Government endorses extension of wage compensation measure

An Estonian Unemployment Insurance Fund (Töötukassa) office on Vaksali Street in Tartu.
An Estonian Unemployment Insurance Fund (Töötukassa) office on Vaksali Street in Tartu. Source: Aili Vahtla/ERR

The government on Thursday endorsed a draft which will extend the measure of compensating employees for lost wages, introduced as part of the package of measures to alleviate the impact of the COVID-19 crisis, to cover also the month of June.

It will be possible for employers to apply for follow-up compensation of lost wages for the month of June until July 31. The conditions that must be met to qualify for the measure have been made stricter compared with the previous months, the government's communication office said. 

Where earlier the sales or revenue of a business must have declined by at least 30 percent for the business to qualify for the measure, now the rate of decline must be at least 50 percent.

Also the cap on the compensation paid by the Unemployment Insurance Fund was lowered from 1,000 to 800 euros gross. The ratio of the employee's wage that will be compensated was brought lower from 70 percent to 50 percent in general. The size of the minimum payout by the employer remains unchanged at 150 euros.

In addition, the length of the period during which businesses must not lay off the employees who have benefited from the measure was extended from one month to two months

The wage compensation can be sought only for employees working under an employment contract whose contract was concluded before March 1, 2020. Only companies which did not have tax arrears as at March 12, who have eliminated their arrears by the moment of the submission of the application, or whose arrears have been rescheduled can apply for wage compensation for their employees.

The follow-up wage compensation measure is estimated to cost 68.9 million euros, which will be covered with unemployment insurance funds to the amount of 45 million euros and to an amount of no more than 36 million euros from the government's reserve. 

Previously employers in Estonia could seek wage compensation for their employees for two months during the period from March 1 to May 31.


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Editor: Helen Wright

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