Salary subsidy for June to open applications from July 1

Unemployment Insurance Office (Töötukassa) branch in Pärnu.
Unemployment Insurance Office (Töötukassa) branch in Pärnu. Source: ERR

Applications for extraordinary wage compensation for the month of June, under a scheme first put in place during the peak of the coronavirus pandemic, can be submitted from July 1.

The subsidy is paid for June when an employer has suffered at least a 50 percent decline in turnover or revenue as compared to the month of June last year, according to the Unemployment Insurance Fund (Töötukassa). The scheme was seet up in response to the coronavirus pandemic, initially for the months of April and May.

The employer is eligible for compensation if they are not able to provide at least 50 percent of their employees with work and the workload of the employees has been cut by at least 30 percent.

Also eligible are employers who have cut the wages of at least 50 percent of employees by at least 30 percent, or down to the minimum wage, currently €584 per month.

The employer must have cut the wages or workload of their employees for the whole month of June.

The amount of the subsidy will be 50 percent of the average monthly wage of the employee. The maximum amount of the subsidy is €800 (down from €1,000 for the first two months - ed.). In addition, the employer must pay a wage of at least €150 to the employee. The employee will receive at least the minimum wage of €584 from the Unemployment Insurance Fund and their employer, collectively. The employer must make their payment before applying for the subsidy.

Only employers without tax debt or paying their tax debt in installments as agreed with the Tax and Customs Board (MTA) can apply to have the June salaries of their employees subsidized. An employer can apply for the salaries of contracted employees to be subsidized on the condition that the contract was signed before March 1 2020.

If the employer terminates the contract with the employee due to redundancy in June or in the course of two following calendar months, the subsidy is to be returned to the Unemployment Insurance Fund.

In July, employers may apply to have the June salaries subsidized for the same employees whose salaries were subsidized in March, April, or May. Thus, an employee's salary may be subsidized for a maximum of three months instead of two.

CEO of the Unemployment Insurance Fund Meelis Paavel underscored that both the first stage of the support measure as well as the salary subsidy for June are of a temporary nature.

"Compensation should be sought in the case of temporary difficulties. The employer must weigh if the wage subsidy will help them continue operation," Paavel said.

The cost of the two stages of salary subsidy amounts to some €300 million. The Unemployment Insurance Fund's reserve at the start of 2020 totaled €838 million and is estimated to decrease to below €400 million by the end of the year.


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Editor: Katriin Eikin Sein

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