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Temporarily unemployed workers to receive two months salary at 70 percent

The Estonian Unemployment Insurance Fund office in Tartu.
The Estonian Unemployment Insurance Fund office in Tartu. Source: Aili Vahtla/ERR

The Unemployment Insurance Fund decided to reimburse 70 percent of salaries to employees of companies for two months who are in financial difficulty due to the impact of the coronavirus, it was agreed on Wednesday evening. The government agreed to the plans on Thursday.

The council of the Unemployment Insurance Fund (Töötukassa) reached an agreement on how to prevent large-scale layoffs in the economic crisis caused by the effects of the coronavirus.

The plan will help companies whose turnover and income have fallen sharply and whose employees have suddenly found themselves without work. The initial agreement is to compensate them with 70 percent of their wages for two months, March and April. Companies are also expected to pay some of the costs themselves.

To be eligible for compensation, the employer must meet at least two of three criteria:

  • The turnover of the company must have fallen by at least 30 percent compared to the same period last year; 
  • At least 30 percent of the workforce no longer have a job; 
  • Salaries have been reduced by at least 30 percent.

The Unemployment Insurance Fund will calculate how much a worker will be paid based on their average salary for the last 12 months. However, they will receive no more than €1,000.

In turn, the employer will be obliged to pay the employee at least €150 and the labor taxes owed.

The measure will apply retroactively from March 1 to May 31, but the compensation may be claimed for up to two months' salary for the period chosen by the employer within that three month period. This means employees who have already received notice their redundancy as of March 1 are included.

All companies that meet the qualification criteria will be covered by the scheme.

On Thursday, the government agreed to support the measures with €250 million. The rules state:

The labour market service provided by the Estonian Unemployment Insurance Fund to cover for wage reduction – amounting to €250 million, under the following conditions:

  1. The benefit can be used by a compliant employer to cover the period of two months from March to May 2020;
  2. The benefit of no more than €1,000 per month per employee in need of the support is paid as gross amount.
  3. The benefit is calculated based on the gross wages of the employee over the period of the previous 12 months, plus remuneration payable by the employer to the employee which is no less than €150 in gross amount. The Unemployment Insurance Fund and the employer will pay all labour taxes on wages and benefits.

To see the details of the government's €2 billion economic support package


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Editor: Helen Wright

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