New Family Leave Allowance and Reduced Holiday Accrual During Family Leave Supports Competitiveness in Female Dominated Sectors

Author: Johanna Haltia-Tapio

From May 2017 onward, employers may apply for a new family leave allowance of EUR 2 500 from the Social Insurance Institution of Finland (‘Kela’). The aim of the new allowance is to compensate the employer for the costs of parenthood for a female worker, and to support Finland's competitiveness in female-dominated business sectors by promoting employment and growth.

Employers of female workers may apply for the family leave allowance if the first maternity leave or adoptive mother's parental allowance payment is due on or after 1 April 2017.

In order to qualify for the family leave allowance, the following conditions must be met:

• The employer has paid the female employee her salary, or the difference between her salary and the maternity / parental allowance for at least one month during their maternity leave or adoptive mother parental allowance period;

• The employee has been employed for at least three months before commencement of their maternity leave or adoptive mother's parental allowance period;

• The employee’s employment contract is for at least one year (alternatively, the one year employment requirement may be fulfilled with two or more consecutive fixed-term contracts with the same employer); and

• The employee works at least 80% of a full-time workweek in the specific business sector.

An employer must apply for the family leave allowance from Kela within six months from the end of the employee's maternal leave or adoptive mother parental allowance period.

The family leave allowance can be applied for simultaneously with the already existing compensation for costs related to holiday accrued during the family leaves. Please note, however, that new rules also apply to compensation for holidays accrued during family leaves which have started on or after 1 April 2017. Annual holiday is no longer accrued for the full duration of the family leaves, but only for the first six months (i.e. 156 working days), and only holidays accrued in accordance with the law are compensated for by Kela. Therefore, to the extent the employee accrues more holidays during the family leave based on, for example, the applicable collective bargaining agreement, no compensation is paid by Kela to the employer for such additional costs related to non-statutory holidays.