JOB ALTERNATION LEAVE AND COMPENSATION

Job alternation leave is an arrangement whereby a full-time employee or an employee whose working hours are more than 75% of the working hours of a full-time employee under the applicable collective agreement takes job alternation leave according to an agreement made with his or her employer. The employer hires a person registered as an unemployed job seeker at the Employment and Economic Development Office as a substitute for the same period. The person hired as the job alternation substitute should primarily be a young person, a long-term unemployed or a person who has recently completed an academic or vocational degree.

The combined working hours of the employee(s) hired as the job alternation substitute(s) must at minimum equal the regular working hours of the employee taking job alternation leave. If a part-time employee of the employer is registered with an employment office as an unemployed job seeker for a full-time job and that person is hired for a vacancy under the job alternation scheme, the job alternation may be implemented by hiring the unemployed employee who has registered with the Employment and Economic Development Office for the job that has thus become vacant.

Time-in-employment requirement

The requirements for receiving job alternation compensation are that the person leaving on job alternation leave has a minimum of ten years of time in employment prior to the leave and that the employment relationship with the same employer has lasted for an uninterrupted period of at least 13 months prior to the leave.

This period of 13 months may include unpaid absence of a maximum of 30 days. Absence due to illness or accident is considered time in employment.

A person who has been on job alternation leave will be re-eligible for job alternation leave after five years in employment after the first leave.

An employee will not be entitled to job alternation compensation if he or she is

• receiving salary or wages from the employer (not applicable to fringe benefits which under the terms of the job alternation agreement remain in effect during the period of job alternation leave or to training paid by the employer)
• carrying out military or non-military service (excluding military refresher courses)
• in full-time employment lasting more than two weeks for another employer
• a full-time entrepreneur
• receiving benefits under unemployment security legislation (excluding personal liability days)
• receiving maternity, paternity, parental allowance or special care allowance under the Sickness Insurance Act, or has been granted leave due to pregnancy, child birth or child care
• receiving disability pension or rehabilitation allowance under the National Pension Act
• receiving benefits payable under other Acts on the basis of full disability
• receiving early old-age pension or individual old-age pension under the National Pension Act or Employees' Pension Acts, or old-age pension on the basis of years of service entitling to full pension
• receiving unemployment pension
• receiving training support
• receiving rehabilitation allowance or indemnity for loss of earnings under an accident or traffic insurance policy or the Military Insurance Act
• in imprisonment in a penal establishment.

Duration

Job alternation leave may last for a continuous period of at least 90 calendar days and a maximum total of 359 calendar days. The leave may be divided into periods of at least 90 days each. These periods must be agreed in the job alternation agreement before starting the leave. An agreed leave may be extended for special reasons, but the extension must be agreed no later than two months before the end of the original leave. The job alternation leave must be completed within two years from its commencement.
 
 If the person on the leave temporarily returns to work by his or her employer during the leave, such time in employment will be considered part of the leave.
 
Job alternation compensation

The full amount of job alternation compensation is 70 per cent of the unemployment allowance the employee would be entitled to if he or she became unemployed. Child increases under unemployment security legislation are not taken into consideration when calculating the job alternation compensation. Earned income during the at least 52 weeks preceding the job alternation leave is not taken into consideration when calculating the unemployment allowance on which the compensation is based. A deduction of 3.5% (share corresponding to the employment pension contribution) is made before determining the job alternation compensation.
 
 If the person leaving on job alternation leave has an employment history of at least 25 years with pension entitlement before the job alternation leave began, the job alternation compensation is 80 per cent of daily allowance.
 
 If the job alternation agreement was made prior to 2010 and the person has previously been unemployed, receiving no more than 150 days of increased earnings-related allowance, the job alternation compensation may be determined on the basis of the increased allowance.
 
 In the same way as other benefits paid by unemployment funds, alternation leave compensation is taxable income.
 
 If the applicant has received a fringe benefit while employed and the benefit is not discontinued for the duration of the alternation leave, the benefit will not have an effect on the amount of alternation leave compensation nor will it be deducted as income during the leave.
 For example, housing benefit, which is a taxable benefit and would otherwise be taken into consideration as a basis for the benefit, is not taken into consideration when determining the amount of job alternation compensation if the claimant will be using the housing benefit during the leave. If the has had a company car, for example, the car will be taken into consideration as taxable income when determining the job alternation compensation in the event that the person will not be using the car during the leave.
 
