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Adjusted earnings-related daily allowance

When you have income from part-time work, you are entitled to adjusted earnings-related daily allowance. So you can apply for earnings-related daily allowance even if you are working. If the conditions are met and there are no obstacles, we can pay you earnings-related daily allowance, the amount of which has taken into account your income from part-time work. Then the benefit we pay is an adjusted earnings-related allowance.

Is the adjusted daily allowance worth it?

The adjusted daily allowance is worthwhile. The adjusted daily allowance is structured so that your part-time pay and the adjusted daily allowance together are always more than what you would get if you were completely unemployed.

However, there is also an upper limit to the amount of the adjusted daily allowance. This is to ensure that the full-time salary would always be more than the total of the part-time salary and the adjusted daily allowance.

It is possible that you will not receive the adjusted daily allowance at all if you work part-time. Typically, such situations arise because your working hours or salary exceed the limits that have been set to ensure that full-time work would always be the most profitable option. Even in these situations, the pay for part-time work is usually more than you would get if you were fully unemployed, so profitability is not affected.

When you apply for adjusted daily allowance, the processing of your application is a manual task. In busy situations, it is therefore possible that you will receive your adjusted daily allowance later than if you were fully unemployed.

Right to adjusted earnings-related daily allowance

If the conditions are met, you are entitled to adjusted earnings-related daily allowance if

  • you have income from part-time work, 
  • your daily working hours have been reduced due to a lay-off or a reason comparable to a lay-off, 
  • your work is prevented by an industrial action that does not affect your terms of employment or working conditions, 
  • you receive income from full-time employment of a maximum duration of two weeks, or 
  • you have income from part-time business or your own work.

As a rule, the right to adjusted earnings-related daily allowance arises if you have income from part-time work. In practice, this leads to taking into account income from part-time work when it is paid. Thus, we do not take income into account according to earnings, i.e. when the work on which earned income is based is done.

Even if you are entitled to adjusted earnings-related daily allowance, it does not mean that we can automatically pay you adjusted earnings-related daily allowance. All the conditions for the payment of earnings-related daily allowance must be met, and there must be no obstacles. In addition, there are a few additional restrictions on the payment of adjusted earnings-related daily allowance.

What is part-time work?

In unemployment security, part-time work is defined in relation to the working hours of a full-time employee. Part-time work is work where the working hours are no more than 80% of the working hours of a full-time employee.

The working hours of a full-time employee depend on what is recorded in the collective agreement. If the matter has not been separately agreed upon, 40 hours per week is the basis according to the Employment Contracts Act.

  • You work 25 hours a week.
  • In your industry, the maximum working time for a full-time employee is 40 hours per week.
  • Your working time is thus 62.5% of the working time of a full-time employee.
  • This is less than 80%, so your job is part-time from the point of view of unemployment security.

  • You work 32 hours a week.
  • The maximum working time for a full-time employee in your industry is 37.5 hours per week.
  • Your working time is thus 85% of the working time of a full-time employee.
  • This is more than 80%, so your job is not part-time from the point of view of unemployment security.

Part-time work is also a casual job. This refers to full-time employment of a maximum duration of two weeks.

Working as an entrepreneur can also be part-time. This requires that the employment authority has assessed that your business is part-time.

Payment-based adjustment

When the right to adjusted earnings-related daily allowance is based on the fact that you have income from part-time work, the moment when the salary is paid is crucial.

In practice, this can lead, for example, to a situation where your earnings-related daily allowance is adjusted according to the payment date, even if you have not worked at all during the application period. Similarly, a situation may arise in which you work part-time, but this does not affect the amount of earnings-related daily allowance to be paid.

You are working part-time in May. Your wages for the work in May is paid in June.

In June, you apply for earnings-related daily allowance for May. We will pay you the full daily allowance for May in June, even though you worked in May, because you received no income from part-time work in May.

You are working part-time in May but not in June. Your wages for the work in May is paid in June.

In July, you apply for earnings-related daily allowance for June. We will pay you an adjusted daily allowance for June in July, because you received income from part-time work in June.

You work part-time each month and are paid a salary for the previous month.

In the first application period, you will not have income from working part-time, so we will pay you full earnings-related daily allowance even if you have worked part-time. We will then pay you an adjusted earnings-related daily allowance each month for which you are paid.

You’re completely unemployed in August. In September you will work part-time and in early October you will be employed full-time. Salary for September will be paid in October.

In September, you apply for earnings-related daily allowance for August. We will pay you full earnings-related daily allowance for August because you are completely unemployed.

In October, you apply for earnings-related daily allowance for September. We pay you full earnings-related daily allowance for September, even if you have worked part-time in September, because in September you have no income from working part-time.

You will no longer apply for earnings-related daily allowance for October because you have been employed full-time. The salary paid in October will thus remain completely unaltered.

Exceptions to the payment-based adjustment,

If you are paid during the adjustment period for a earning period longer than one month of earned income and if this differs from the normal pay period, we divide the work income and the working hours on which the pay is based into an impacted pay month and as many months following it as the number of months the work income has been paid for.

If, on the basis of the date of payment of wages and other circumstances, it is apparent that the arrangement of the payment of wages has been used to avoid taking income into account in mediation, we shall settle the earned income on an earnings basis, i.e. for periods for which the working hours on which the wages are based are located.

We do not settle earnings paid during the suspension period for part-time work if it is earned during a period for which no unemployment benefit is paid due to general restrictions on the receipt of the benefit.

Why payment-based adjustment?

Before the current law, adjustment was based directly on working part-time. This sometimes led to an unreasonable delay in the payment of the adjusted daily allowance. For example, if you worked in January and submitted an earnings-related daily allowance application for January in February, we could not process your application until your wages were paid. We often had to wait for the payment of wages, which delayed the payment of the adjusted earnings-related daily allowance.

The purpose of payment-based adjustment is to eliminate this delay. Since earnings-related daily allowance is always applied for retroactively, we already have information on the wages paid during the period applied for through the Incomes Register when we receive the application. This means we can process your application immediately.

Previously, the payment of adjusted earnings-related daily allowance could be delayed depending on the payment of wages. However, the good thing was that, in practice, the adjusted earnings-related daily allowance and the income from part-time work were in the applicant’s bank account at about the same time and the connection was easier to understand.

Payment-based adjustment reduces the risk of delay in the payment of adjusted earnings-related daily allowance, but leads to a situation where income from part-time work and the related adjusted daily allowance may be paid at very different times. This can lead to frontloaded fluctuation in your disposable income. For example, if you only work for a short period of time, you may first receive wages and full earnings-related daily allowance, but in the following month, you will not receive any wages and even the earnings-related allowance will be adjusted. In other words, you may receive a fairly high total income in the beginning, but in the following month, your total income may be low.  

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