum daily allowance period begins again. The employment requirement can be fulfilled one year after the previous determination at the earliest.

The fulfilment of an employment requirement with additional days is not monitored. So, if a daily allowance with additional days is gradated, the reduced daily allowance is paid until the retirement age.