Debunking myths about unemployment benefits
There are many commonly held beliefs about unemployment benefits, not all of which are true. In this article, we fact-check some misconceptions about unemployment benefits.
- Myth No. 1: To qualify for unemployment benefits, all you have to do is register with the employment services as an unemployment jobseeker.
Untrue. Unemployment benefits are not paid automatically. You have to apply for them.
It is true that you can only get unemployment benefits if you register with the employment services as an unemployed jobseeker. However, there is one more step you have to take after registering: apply for unemployment benefits from an unemployment fund or from Kela.
If you are unemployed for an extended period of time, you must file an unemployment status report with your unemployment fund or with Kela once every four weeks in order to continue collecting benefits. In addition, you must look for work actively and follow an employment plan that you draw up with the employment services.
Myth No. 2: You can get unemployment benefits right away from your first day of unemployment.
Untrue. You must complete a specified waiting period before you can get unemployment benefits. If you are paid compensation for unused vacation days (“holiday compensation”), that too will delay the start of your unemployment benefit.
You complete the waiting period by staying registered with the employment services as an unemployed jobseeker for at least seven working days.
Also, any holiday compensations from your last job, i.e. payments for unused vacation days, are periodised.
Periodisation of the holiday compensations means that if you have days of holiday left when the employment relationship ends, the compensation paid for these days postpones the start of payment of unemployment benefits. The periodisation concerns holiday compensation paid when a full-time job of more than two weeks ends.
The waiting period of seven working days starts after a possible periodisation of holiday compensations.
- Myth No. 3: Working part-time does not make financial sense because all of your earnings are deducted from your unemployment benefit.
Untrue. Working part-time while unemployed increases your total income.
If you work part-time (meaning that you work up to 80 per cent of the normal full-time hours in your industry), your earnings are not deducted from your unemployment benefit at their full amount. Only half of your earnings before taxes are deducted from your unemployment benefit.
For example, if you earn EUR 1,000 per month, your unemployment benefit is reduced by EUR 500. By working part-time, you increase your total income by EUR 500.
Myth No. 4: If you are unemployed, it does not make sense to look for a job far from your home because it costs too much to commute.
Untrue. You can apply to Kela for a commuting and relocation allowance to offset some of the cost of a long commute or relocation.
A long commute is no reason not to look for work. If you find work far from your home, you may have a right to a commuting and relocation allowance, which offsets some of the cost of your commute.
You can apply for a commuting and relocation allowance from Kela if your daily travel time to and from work is at least three hours (at least two hours if you work part-time). You can also get commuting and relocation allowance for moving costs.
The amount of the commuting and relocation allowance is the same as the amount of the basic unemployment allowance or labour market subsidy.
Myth No. 5: It makes no difference whether I am granted labour market subsidy or basic unemployment allowance, because they are both the same amount.
Untrue. While it is true that their basic amount is the same (about EUR 800 per month), they are determined in different ways.
Because the labour market subsidy is means tested, such income as dividends, rent or informal care allowance can reduce the labour market subsidy or prevent you from getting it. Also, the labour market subsidy is reduced if you live with your parents. These conditions do not apply to the basic unemployment allowance.
Myth No. 6: There is no need to register with the employment services as an unemployed jobseeker while completing the waiting period for the labour market subsidy, because you are not paid unemployment benefits during that time.
Untrue. The waiting period for the labour market subsidy does not start to run until you are registered as an unemployed jobseeker.
If you have no vocational qualifications or degree from higher education, you have to complete a 21-week waiting period to qualify for labour market subsidy.
For example, if you graduate from an upper secondary school (lukio), you should register with the employment services as a jobseeker as soon as the term has ended even if you will not immediately qualify for labour market subsidy because you will first have to complete the waiting period.
It is a good idea to stay registered as a jobseeker so as not to have to complete the waiting period a second time.
Staying registered means keeping up your registration status with the employment services.
Myth No. 7: If the employment services give me a statement that says that there is no obstacle to paying me unemployment benefits, Kela is required to pay them to me.
Untrue. You must also meet the other qualifying conditions for unemployment benefits.
If you lose your job and register as a jobseeker, the employment services will issue you a statement on whether you meet the so-called labour market policy prerequisites for unemployment benefits.
After that, Kela will check if you meet the other conditions to qualify for unemployment benefits, such as whether you have received holiday compensations that are periodised, whether you have earnings or other social benefits that are relevant to the amount of your unemployment benefit, and whether you must complete a waiting period to qualify for unemployment benefits.
If you have not earned vocational qualifications or a higher education degree, you must complete a qualifying period to be eligible for labour market subsidy. The maximum length of the waiting period is 21 weeks. The purpose of the waiting period is to encourage labour market subsidy recipients to earn a degree or vocational qualifications.
Myth No. 8: Self-employed persons cannot get unemployment benefits.
Partly untrue. Self-employed persons can get unemployment benefits from Kela in certain situations.
The main rule is that you cannot get unemployment benefits from Kela if you are self-employed on a full-time basis.
However, if you are no longer self-employed,Kela can pay you basic unemployment allowance or labour market subsidy for the duration of the unemployment.
If you are self-employed on a part-time basis, you can get unemployment benefits. However, the KEHA Centre will first determine if you are self-employed on a full-time or part-time basis. If the KEHA Centre finds that you are self-employed on a full-time basis, you cannot get unemployment benefits.
If you take up self-employment while unemployed, Kela can pay you unemployment benefits for four months. The unemployment benefit will be adjusted to take into account the income you receive from self-employment over the same period. After four months, the KEHA Centre will check whether your self-employment is full-time or part-time. If full-time, you can no longer receive unemployment benefits.
Myth No. 9: If you are ill, you do not have to stay registered as a jobseeker with the employment services.
Untrue. You should not end your registration as a jobseeker until you receive a favourable decision on your application for sickness allowance.
You can tell the employment services if your illness is brief. However, do not end your registration as a jobseeker for a brief illness, because you could lose your unemployment benefits. Staying registered means keeping up your registration status with the employment services.
If you are ill for more than 10 working days, you can apply to Kela for sickness allowance instead of unemployment benefits. In order to qualify for sickness allowance, you need a medical certificate on your inability to work, issued by a healthcare provider.
It is worth it to transition to the sickness allowance when you are unemployed, because if you are ill and receive unemployment benefits but cannot accept a job offer because of your illness, you could lose your unemployment benefits. In addition, the days for which you are paid sickness allowance do not count against the maximum period of 300 or 400 days for which basic unemployment allowance is available.
If you fall ill, it is important that you do not end your registration with the employment services until you have received a favourable decision on your application for sickness allowance. This way you will not lose your unemployment benefits.
When you are no longer paid sickness allowance, tell the employment services about it and apply for unemployment benefits if you remain unemployed.
Myth No. 10: If you are unemployed, you should provide your tax card to Kela even though the application for unemployment benefits does not specify it.
True. You may wish to provide your tax card to Kela for the purpose of receiving social benefits. However, you are not required to do so.
Kela gets information on withholding taxes directly from the Tax Administration, so you do not have to provide your tax card to Kela.
If you think that you may be paying too little or too much tax on your benefits, use this calculator (vero.fi) to check your tax percentage. If needed, you can request a tax card for social benefits in the MyTax e-service (vero.fi). It is a good idea to provide Kela with a tax card for social benefits because tax rates on benefits are usually lower than those on earnings.