Legislative Changes in Unemployment Coverage and New Legislation Introducing Financial Assistance Due to the Coronavirus Outbreak

Authors: Marta Kauppinen (Senior Associate) and Minna Wirtamo (Associate Trainee)

Following our previous blog post, certain new legislative amendments have been introduced with the intention of securing wage-earners’ livelihood and compensating the loss of wages in the exceptional circumstances caused by the coronavirus pandemic.

Legislative Changes in Unemployment Coverage

The new legislative amendments include measures taken to support employees’ livelihood as many employees are now facing temporary lay-offs and unemployment. The new legislation introducing amendments to the Unemployment Benefit Act (1290/2002, as amended), the Act on Financing Unemployment Benefits (555/1998, as amended), and the Unemployment Fund Act (603/1984, as amended) entered into force on 15 April 2020.

The five-day qualifying period for unemployment benefit has been removed, meaning that temporarily laid-off employees or employees who have been made redundant are entitled to unemployment benefit from the first day of unemployment. This also applies to agreement-based temporary lay-offs, provided that the temporary lay-off is based on the employer’s initiative and is necessary due to the employer’s operations or economic situation.

The required period of employment that employees have to meet in order to be entitled to unemployment allowance has been reduced from the normal requirement of 26 calendar weeks to 13 calendar weeks.

Unemployment allowances paid on the grounds of temporary lay-offs will not be taken into account when calculating the maximum period of payment that applies to the unemployment allowance. This amendment will improve unemployment security in case the unemployment is prolonged.

The amendments are applied retroactively as of 16 March 2020 and the amended legislation will remain in force until 6 July 2020.

Temporary Financial Support for Those Absent from Work Without Pay due to COVID-19

On 1 May 2020, new legislative amendments were introduced for the purpose of setting the grounds for a new type of social security benefit known as “temporary financial assistance due to an epidemic outbreak”. This form of financial assistance aims at easing the financial situation of people absent from work due to the government’s recommendations for controlling the coronavirus epidemic in Finland.

The new financial assistance is intended to compensate the wages lost by a parent who is absent from work without pay due to having complied with the government’s recommendations by taking care of small children (i.e. children attending early childhood care and education and children in grades 1-3 in basic education) at home. Parents of schoolchildren are entitled to the assistance for one school term at the most.

In addition, the assistance can be paid to people arriving in Finland from abroad who have been placed in quarantine-like conditions based on the government’s recommendations and who are therefore absent from work without salary payment. In this case, the assistance can be paid for a maximum of 14 days from the date of arrival in Finland.

The compensation of loss of wages requires an agreement on unpaid absence between the employee and the employer, whereas the financial assistance can be paid even on the basis of a one-day absence provided that the absence period is covered by the employer’s certificate of absence. The amount of the benefit is EUR 28.94 per weekday, and it can be applied for at the Finnish Social Insurance Institution Kela. The financial assistance can be paid retroactively as of 16 March 2020 up to the end of August 2020 or until the exceptional circumstances due to the coronavirus pandemic end by a decision of the Finnish government.

The amendments summarised above have been introduced on a temporary basis, and the validity of these exceptional provisions is therefore closely linked to the development of the coronavirus outbreak in Finland. We will continue to follow the situation and update our blog in case of any new changes.