How does the notice period affect earnings-related daily allowance?
When your employment is terminated, you are usually entitled to receive notice pay or some equivalent compensation. Such pay or compensation is paid for a certain period of time. Earnings-related daily allowance cannot be paid for the same period.
An employment contract of an indefinite duration can be terminated by either party. Typically, a specific notice period has been agreed on in the event of a termination. The length of the notice period depends on what has been agreed, which party terminates the contract and the duration of the employment. The notice period can be based on what is specified in a collective agreement, or it can be separately agreed on in the employment contract. If no notice period has been agreed, the notice periods laid down in the Employment Contracts Act will be used. The maximum duration for a notice period is six months.
The employer must pay wages or salaries for the notice period. Whether the employee is obligated to work or not can be agreed on separately. If the employment relationship ends without notice or, for example, directly as a continuation of a lay-off, the employer pays compensation corresponding to the amount of the employee’s notice pay.
Earnings-related daily allowance and the right to receive notice pay are incompatible
We cannot pay earnings-related daily allowance for the same period for which you are entitled to receive notice pay or an equivalent compensation from your employer. For example, if you have a three-month notice period, we cannot pay earnings-related daily allowance for the same three-month period.
It is possible that your employer fails to pay your notice pay or the equivalent compensation for the notice period. However, this has no impact on the payment of unemployment benefits. If you have a notice period, earnings-related daily allowance cannot be paid for that period, even if you have not been paid by your employer during the notice period.
Termination after lay-off
If you have been laid off and your employment is terminated, be sure to report it in the application. This allows us to take into account the termination and check your entitlement to earnings-related daily allowance.
If you do not report the termination of your employment, we may pay you earnings-related daily allowance even if you are not entitled to receive it. When we find out about it later, we will have to recover the excess amount of the daily allowances from you. If you have intentionally failed to report the termination of your employment, we will have to ask the police to investigate the matter.
According to the Employment Contracts Act, you can terminate your employment without a notice period while laid off. Since in such a case you are not entitled to notice pay, there is no obstacle to the payment of earnings-related daily allowance. However, the TE Office investigate the termination of the employment and may consider that there was no valid reason for the termination. In this case you might be subject to a fixed period during which no benefit is paid.
Your employer may also terminate your employment during the lay-off period. However, the employer must comply with the agreed-on notice period. The employer may reduce an amount equivalent to 14 days of pay from your notice pay if the employer gave more than a 14 days' notice on the layoff. The condition is therefore that the notice period for the lay-off was 15 days or more.
If your lay-off has lasted more than 200 consecutive days, you can terminate your employment without losing the right to the notice pay and your employer must pay you compensation equal to the amount of your notice pay. We cannot pay earnings-related daily allowance for the period during which you are entitled to receive compensation equivalent to your notice pay.
The TE Office will investigate the termination in this situation as well. It is settled in case-law that terminating an employment after a 200-day lay-off is acceptable and these cases did not result in a period for which no benefits were paid.