New type of restructuring protection introduced for persons aged 55 or over – eligibility for extended unemployment benefits phases out
A new package of measures being introduced is intended to improve the labour market situation of persons aged 55 or over. They include a restructuring protection allowance and voluntary training. For employers, this means paying a new restructuring protection fee. Also, the age limit for extended unemployment benefits will be raised for those born in 1963 or 1964, and those born in 1965 or later will not be eligible at all. With the abolishment of extended unemployment benefits, the liability component payable by employers will be discontinued as well.
A new package of restructuring protection measures for laid-off employees will be implemented at the beginning of 2023. They include a restructuring protection allowance, the right to training and a longer paid leave for job search.
Employees who are laid off can apply for restructuring protection if their contract was terminated for financial or production-related reasons on or after 1 January 2023 and they had reached the age of 55 before being made redundant. Also, they must have been with the same employer for at least 5 years.
Unemployment funds pay laid-off employees a restructuring protection allowance which corresponds to about one month’s salary. Employees who are not enrolled in an unemployment fund can apply to Kela for the restructuring protection allowance.
The restructuring protection allowance is also available to employees who were enrolled in the unemployment fund right before being terminated. This means that the allowance is available also to employees who have not been members of the unemployment fund long enough to qualify for earnings-related unemployment allowance.
Collecting a restructuring protection allowance does not affect the recipient’s eligibility for unemployment or other benefits, with the exception of social assistance. Restructuring protection allowance is payable also during the notice period; i.e., the recipient does not have to be unemployed yet.
Participation in restructuring protection training is voluntary to laid-off employees. The training is commissioned by the TE Office or the Centre for Economic Development, Transport and the Environment, and can last up to six months.
For employees entitled to restructuring protection who have been laid off for financial or production-related reasons, the paid leave to find employment is five days longer.
Employers laying off staff are liable for a new restructuring protection fee
Restructuring protection is financed by the Employment Fund with payments collected from employers. Half of the assistance is funded with restructuring protection fees payable by employers laying off staff. The other half is financed by an increase in the unemployment insurance contribution levied on all employers.
The new restructuring protection fee is levied on employers who lay off an employee who is 55 years or over and has been with the employer for at least five years, and the redundancy is based on financial or production-related grounds. Small employers are exempt from the fee.
The fee must be paid by employers who are laying off staff and whose total payroll subject to the unemployment insurance contribution was higher than a specific threshold amount in the year preceding the redundancy. In 2022, this amount is about 2.2 million euros.
Extended eligibility for unemployment benefits to be phased out
The eligibility for additional days of unemployment benefit payments has allowed unemployed persons between ages 61 or 62 to continue collecting earnings-related unemployment allowance past the 300–500 day cut-off until they reach age 65. The age limit to qualify for the extension will rise from 61–62 years to 63 years for those born in 1963 and to 64 years for those born in 1964. Those born in 1965 or later will not be eligible at all. Extended unemployment benefits will be discontinued for all age groups in 2030.
Because the age limit for eligibility will increase, also the age of the employee at which the employer’s obligation to pay the so-called liability component will rise for those born in 1963 and 1964. The Employment Fund will collect the fee from employers who are laying off or furloughing staff.
The change in the age at which the employer’s obligation to pay the liability component ends also corresponds to the increase in the general age of retirement.
With the abolishment of the extended eligibility for unemployment benefits and the new restructuring protection provisions, employers will no longer be charged the liability component for employees born in 1965 or thereafter.
Hallituksen esitys eduskunnalle 55 vuotta täyttäneiden työllisyysasteen nostamista koskevaksi lainsäädännöksi: HE 62/2022 vp (eduskunta.fi)