Government proposes changes to the Unemployment Security Act

The Government has submitted a proposal to Parliament containing several amendments to the Unemployment Security Act. The changes relate to the amount of the earnings-related allowance and satisfying the employment requirement. The Government is also proposing to abolish the obligation of local authorities to offer work to unemployed job-seekers.

Please note that these legislative changes are not yet in force. The amendments are intended to take effect on 2 September 2024, but the exact wording depends on what happens to the proposal as it makes its way through Parliament. We will provide updates on the progress of the proposal as and when more information becomes available.

Amount of earnings-related allowance to decrease over time

Among the changes proposed by the Government is a gradual decrease in the amount of the earnings-related allowance.

According to the proposal, the amount of the earnings-related allowance would drop initially after 40 days of unemployment and again after 170 days of unemployment. The first drop would be 20 per cent and the second would be 25 per cent. The second drop, too, would be calculated from the original amount to avoid multiplying the effect.

The new system would be effective as of 2 September 2024. It would apply to claimants who are subject to a 12-month employment requirement and who satisfy the employment requirement after 2 September 2024.

Anyone whose maximum earnings-related allowance period (300, 400 or 500 days) has already started before the rule change would therefore not be affected. The new rules would only apply to claimants who are subject to a 12-month employment requirement and who resatisfy the employment requirement after 2 September 2024.

Subsidised work to no longer count towards satisfying the employment requirement

Under the current rules, up to 75 per cent of weeks worked on subsidised pay can be counted towards the employment requirement. The Government is proposing to change the rules so that subsidised work would no longer count towards satisfying the employment requirement. Any subsidised work that begins before 2 September 2024 would be subject to the old (current) rules. The new rules, under which subsidised work cannot be counted towards the employment requirement, would apply to subsidised works that begin on or after 2 September 2024.

The new rules would mean extending the review period during which the employment requirement must be satisfied – which is normally 28 months – by the full length of the subsidised work.

A part of subsidised work could nevertheless still be counted towards the employment requirement in certain circumstances, if the subsidised worker had limited capability for work or was a long-term unemployed person over 60 years of age. In these cases, the first 10 months of subsidised work would not count towards the employment requirement. If the subsidised work would continue for a longer period, however, 75 per cent of the weeks worked after the first 10 months would count towards satisfying the employment requirement.

Employment obligation to be abolished

‘Employment obligation’ refers to a statutory obligation of local authorities to offer, under certain conditions, work to unemployed job-seekers aged 57 years and older who have used up their maximum unemployment allowance period.

The Government is proposing to abolish this concept altogether. According to the proposal, it would no longer be possible for an employment obligation to arise on or after 2 September 2024. Any employment obligations that have arisen before 2 September 2024 would not be affected by the rule change.

The current rules make it possible to count all work performed under an employment obligation towards the employment requirement. The Government is proposing to change the rules so that only work performed under employment obligations that arise no later than on 1 September 2024 would count towards satisfying the employment requirement. The extension of the employment requirement from 26 weeks to 12 months as of 2 September 2024 would not apply to claimants who satisfy the employment requirement through work performed under an employment obligation.

Enrolment in services that promote employment to no longer count towards the employment requirement

Claimants aged 60 years and older are currently able to build employment history that counts towards satisfying the employment requirement by enrolling in services that promote employment on the basis of their local authority’s employment obligation. Even claimants who have already used up their maximum earnings-related allowance period can claim an earnings-related allowance while participating in these activities.

The Government is proposing to change the rules so that enrolment in services that promote employment would no longer count towards satisfying the employment requirement. The new rules would be effective from 2 September 2024. The exemption whereby an earnings-related allowance can be claimed while participating in these activities even after the maximum earnings-allowance period has been used up would be abolished at the same time. Claimants who enrol in a service promoting employment no later than on 1 September 2024 would not be affected by the rule change if their participation in the programme was based on an employment obligation.

Age-based guaranteed amount of earnings-related allowance to be abolished

The current rules guarantee, that we will not adjust the wage based on which daily allowance is calculated, for claimants aged 58 years and older. The guarantee means that, unlike other claimants, these claimants’ earnings-related allowance is only recalculated if their earnings increase.

The Government is proposing to abolish the guarantee as of 2 September 2024. Claimants who satisfy the employment requirement no later than on 1 September 2024 would not be affected by the rule change and would still be guaranteed a minimum earnings-related allowance. In other words, the new rules would only apply to claimants who are subject to a 12-month employment requirement and who resatisfy the employment requirement after 2 September 2024.

More information

You can read more about the unemployment security reform and the schedule of the proposed legislative changes in our past press releases: Timetable for legislative reforms

More information on the legislative amendments can also be found on the website of the Ministry of Social Affairs and Health.