Pay subsidy
Pay subsidy is a support aimed at promoting the employment of an unemployed job seeker, which the employment service may grant to an employer for wage costs. The purpose of the subsidized job is to promote the employment of an unemployed job seeker in the open labor market and to improve their professional skills. The pay subsidy also helps individuals with reduced work capacity and those over 60 years old who have been unemployed for a long time to gain employment and participate in the labor market. The support is granted and paid to the employer, but it is always based on the service needs of the unemployed job seeker.
Pay subsidies can be granted for:
- permanent full-time employment
- fixed-term full-time employment
- apprenticeship training
- part-time employment, if the grantor considers it appropriate and the subsidy helps the job seeker’s chances of employment.
The employment service assesses whether the subsidy is the most appropriate way to support the job seeker’s employment and decides the duration and amount of each subsidy period separately. The information about the pay subsidy is included in the job seeker's employment plan.
The length of the pay subsidy period depends on factors such as the length of the individual’s unemployment and the effect of their reduced work capacity on job performance. The subsidy is typically granted for five or ten months, depending on the duration of the unemployment prior to the subsidy. The subsidy is granted for a maximum of the duration of the employment. The subsidy can be granted for up to 24 months for the employment of a long-term unemployed person over 60 years old.
The amount of the pay subsidy is usually 50 percent of the wage costs for the subsidized employee. For the employment of individuals with reduced work capacity, the subsidy is 70 percent of the wage costs. For associations, foundations, or registered religious communities, the subsidy may cover 100 percent of the wage costs. The subsidy is paid in amounts ranging from €1,260 to €2,020 per month, depending on the basis for granting the subsidy.
Do the following
Apply for the subsidy well in advance before the employment relationship begins. The employment relationship can only start after a decision has been made about the subsidy.
If you are applying for an extension of the pay subsidy, submit the continuation application before the new subsidy period starts. The employment relationship must continue immediately after the previous subsidy period ends.
The granted pay subsidy will be paid retroactively, with the payment period including the wage payment periods that ended within a calendar month. You can apply for the subsidy payment for multiple payment periods. However, the subsidy is paid in payment periods.
Submit the payment application to the employment authority within three months after the calendar month in which the last payment period belonging to the subsidy period ends. The subsidy period is the time period specified as the duration of the subsidy.
Apply for the subsidy and its payment through the service platform.
Apply for the subsidy and its payment using an electronic form on the service platform. Log in to the service platform with your personal bank credentials, mobile certificate, or certificate card.
Fill out the application in the service platform and attach the necessary documents. Internal instructions within the service will assist you in completing the application. On the service platform, you can submit the application, respond to any requests for additional information, complete your application, and receive decisions related to your case.
The application can also be submitted by an authorized person through the service platform. Representatives of organizations may use the service without a specific authorization if they have an existing authorization or a right based on registry information to handle the matter. The service platform checks the user’s access rights when logging in.
The authorization for using the service is called ""Applying for Pay Subsidy.""
In addition to the authorization, the use of the service platform requires that community clients have a Business ID (Y-tunnus).
To whom and on what terms
Pay subsidy can be applied for by a business, municipality, municipal federation, welfare area, or other community such as an association, foundation, registered religious community, or parish.
The subsidy cannot be granted for an employment relationship that has started before a decision has been made about granting the subsidy. An exception to this is when a new subsidy period is granted that starts immediately after the previous subsidy period ends.
As an employer, you are committed to paying the subsidized employee at least the wage according to the applicable collective agreement or the usual and reasonable wage if no collective agreement applies. The pay subsidy will not be granted if the wage for the subsidized employee is determined solely based on the results of the work.
The subsidy will not be granted if
- it distorts competition compared to others offering the same products or services
- the employer has significantly neglected their obligation to pay wages or taxes or make statutory payments
- the organization you represent is a company in difficulty as defined in the EU State Aid General Block Exemption Regulation, or is subject to an unpaid recovery order based on a decision by the European Commission, declaring the subsidy to be incompatible with the rules or the internal market.
It is possible to receive the subsidy despite dismissals or layoffs, as long as the number of employees in the employment relationship at the time of applying for the pay subsidy is at least as great as the number of employees at the time of the dismissal or layoff. The subsidy must not worsen the position of the employees in service.
If an employee hired with a pay subsidy moves to another employer during the subsidy period due to a transfer of business, merger, or division of a company, or due to the merger of communities, the pay subsidy can be granted to the receiving employer for the remaining period of the subsidy originally granted to the transferring employer. The receiving employer must submit a pay subsidy application to the employment service within one month of the employee’s transfer to the new employer or receiving community.