Application and payment

Before the job alternation leave begins, the employer must deliver the job alternation agreement made with the employee to the Employment and Economic Development Office along with a reliable account (e.g. an employment contract) of the hiring of an unemployed person for the duration of the leave. At the same time, the employee taking the job alternation leave must deliver an income certificate for the at least 52 weeks preceding the job alternation leave to the Employment and Economic Development Office. Agreement forms for job alternation leave are available from Employment and Economic Development Offices and from the website of the labour administration at www.mol.fi.
 
An employee taking job alternation leave applies for job alternation compensation from his or her own employment fund. An original copy of the income certificate and employment register extract must be attached to the application. The Employment and Economic Development Office gives a statement to the unemployment fund, which in turn issues a written decision on the compensation and pays it retroactively at least once a month. There is no personal liability period for alternation leave compensation. Contrary to earnings-related allowance, you do not need to submit follow-up applications for job alternation compensation. You must, however, immediately notify the fund of changes affecting the compensation (e.g. employment).
 
Application for job alternation compensation must be made within three months of the beginning of the job alternation leave, but it is also possible to submit the application prior to going on leave.
 
Job alternation compensation is payable for a maximum of 5 days per week.
 
Details on employment history

The meeting of the ten-year employment period required for alternation leave is proven with an employment register extract. The calculation method for employment pension was changed on 1 January 2007: employment prior to that date is calculated according to hours worked, whereas the method for accruing employment history from 1 January 2007 is the comparison of annual income against the limits of basic pension under the Employees' Pension Act.
 
 What is included in employment history?

• gainful employment
• employment as an entrepreneur (with compulsory self-employed person's insurance)
• work done as a posted worker
• employment in treaty countries up to 31 December 2007 (not included from the beginning of 2008).

Employment history is also accumulated in the event that employment and wage payment are interrupted for a continuous period of no more than one year during the employment relationship (e.g. because of maternity leave or military service).
 
 A maximum of one quarter of the employment history may consist of so-called time comparable to employment. Such periods include periods of maternity, special maternity, paternity and parental allowance and special care allowance, provided that no pension has been accrued during the period. Child care leave and military or non-military service are also considered comparable to employment.
 
 A further requirement for alternation leave is that the applicant has been in a service relationship with the same employer for a minimum of 13 months. Contrary to the ten-year employment requirement, only absence resulting from sickness or accident may be regarded as comparable time as concerns this requirement.
 
 The employment register extract regarding time in employment can be obtained from the Finnish Centre for Pensions. Employees of municipalities and the State can obtain the extract from the Local Government Pensions Institute or the State Treasury. It is advisable to begin by establishing the employment history details, as the Employment and Economic Development Office may issue its statement on job alternation leave and the applicant begin the leave before the unemployment fund has the opportunity to establish the conditions for the payment of job alternation compensation. If it is found at this time that the applicant does not have enough time in employment, he or she will not be entitled to receive the benefit.
 
Employment and other income during job alternation leave

Pay and other earned income received during job alternation leave result in a deduction in the job alternation compensation; in such a case the basis for the compensation will be adjusted allowance . There is no entitlement to compensation for periods of full-time employment of over two weeks.
 
The payment during the leave of compensation earned during time in employment preceding the job alternation leave does not reduce the amount of job alternation compensation. For example, holiday bonus and profit- and merit-based pay received during the job alternation leave does not influence the amount of alternation compensation.
 
Statutory benefits with a reducing effect on unemployment security (such as child home care subsidy) also have a reducing effect on alternation compensation. A more detailed list of the effect of social benefits can be found here .

Discontinuation of alternation leave

The premature termination of alternation leave must be agreed by the person on alternation leave and the employer.
The job alternation leave is considered to be suspended, if the person becomes entitled to maternity, paternity, parental or special care allowance or is granted leave due to pregnancy, child birth or child care. If the duration of the entitlement or leave is at least 18 weekdays, the job alternation leave is considered to be suspended, continuing as normal after the suspension.