Unemployment benefit

What it means

Unemployment benefit is a cash payment from unemployment insurance that partly replaces income after a job is lost. The Social Insurance Agency pays it, but entitlement arises only after registering as a jobseeker with the labour office.

The basic condition is at least two years, meaning 730 days, of unemployment insurance in the four years before registration. More lenient conditions with a shorter payment period apply to fixed-term employment. Both employee and employer pay the insurance from gross pay.

The benefit is paid for a limited time, under current rules generally six months, and is calculated from the average daily assessment base in the reference period, in other words from previous earnings, subject to a statutory cap. Entitlement ends earlier if the person finds a job or the office removes them from the register.

How it works in practice

When employment ends, the employer deregisters the employee with the Social Insurance Agency and issues the employment confirmation the labour office needs. Errors in the deregistration, such as a wrong end date, can delay the benefit, so we check them at every termination.

If the employee receives severance pay, unemployment benefit is not paid for the period the severance covers where the two would overlap. Payment is postponed, not lost. We advise employees leaving by agreement to find out in advance how this will affect them.

Sole traders are compulsorily insured only for sickness and pension; they may pay unemployment insurance voluntarily. Without it they have no entitlement to benefit when they close the business unless they have enough insurance from previous employment. It is worth considering when moving from employment to self-employment.

What to watch out for

A common mistake is registering late. Entitlement is assessed at the date of registration, and waiting too long can drop part of the years worked out of the relevant four-year window. It is sensible to register with the labour office as soon as possible after employment ends.

Alongside the benefit only limited income is allowed, for example from short-term work up to a statutory limit. Anyone who works undeclared or above the limit while registered risks being removed from the register, repaying the benefit and a fine for illegal work.