Transition security to speed up re-employment

Topics

• Unemployment

From the beginning of 2023, a new transition security package will be introduced for persons aged 55 and over. Those covered by transition security are entitled to a transition security allowance as well as training and extended employment leave.

Basics of transition security

The transition security package consists of a transition security allowance as well as transition security training, which are intended to support the re-employment of employees over the age of 55. The reforms are intended to replace the right to an additional day of earnings-related unemployment allowance, which will be phased out from 2023 onwards. You may be entitled to transition security if the employment relationship has been terminated on or after 01/01/2023. In addition to transition security, the Parliament of Finland has also approved, for example, an amendment to the Working Hours Act, which should make it easier to cope at work.

General requirements for transition security training and the transition security allowance

Transition security consists of the transition security allowance as well as transition security training, which the TE Office investigates with regard to the general requirements. The first condition thereby for the right to transition security is that the dismissed employee has reached the age of 55 at the latest on the day of dismissal. 

The employment relationship must have ended with dismissal for production and economic reasons. Thus, there is no right, for example, to transition security in a situation where the employment relationship has ended by mutual agreement (e.g. “golden handshake”). Transition security also cannot be obtained if the employment relationship ends due to bankruptcy, re-organisation, or the death of the employer.  

The employment relationship must have been terminated by an employer who has terminated the employment relationship for a continuous period or with interruptions of no more than 30 days in total, for at least five years. This means that the right to transition security may also be fulfilled for shorter successive employment relationships, as long as the last employment relationship has ended in dismissal for production and economic reasons. 

Registration as a jobseeker must be made with the TE Office no later than 60 days from the date of dismissal. Thus, depending on the length of the notice period, it is possible that the registration must be made even before the end of the employment relationship. It is therefore advisable to register as soon as you have been informed of the termination.

The transition security allowance compensates for the dismissed person’s loss of earnings

The TE Office investigates the above-mentioned requirements for receiving the transition security allowance, and will issue a statement on their fulfilment to the payer of the unemployment benefit. The payment of the transition security allowance does not require the fulfilment of the employment condition or membership condition; rather, the transition security allowance is paid by the unemployment fund of which the person was a member on the day of dismissal. If the dismissed employee has not been a member of an unemployment fund, the transition security allowance should be applied for from Kela. The transition security allowance can be applied for and paid already during the notice period, but at the latest the application must be submitted within three months of the end of the employment relationship. 

Registration as a jobseeker must be made with the TE Office no later than 60 days from the date of dismissal. It is advisable to register as soon as you are informed of the termination. However, unemployment is not required to receive the transition security allowance. You can receive the money even if you start a new job immediately after the notice period has ended. 

The transition security allowance corresponds to the dismissed employee’s one-month salary. Based on the Incomes Register data, wages paid during the 12 calendar months preceding the date of dismissal are taken into account in the calculation. The transition security allowance does not reduce or prevent the payment of unemployment benefit, but it is separate compensation. It is also not taken into account when determining the wages on which the earnings-related unemployment allowance is based.

Transition security training supports re-employment

The purpose of transition security training is to support the rapid re-employment of the dismissed employee by improving their professional skills. Transition security training is acquired by the TE Office and must be arranged within three months of the end of the employment relationship. The value of transition security training corresponds to a maximum of two months’ salary and can last no more than six months. 

The training must be such that it provides the participant with professional skills and supports re-employment. The TE Office will determine whether the training meets the required requirements. In matters related to transition security training, it is therefore advisable to contact the TE Office directly. 

Participation in transition security training is voluntary for jobseekers and does not prevent them from receiving unemployment benefit, as long as the other conditions for payment are met. In addition, there are no sanctions for refusing or dropping out of training. However, In contrast to the period of employment promotion services, participants in transition security training are not entitled to an increase in earnings-related unemployment allowance.

Reduced working hours provide support for coping at work

A provision has been added to the Working Hours Act, according to which an employee who has reached the age of 55 can ask the employer to reduce their regular working hours. In addition to reaching the age of 55, it is a prerequisite that the person has been employed by the employer for at least three years. The right to a reduction in working hours is not subjective; rather, the employer may refuse to reduce working hours for a justified reason.  

It is important to note that there is no right to unemployment benefit in this situation, since the reduction in working hours is based on the employee’s own request. Entitlement to adjusted unemployment benefit during reduced working hours requires that the employer has reduced working hours due to lay-offs or similar reasons for production and economic reasons.