A pay subsidy is an economic benefit that a TE Office may grant an employer to cover pay costs of an unemployed jobseeker.
The purpose of work supported by pay subsidy is to enhance the professional competence of prospective employees to be hired with pay subsidy, and to help them find work in the open labour market.
The granting of pay subsidy is subject to an estimation made by the Employment and Economic Development Office (TE Office) that the jobseeker’s unemployment is caused by the lack of professional competence, and work supported by pay subsidy will enhance the jobseeker’s professional competence and opportunities to find work in the open labour market. If the person to be hired with pay subsidy is aged 60 or over, the granting of pay subsidy primarily requires that the person has been unemployed for an uninterrupted period of 12 months immediately preceding the granting of pay subsidy.
Although a pay subsidy is granted and paid to the employer, the granting of the subsidy is always based on the unemployed jobseeker's need for the service.
The pay subsidy is a discretionary form of support that a TE Office can grant within the framework of available funding.
The employer must commit to paying a wage in accordance with an applicable collective agreement or, if no applicable collective agreement exists, a prevalent and reasonable wage for the job in question.
A pay subsidy may be granted:
When reporting a vacancy to the TE Office, include information whether you are also willing to hire a person needing more support at the beginning of their employment relationship than what the average employee would receive.
Upon agreement, the TE Office may also offer work for persons whose recruitment may make the employer eligible for a pay subsidy.
No pay subsidies are available for central government offices or agencies. This type of employers can, however, be granted an appropriation for job creation in order to hire an unemployed jobseeker.
A pay subsidy is income subject to a tax for all employers with the exception of private households.
Work supported by pay subsidy may be joined with other TE services.
Joining the services appropriately supports the jobseeker’s access to the labour market and helps the employer to find a suitable employee.
Pay subsidy may also be used to help find opportunities on the open labour market for an employee benefiting from the subsidy. The employee may, for example, be transferred to an enterprise to help the employer to estimate the employee’s applicability to the available assignments without taking risks. The transfer is always based on the transferred person’s needs.
The actual employer, who applies for/gains pay subsidy, pays the transferred employee’s salaries. The division of responsibility between the actual employer and the user enterprise is determined in the Employment Contracts Act.
The transfer requires that the user enterprise does not have unpaid taxes or other statutory charges and that it has not neglected the duty to pay salaries.
If an employee's contract has been terminated by the user enterprise or if the enterprise has laid-off an employee for financial or production-related reasons, and the notice period for these has come to an end during the 12 months prior to applying for pay subsidies, an employee supported with pay subsidies can be transferred if the employee has rehired the employee.
The employee’s consent for the transfer and the possibility to notify the TE office of the transfer with the form TEM3.23 prior to enacting it are prerequisites of transferring an employee hired with pay subsidy to a user enterprise.
The TE Office may grant a jobseeker a pay subsidy card to support their independent efforts to find work. If the jobseeker has a pay subsidy card it means that the employer is eligible for a pay subsidy towards the card holder's payroll costs if employer and employment relationship criteria for granting the subsidy are met.
A pay subsidy may be granted for those without a pay subsidy card if the possibility of subsidised employment is included in the employment plan of the unemployed jobseeker.
The TE Office decides on the duration and amount of the subsidy on a case-by-case basis.
If a pay subsidy is granted due to shortcomings in the professional skills of the jobseeker, the amount and duration of the subsidy are determined by the length of the unemployment period of person hired for the job. The longer a person has been unemployed before receiving the pay subsidy, the higher the amount and longer the duration of the subsidy.
The pay subsidy for an employer enterprise is granted either as a subsidy defined by the General Block Exemption Regulations of EU State Aid or as a de minimis subsidy.
If the employer receives a further monetary compensation in addition to the pay subsidy or gets training compensation for the course of an apprenticeship training, the total amount of compensations may not exceed the amount of payroll costs.
When you are considering hiring a jobseeker, you can anticipate the amount and duration of the pay subsidy according to the length of the jobseeker's unemployment:
If the pay subsidy has been granted on the grounds that a disability or an illness of the jobseeker significantly and permanently effects the jobseeker's work performance in the job you offer, the subsidy may cover up to 50% of the payroll costs. The subsidy period may not exceed 24 months at a time.
If the pay subsidy is granted to a person who is 60 years or older and has been unemployed for a minimum of 12 months immediately before the granting of the pay subsidy, the subsidy period may not exceed 24 months at a time. Based on the length of unemployment, the amount of the subsidy is a maximum of 40 or 50% of payroll costs for the initial 12-month-period and, subsequently, a maximum of 30% of the payroll costs.
Pay subsidy for apprenticeship training
A pay subsidy may be granted for the entire duration of apprenticeship training. If the amount of subsidy is based on the length of unemployment, it covers a maximum of 30%, 40% or 50% of the payroll costs for a period not exceeding 12 months. The subsidy for the rest of the course of the training is a maximum of 30% of payroll costs.
If the subsidy is granted based on a disability or an illness of the jobseeker, it will cover 50% of payroll costs throughout the entire training period.
Associations, foundations and registered religious communities
When an association or a foundation that does not pursue business practices hires a person who has been unemployed for a minimum of two years, the subsidy period may not exceed 12 months.
The pay subsidy is 100% for work time of up to 65%. The maximum amount of compensation is EUR 1,800 per month. The Evangelical Lutheran Church of Finland and the Eastern Orthodox Church of Finland and their parishes are not associations, foundations or registered religious communities and, therefore, they cannot be granted a 100% pay subsidy.
Social enterprises may be granted a pay subsidy differently from other businesses in the following situations:
Work organised by municipalities due to an obligation
When a municipality hires a person for whom they are obligated to offer work, the subsidy covers a maximum of 50% of payroll costs for a period not exceeding six months.
A pay subsidy may not be granted to an employer in the following circumstances:
Pay subsidy may not impair the position of the employer’s other employees.
It is possible to receive a pay subsidy in spite of termination or temporary layoffs if, the employer has, before submitting a pay subsidy application, offered work to employees who have been terminated or temporarily laid off for financial or production-related reasons.
The TE Office will check the criteria for granting a pay subsidy. A pay subsidy card presented by the jobseeker does not on its own suffice for granting the subsidy, and the employer must also fill out a pay subsidy application
After the pay subsidy period, apply for the payment of a Pay Subsidy from the development and administration centre for ELY Centres and TE Offices (the KEHA Centre).
Instruction for applying for payment of pay subsidy and contact information for KEHA Centres (in Finnish, pdf, 290 kt, keha-keskus.fi)
Attach a copy of the employment contract to the first payment application or enclose an apprenticeship training agreement to your application if a subsidy has been granted for apprenticeship training.
Electronic payment application
Payment application in paper format
Pay subsidy cannot be paid if: