Changes to the unemployment security system 2024 – 25

Earnings-related unemployment allowance can be paid at a higher rate if the person participates in an employment-promoting service. The Government proposes to abandon this policy so that participation in an employment-promoting service would no longer affect the amount of daily allowance in the future. This change would take effect on 1 January 2025.

If you started participating in an employment-promoting service before or on 31 December 2024, you could still receive the increased component after the new law’s entry into force until the end of the service, but only for a maximum of 200 days. If the service is arranged as separate, non-continuous segments, no increased component or increased earnings-related component would be paid for any service periods starting on or after 1 January 2025.

The legislative change would not affect the reimbursements of expenses paid during participation in employment-promoting services.

The mobility allowance is paid to an unemployed person who accepts a job further away from their current place of residence. An increased mobility allowance can be granted if the workplace is more than 200 kilometres away. The Government proposes to discontinue increased mobility allowances on 1 January 2025.

The increased mobility allowance could still be paid if the job or job-related training started before or on 31 December 2024.

The plan is to extend the unemployment security waiting period by two days. The waiting period refers to a period set at the beginning of unemployment or lay-off during which earnings-related unemployment allowance is not paid. Before, the waiting period was 5 days, which equates to 1 week for a completely unemployed person. After the legislative amendment, the waiting period will be 7 days, which corresponds to approximately one and a half weeks.

The waiting period will be seven days for all waiting periods starting on or after 1 January 2024.

The phasing of holiday compensation will be restored. This means that, if a person has time off that has not been taken at the end of the employment relationship, the compensation paid for this will postpone the start of eligibility for earnings-related unemployment allowance. Holiday compensation equal to 1 month’s pay postpones the start of entitlement to earnings-related unemployment allowance by approximately 1 month. Currently, holiday compensation does not affect the commencement of entitlement to earnings-related unemployment allowance. The phasing of holiday compensation and the waiting period do not elapse at the same time. The waiting period begins after the phasing of any holiday compensation.

The periodised holiday compensation rule will apply to all employment relationships that end on or after 1 January 2024.

This means that benefits will no longer increase along with rising consumer prices. The magnitude of the cuts will depend on how much prices will rise. In 2022, the national pension index rose by a total of 8% due to the increase in consumer prices. Regarding earnings-related daily allowance, the impact of the index freeze also partly depends on earnings, as the index adjustment affects the formula for calculating the daily allowance in various ways.

The change will affect benefits as of 1 January 2024.

Child increases will be removed from unemployment security. Before, child increases ranged from EUR 150 to EUR 285 per month.

Child increases will no longer be payable for any days of unemployment on or after 1 April 2024.

The EUR 300 standard entitlement of earned income will be removed as of 1 April 2024. Before, recipients of unemployment benefits were able to earn EUR 300 without their wages or business income affecting their daily allowance. Each euro of earned income above the EUR 300 exempt amount reduces the unemployment benefit by 50 cents. In other words, the amendment will cut the benefit for those receiving earned income by a maximum of EUR 150 per month.

The standard entitlement will no longer be taken into account in the calculation of earnings-related unemployment daily allowances claimed on or after 1 April 2024.

The job alternation leave system will be terminated. Job alternation leave means that a person takes leave from work for a maximum of 6 months and the employer hires an unemployed person for the same period.  During job alternation leave, job alternation compensation is paid instead of wages.

The job alternation leave system will end on August 1, 2024.

The earnings-related unemployment security will be staggered. This means that the unemployment security will decrease

• to 80% of the original level after eight weeks of unemployment (approximately 2 months), and
• to 75% of the original level after 34 weeks of unemployment (approximately 8 months).

Currently, unemployment security is not staggered and the level remains unchanged throughout the maximum duration of the earnings-related unemployment allowance.

According to the draft Government proposal, earnings-related unemployment allowance would be staggered if the employment condition required for the payment of earnings-related unemployment allowance can include work in accordance with the new euro-based model for the period of September 2024 or later.

The plan is to stop subsidised work from counting towards the employment condition that must be fulfilled to qualify for an earnings-related unemployment allowance. Under the current system, subsidised work counts towards satisfying the employment condition at a rate of 75%.

According to the draft Government proposal, pay-subsidised work would no longer accrue the employment condition if the work started on or after 2 September 2024.

Pay-subsidy work could, however, accrue the employment condition when pay subsidy has been paid for hiring a person with reduced work ability. In such a situation, the employment condition would accrue after the pay subsidy has been paid for 10 months. Starting from 11 months, the employment condition would accrue for 75% of working hours. Any rounding would be made down to the nearest full month of the employment condition.

When pay-subsidised work is not taken into account in the employment condition, it would in future extend the period during which work can be taken into account in the employment condition (so-called review period).

Age-related exceptions will be abolished. Age affects many aspects of unemployment security:

• In certain situations, persons aged 55 or over can gain access to education and financial compensation, for example. This an example of the transition security model that was created during the last government as a replacement for the additional allowance days, i.e. the unemployment path to retirement.
• People aged 57 or over may be covered by an obligation to employ that guarantees them a job.
• In certain situations, persons aged 58 or over may receive earnings-related benefits for 500 days instead of 400 days.
• The level of daily allowance for persons aged 58 or over is protected. The protection is relevant when a person is in a low-paid job and becomes unemployed again, with the level of daily unemployment allowance being recalculated.
• Persons aged 60 or over can meet the prior work requirement for earnings-related unemployment allowance in an employment promoting service.

According to the draft Government proposal, protection for the level of the earnings-related unemployment allowance would not be applied if the employment condition required for the payment of earnings-related unemployment allowance can include work in accordance with the new euro-based model for the period of September 2024 or later.

The employment obligation will cease if the obligation begins on or after 2 September 2024.

The length of the prior work requirement for earnings-related unemployment security will be doubled. Currently, earnings-related unemployment allowance can be obtained after 6 months of work. In the future, a year’s work would be required.

A longer employment condition will be applied, if the employment condition required for the payment of earnings-related unemployment allowance can include work in accordance with the new euro-based model for the period of September 2024 or later.

However, a longer employment condition does not apply if the employment condition has been fulfilled in work or services arranged on the basis of an employment obligation and the work or service has started no later than 1 September 2024.

Example

You have worked a total of 26 calendar weeks by 1 September 2024. Your employment relationship lasts until the end of September, and you will become unemployed starting 1 October 2024.

The calendar weeks you worked up to 1 September 2024 will be converted to the new employment condition months. This means you have collected 6.5 employment condition months under the new 12-month employment condition (24 weeks / 4 weeks = 6 months, 2 weeks = 0.5 months).

If you are paid €930 or more in September, you will collect a full employment condition month. This would mean that, when you become unemployed, you have only collected 7.5 unemployment condition months and are not entitled to daily allowance.

The employment condition for unemployment security will be based on euros, i.e. changed to be income-based.  This means that entitlement to daily allowance would not depend on the number of hours worked before unemployment. The amount of work carried out before unemployment would be assessed solely on the basis of wages.

Currently, in order to receive earnings-related unemployment allowance, a person must have worked 18 hours a week for about 6 months. According to the amendment, the weekly hourly limit would be abolished. Instead, the person would be required to have earned a certain minimum amount per month.

According to the government proposal, the income-based employment condition would be applied to wages earned and paid on or after 2 September 2024. Parliament has approved the amendment.