Unemployment benefits weakened significantly

The weakening of unemployment benefits began already back in January 2024, when the waiting period was extended from five to seven days, and the periodisation of holiday compensation began. 

The waiting period refers to the period at the start of unemployment for which unemployment allowance is not yet paid. 

In addition, the end-of-service holiday compensation for full-time employment, i.e. the compensation paid for untaken holidays, now postpones the start of the unemployment allowance period. A holiday compensation equivalent to one month’s pay postpones the entitlement to earnings-related allowance by about one month. 

In April 2024, the former exempt amount for earnings was abolished. 

Previously, an applicant could earn up to €300 in part-time work during unemployment without this income affecting the amount of unemployment allowance paid. In future, each euro earned will immediately reduce the unemployment benefit by 50 cents. 

In addition, the child increases paid as a supplement to unemployment allowance were discontinued, i.e. the number of children no longer affects the benefit. 

Age-related exemptions have also been partially abolished. For example, the employment obligation concerning people aged 57 and over was abolished and the level of unemployment allowance for people aged 58 and over is no longer protected. 

The job alternation leave system was also discontinued and, as a general rule, working on pay subsidy no longer entitles you to unemployment allowance. 

The most significant change to the unemployment benefit system as a whole is the change to the work requirement for unemployment benefit taking effect in September 2024, which I will discuss in more detail below. 

Work requirement extended

The employment history required to receive earnings-related unemployment allowance has now been extended to 12 calendar months, following an amendment that entered into force on 2 September 2024. 

Similarly, membership of an unemployment fund must also have been valid for 12 months.

Previously, the work requirement was based on the number of hours worked per calendar week. In practice, about six months of working at least 18 hours a week was sufficient to meet the requirement, with some exceptions. The employment history required is therefore twice as long as it was before the change.

The number of hours worked is no longer relevant in determining the sufficient employment history, as the accumulation of the work requirement is now based on the size of your salary. This is known as the ‘euroisation’ of the work requirement. 

A person becomes entitled to earnings-related unemployment allowance once they have accumulated 12 calendar months of employment while also being a member of an unemployment fund. Instead of the hours worked, the salary paid determines whether a month counts towards the work requirement.

Simply put, each month during which at least €930 has been paid in salary counts as one work requirement month. Half months can also be accumulated, as long as you earn at least €465 that month. The salary must still be in line with the collective agreement or the minimum level.

If there is no collective agreement for the sector, the minimum salary required for unemployment benefit in 2025 is €1,430 per month for full-time work.

The work requirement can still be met over a reference period of 28 months. A continuous or uninterrupted period of employment is not required.

In addition, the reference period will still be extended if the applicant has been absent from the labour market for an acceptable reason. Acceptable reasons for extending the reference period include, for example, full-time study. The maximum extension is seven years.

The new provisions apply to all applicants who have been working on or after 2 September 2024 and have been paid at least €465 per calendar month for that work. During the transition period, the weeks counting towards the work requirement under the former law are converted into months under the new law.

It is worth noting that the new provisions do not yet apply to periods of unemployment allowance for which payment has started before 2 September 2024. Earnings-related unemployment allowance can still be paid according to that previous period if the new 12-month work requirement has not yet been met when you become unemployed again.

Staggering of earnings-related allowance

The amendment that entered into force in September also cut earnings-related unemployment allowance by staggering it.

The allowance is reduced to 80% of the full amount after it has been paid for 40 days, or about two months.

The next cut takes place after 170 days, or about eight months, when the benefit falls to 75% of the original level.

Since the changes came into force on 2 September 2024, the first allowances have already been staggered in October and November. For this provision too, it is important to keep in mind the transitional period: the new staggering principle only applies to periods of earning-related allowance that begin after the change. The staggering does not apply to an applicant who receives earnings-related allowance for employment that has ended on 1 September 2024 at the latest.

Author works at TEK as an employment lawyer.