For these reasons, you will lose your earnings-related daily allowance

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• Income security

There are many reasons why you can lose your daily allowance, and a recent change in the law has added one more. YTK Unemployment Fund, Finland’s largest payer of income support, has investigated the most common reasons for a negative decision on an application for income support.

In 2023, the YTK Unemployment Fund issued a total of 338 376 decisions. Of these, 93 434 were negative decisions, i.e. almost one third.

“The high proportion of negative decisions is due to the fact that in situations such as part-time work, an applicant may receive dozens of temporary negative decisions during the daily allowance period, while someone who is completely unemployed may receive a single positive decision for the entire period of unemployment,” says Petja Eklund, a specialist at the YTK Unemployment Fund.

Reason No 1: Exceeding the working time limit for the adjusted daily allowance

The most common reason for rejecting an application is that the working time in a part-time job exceeds 80% of the maximum working time of a full-time worker.

“In practice, this is because the work has been done to such an extent that it can no longer be considered part-time for unemployment benefit purposes. Only part-time work can be accompanied by an earnings-related allowance,” Eklund explains.

Expert tip: It’s great that you’ve done enough work! A negative decision only applies to one application period. If your work decreases, you can get paid again. In this way, part-time work that covers the whole period will build up a new working condition and allow you to continue to receive income support. The overall situation is therefore reasonable, even if a negative decision has been taken.

Reason No 2: Applicant has not registered as a jobseeker

The second most common reason for rejecting a daily allowance application is that the applicant has not registered as a jobseeker.

“The payment of a daily allowance is always conditional on the applicant having registered as a jobseeker with the employment office. We cannot pay the daily allowance if the job application is not valid,” says Eklund. 

Expert tip: You can register as a jobseeker before you stop working or at the latest on the first day of unemployment. Always follow the instructions of the employment services and keep your job application valid even if you have been laid off or have received a negative decision.

Reason No 3: The 400-day maximum period for the earnings-related daily allowance has been reached

The third most common reason for refusal is that the maximum period of 400 days has been reached. This means that the maximum period of daily allowance has been paid.

“This decision will eventually be given to everyone if unemployment is prolonged. Therefore, the prevalence of the decision is not surprising in itself. However, the ranking on the list of the most frequently issued negative decisions is harsh, because it is also a sign of long-term unemployment,” Eklund reflects.

Expert tip: Don’t get discouraged in your job search. Take advantage of the services of the employment services and remember that as an unemployed person you have many opportunities, for example to study and thus find new paths. If your entitlement to earnings-related unemployment benefit ends, you can apply to Kela for labour market subsidy.

Reason No 4: The maximum amount of the adjusted daily allowance is exceeded

The maximum amount of the adjusted earnings-related daily allowance may not exceed the basic salary when combined with earnings from work. If the applicant’s earnings and the earnings-related daily allowance together exceed the basic salary, no earnings-related daily allowance remains payable.

“The purpose of the rule is to ensure that work is always more profitable than unemployment and that full-time work is always more profitable than part-time work,” says Eklund.

Expert tip: It’s good to hear that there has been work and money. A negative decision only applies to one application period. If your work decreases, you can continue to receive earnings-related daily allowance. This way, part-time work that covers the whole period will build up a new working condition and allow you to continue to receive income security.

Reason No 5: Quitting your job 

If you resign from work lasting more than five days without a valid reason, you are not entitled to earnings-related daily allowance for 45 days after the termination of employment.

Expert tip: Unemployment benefit has strict limits on the amount of unemployment benefit you can receive on your own initiative. Valid reasons for leaving a job without any penalty under unemployment benefit are mainly disability-related reasons and situations where the employer seriously breaches its obligations under the Employment Contracts Act. If you are planning to terminate your employment, always contact the employment services first. With them, you can take stock of your situation and find possible solutions.

New reason: Periodicity of holiday compensation

From the beginning of 2024, it has not been possible to receive an earnings-related allowance for the period corresponding to the holiday compensation paid in wages at the end of the employment relationship. On this basis, the YTK Unemployment Fund has already issued more than 1000 negative decisions during 2024.

“The number of negative decisions on holiday compensation is equivalent to the number of decisions on the qualifying period for leaving a job. It therefore appears that a negative decision on holiday compensation is becoming one of the most common reasons for rejecting an application for unemployment benefit.” Eklund interprets.

Expert tip: Take your holidays during your employment relationship. If this is not possible, be prepared in advance for a delay in the start of the payment of the earnings-related allowance.