Pay subsidy reform will enter into force in July

The amended legislation aims to simplify the pay subsidy system and increase its use by companies. The act will enter into force on 1 July 2023.

By increasing the use of pay subsidies in companies, the reform aims to make the subsidy a more impactful instrument in promoting employment and raise the employment rate.

“The pay subsidy reform offers more opportunities for both employers and jobseekers. A simplified application process and quicker payment will make the use of pay subsidy easier. The pay subsidy reform is one of the many ways the Government promotes employment,” Minister of Employment Tuula Haatainen said.

In future, the use of pay subsidy will mostly be reserved to promote the employment of those with reduced working capacity or to unemployed jobseekers who are otherwise disadvantaged.   

The amount of pay subsidy granted due to the lack of professional skills will be harmonised so that it will amount to 50 per cent of labour costs. The amount of pay subsidy granted for persons with reduced working capacity will be 70 per cent of labour costs. Pay subsidy will no longer cover non-wage labour costs or holiday bonuses payable by the employer.

Pay subsidy can be granted for five or ten months 

Depending on the duration of the unemployment preceding the pay subsidy period, the pay subsidy will usually be granted for five or ten months.

Pay subsidy can be granted for the same person for another job

As long as the conditions are met, pay subsidy can be granted again for the same person for a new job without a so-called cooling off period.  

However, the subsidy cannot be granted to an employer who has received a pay subsidy for the labour costs of the same person in the preceding three years. This restriction does not apply to the employment of persons with reduced working capacity.

A new employment subsidy for those aged 55 or over

As part of reform, a new employment subsidy for those aged 55 or over will be introduced. The subsidy will be granted without consideration of expediency, as long as the conditions laid down in the act are met. It will be paid for up to 70 per cent of the eligible labour costs for a maximum period of 10 months. 

Regulation will be amended to better correspond to state aid rules 

The national legislation on pay subsidies has been amended to better correspond to the EU state aid rules and the block exemption regulation issued under it.  

The provisions concerning a 100 per cent pay subsidy will remain in force in accordance with the current act. A 100 per cent pay subsidy applied for business activities can be granted as de minimis aid.

Inquiries:
Tarja Krakau, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 504 7308