Pay subsidy is granted for employing unemployed persons
Pay subsidy is a discretionary subsidy aimed at promoting the employment of unemployed jobseekers. It is granted and paid by the employment authority.
An employer hiring an unemployed jobseeker may receive financial assistance in the form of pay subsidy that covers 50 per cent of the payroll costs. A 70 per cent subsidy may be received for employing a person with reduced capacity for work. In certain situations, an association, foundation or registered religious community may receive a pay subsidy covering 100 per cent of payroll costs and imputed indirect costs of the employer.
Pay subsidies are always granted for a fixed period. As a rule, the length of the pay subsidy period is 5 or 10 months depending on the duration of unemployment preceding the pay subsidy work. Pay subsidy may be granted again in order to employ the same person for the same employer after three years have passed since the end of the previous pay subsidy period. However, there is no time limit between the subsidy periods for granting a pay subsidy to employ the same person for another employer. However, pay subsidies may be granted to the same employer for a maximum of 24 months at a time immediately after the end of the previous pay subsidy period for persons with reduced working capacity or over 60 years of age who have been unemployed for a long time. Pay subsidies for apprenticeship training may be granted for the entire duration of the training. Pay subsidy may be granted only for the duration of an employment relationship in cases where a fixed-term employment relationship is shorter than the above-mentioned time limits.
In most situations, the purpose of pay-subsidised work is to promote the employment of jobseekers on the open labour market. Pay subsidies also promote the opportunities of people with reduced working capacity and those aged 60 or over who have been unemployed for a long time to find employment and participate in working life. Pay subsidy may be granted to employ unemployed persons who have gaps in their professional skills or have a permanent disability or illness, or one of a permanent nature, that reduces their opportunities to obtain a suitable job, or persons aged 60 or over who have been unemployed for a long time.
Although the pay subsidy is granted and paid to the employer, it is always dependent on the service needs of the unemployed jobseeker. The purpose of the subsidy is to compensate for the employee’s lower productivity.
Which employers are eligible for pay subsidy?
All employers, except households and government agencies and public bodies, are eligible for pay subsidy. However, municipalities and joint municipal authorities may only receive pay subsidies for hiring persons with reduced working capacity or over 60 years of age who have been unemployed for a long time. The restriction does not apply to the City of Helsinki with regard to its separate duties in healthcare, social welfare and rescue services.
The employment relationship may only start after the decision on granting the subsidy has been made. The requirements are that
- the pay subsidy does not distort competition
- the employer is committed to paying a wage laid down in collective agreements
- the employer has performed its statutory obligations
- other conditions for granting pay subsidies are met
How can an employer apply for pay subsidy?
Information on pay subsidy is available from the employment authority in your area. Their contact information can be found at Job Market Finland.
More information about applying for pay subsidies for employers and companies that are customers of employment services is available at Job Market Finland.