Legislative changes concerning employees at least 55 years old entered into effect on 1 January 2023. The aim of these changes is to promote the employment of elderly employees and reduce the discrimination they face on the job market.
These changes include a new transition security model, option to transition to part-time work and abandonment of the so-called unemployment path to retirement. The changes help to support the needs of the ageing population and strengthen economic sustainability in Finland on the long term.
Gradual abandonment of the so-called unemployment path to retirement
Extra days of unemployment security, i.e., the unemployment path to retirement
Unemployment path to retirement is a term used to describe additional days of unemployment security. The pension track is a system where employees retire at a certain age. When the pension track is abandoned, employees may retire without an age restriction or any accumulation related to retirement, if they so wish.
Who has the right to additional days of unemployment security?
In addition to the maximum period of 500 days, an employee may also collect unemployment allowance for additional days, provided that the employee has met a specific age limit before exceeding the 500-day maximum period has been in pensionable work for at least five years in the last 20 years prior to the beginning of the additional days of allowance payment.
- For those born between 1957–1960, the right to additional allowance days begins when they reach 61 years of age.
- For those born between 1961 and 1962, the right to additional allowance days begins when they reach 62 years of age.
- For those born in 1963, the right to additional allowance days begins when they reach 63 years of age.
- For those born in 1964, the right to additional allowance days begins when they reach 64 years of age.
- Those born in 1965 or later have no right to additional days of unemployment allowance.
Unemployment allowance may only be received until the end of the month when the recipient turns 65 years old. Entrepreneurs have no right to additional days.
Unemployment allowance, including the additional days, is paid either by an unemployment fund (earnings-related allowance) or by Kela (basic allowance). For more information on matters related to unemployment security, contact your unemployment fund or Kela.
Creation of a new transition security model
Extension of employment leave
Employment leave means that an employee may retire for a certain period of time after reaching a certain age while retaining the opportunity to later return to working life. This is closely linked to the abandonment of the pension track, as it allows retirement at the age desired by the employee.
Special right to the employment leave for persons 55 years old and older:
If an employee is 55 years old at the time when they are laid-off and the employment has lasted a minimum of five years consecutively or with breaks no longer than 30 days in total, the length of employment leave is determined as follows:
- Maximum of 5 working days in total, if the period of notice is at most one month;
- Maximum of 15 working days in total, if the period of notice is longer than one month but no more than four months;
- Maximum of 25 working days in total, if the period of notice is longer than four months.
Employer's duty to notify
When an employee who is 55 years old or older is being let go on financial or production-related grounds, their employer must notify them about their right to transition security training and transition security allowance.
The employer must also notify the TE Office if the company is undertaking or planning changes that might result in several employees losing their jobs. This notification gives the employees the opportunity to receive the supportive measures they need, such as transition security training. The notification also helps the TE Office to prepare for the needed supportive measures in advance.
Transition security training
Transition security training is aimed at persons who are in danger of becoming unemployed, and the goal is to provide them with the means and skills to transition into a new job or new field. This training can support the acquisition of new skills, facilitate job seeking and contain personal guidance, for example.
- Training security training is procured by the TE Office
- The maximum monetary value of this training is equivalent to the redundant person’s two months’ salary
- The maximum duration of the training is six months, and it can also be organised in parts
- The training must be arranged within three months of the termination of the employment relationship
Preconditions for training:
- the employer has made the employee redundant on financial or production-related grounds;
- the employee has turned 55 years old on the day of termination at the latest;
- the employee has been employed by the terminating employer for a period of five years consecutively or with breaks lasting at most 30 days in total on the day of termination at the latest;
- the employee has registered as a job seeker at the TE Office within 60 days of the day of termination.
Transition security allowance
Transition security allowance is a form of support aimed at helping persons who have lost their job to transition into a new job or new field. The purpose of transition security allowance is to secure a person’s income during training or the acquisition of new skills.
- A redundant employee has the right to receive transition security allowance equivalent to one month's salary.
- The allowance is paid either by an unemployment fund, if the employee is a member, or by Kela.
Financing of transition security
- Transition security is financed in two ways:
- 1) Transition security payment of the terminating employer
- The Employment Fund issues a written decision on the amount of the terminating employer’s transition security payment after receiving notice of the payment of transition security allowance from Kela or an unemployment fund, or after being notified of the redundant employee’s right to training by the TE Office.
- The transition security payment is charged in full from an employer whose annual payroll (i.e., the combined total sum of the salaries, bonuses, compensations and other rewards paid as salary to all employees) is €35 160 000 or more. If the amount is smaller, the charged payment will be reduced. If the total payroll is at most €2 197 500, the payment will not be charged at all.
- 1) Transition security payment of the terminating employer
- 2) Collective unemployment insurance contribution of employers, which will be supplemented with a collective portion to fund transition security
Opportunity to transition into part-time work if so desired
When requested to do so by an employee who is 55 years or older, the employer must primarily arrange work in such a way that allows the employee to reduce their regular working hours so that they can transition to partial early retirement pension, partial disability pension or part-time work during partial sickness absence.
The employer must notify the TE Office of the part-time arrangement so that the employee can be granted the related benefits.
The employer must ensure that:
- part-time work can be arranged reasonably and in manner that is not detrimental to the employee or to other employees.
- the employee doing part-time work receives the same benefits as full-time employees, including salaries, holidays and sick pay.
- the employee doing part-time work receives the same security and health services as full-time employees.
- the part-time arrangement does not result in discrimination or unequal status between employees.
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