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Pay subsidies

A pay subsidy is an economic benefit for employers to cover the pay of an unemployed jobseeker.

Introduction

Residents Entrepreneurs Associations
A pay subsidy is a benefit intended to promote the employment of unemployed jobseekers that an employment authority can grant to an employer to cover pay costs. The purpose of work supported by pay subsidy is to promote the employment of unemployed job seekers in the open labour market and to improve their professional competence. Pay subsidy also helps people with reduced work ability and those aged 60 or over who have been unemployed for an extended period to find work and participate in the w…orld of work. The subsidy is granted and paid to the employer, but its granting is always based on the unemployed jobseeker's service need.

A pay subsidy may be granted for
* open-ended full-time employment
* fixed-term full-time employment
* apprenticeship training
* part-time employment if the granter of the subsidy feels that it is appropriate and that it promotes the jobseeker's possibilities to find employment.

The employment authority assesses whether the subsidy is the most appropriate means of promoting the employment of the unemployed jobseeker and decides separately the duration and amount of each support period. The unemployed jobseeker's employment plan or pay subsidy card includes a mention of the pay subsidy.

The length of the pay subsidy period depends on the duration of the person's unemployment and the impact a possibly reduced work ability might have on their work performance. Depending on the duration of the unemployment preceding the pay subsidy, the subsidy would be granted for five or ten months. The subsidy is granted for the duration of the employment relationship at most. The subsidy may be granted for hiring a long-term unemployed person aged 60 or over for a maximum of 24 months at a time.

In most cases, the amount of the pay subsidy is 50% of the salary costs incurred by the person hired with the subsidy. The amount of support granted for hiring a person with reduced work ability is 70% of their pay. The amount of support for an association, foundation or registered religious community may be 100% of the pay. The amount of subsidy granted is between 1,260 and 2,020 euros per month, depending on the grounds for granting. The pay covered with the subsidy is the pay subject to withholding tax that is paid to the employee on the basis of working hours or the performance of a contract.

Prerequisites

A company, municipality, joint municipal authority or wellbeing services county or other entity, such as an association, foundation, registered religious community or parish can apply for pay subsidies.

The subsidy cannot be granted for an employment relationship that started before the decision to grant the subsidy was made. An exception to this is the granting of a new pay subsidy period when the new period begins immediately after the previous one ends.

As an employer, you undertake to pay the employee who has been hired with the subsidy at least the salary specified in the collective agreement applicable to the employment relationship or the normal and reasonable salary if there is no applicable collective agreement. Pay subsidy shall not be granted if the pay of the person to be hired with the subsidy would be determined solely on the basis of their work performance.

The subsidy cannot be granted if:
* the subsidy distorts competition vis-à-vis others offering the same products or services
* the employer has essentially neglected their obligation to pay wages or obligations to pay taxes or statutory payments
* the organisation you represent is a company in trouble as referred to in the General Block Exemption Regulation of EU State Aid or if the European Commission has issued a negative Recovery Order against it, which declares the subsidy as illegal or unsuitable for the internal market.

It is possible to receive support regardless of dismissals or lay-offs when the number of employees in an employment relationship at the time of applying for the pay subsidy is at least equal to the number of employees at the time of dismissal or lay-off. The subsidy may not impair the position of your other employees.

If the person hired with the subsidy is transferred to another employer during the pay subsidy period due to the transfer of a business, merger or division of an entity or the merger of entities, pay subsidy may be granted to the employer receiving the employee for the remaining period of the pay subsidy period granted to the transferring employer. The receiving employer must submit an application for pay subsidy to the employment authority within one month since person hired with pay subsidy has transferred to the employment of the recipient or the receiving organisation.

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