What are job alternation leave and compensation?

Job alternation leave is an arrangement where a full-time employee in a private or public-service employment relationship, in agreement with his/her employer, takes a leave. The unemployment fund pays job alternation compensation for the duration of the leave, while the employer hires a person registered as an unemployed job seeker with the TE Office to replace the employee for the same time.

The employee taking the leave is paid job alternation compensation for the duration of the leave, amounting to 70% of his/her earnings-related daily allowance. Job alternation compensation is paid for a maximum of 180 days. In order to qualify for job alternation compensation, you must have had a work history of at least 20 years and an employment relationship of at least 13 consecutive months with the same employer.

Terms and conditions of job alternation leave

You may take job alternation leave from a full-time job if you have signed an agreement with your employer about taking job alternation leave. Your employer hires a person registered as an unemployed job seeker with the TE Office for the duration of the leave.

In order to qualify for job alternation compensation, you must have had a work history of at least 20 years and an employment relationship of at least 13 consecutive months with the same employer.

Job alternation compensation is paid for a maximum of 180 days.

Employment and work history criteria for job alternation leave

You may take job alternation leave from a full-time job in which you have been for at least 13 months and where the working hours are at least 75% of the maximum for the sector.

The past 13 months of employment may include a period of unpaid leave of no more than 30 calendar days. ‘Unpaid leave’ is here defined as including: temporary layoffs; time off without pay; study leave; unpaid maternity, paternity or parental leave; and strike.

Any employment that accrues pension counts towards the required 20-year work history. Work done before the age of 23 may also be counted as long as it has accrued pension. For the purposes of this assessment, the following are considered tantamount to employment: maternity, paternity and parental leave on a daily allowance; child care leave; military or non-military service; and absence due to illness or occupational accident. Also, any employment and time tantamount to employment during which you have been insured and in an EU area country counts towards your work history. Submit reports of such employment to IAET-kassa.

If you have already taken job alternation leave, you may not take a new job alternation leave before you have been back at work for 5 years.

Restrictions on job alternation compensation

You cannot be paid job alternation compensation if:

  • you continue to receive a salary, holiday pay or other pay or compensation from your employer (fringe benefits that you continue to enjoy during job alternation leave do not qualify as pay),
  • you are undergoing military service, women’s voluntary military service or non-military service,
  • you are serving a prison sentence in a penal institution,
  • you are in full-time employment for a period of more than 2 weeks with an employer other than your own employer,
  • you are a full-time entrepreneur
  • you receive a social benefit that prevents receiving earnings-related allowance (e.g. sickness allowance or parental allowance).

Amount of job alternation compensation

Job alternation compensation is equal to 70% of the daily allowance that you would receive if unemployed. Job alternation compensation does not include child increments or other increments.

For an estimate on your job alternation compensation, use the Allowance calculator.

The calculation of job alternation compensation does not take into account benefits in kind that are not discontinued for the duration of the job alternation leave.

Length of job alternation leave

Your job alternation leave must be at least 100 days long and may not be more than 180 days long. Job alternation leave must be taken as one contiguous period. If you have agreed that job alternation leave will last less than 180 days, you may extend it. Such an extension must be agreed with the employer no later than 2 months before the end of the already agreed job alternation leave. The end of job alternation leave must also be agreed with the employer. You may temporarily return to work during your job alternation leave, but this will not extend the duration of the leave.

Upper age limit and retirement

The maximum age for an employee to take job alternation leave is linked to the retirement age, being 3 years less than the lowest age for retiring on an old-age pension. For instance, if your retirement age is 63 years, your maximum age for taking job alternation leave is 60 years. You must start your job alternation leave no later than during the month in which you have your 60th birthday.

You cannot retire on an old-age pension directly from job alternation leave.

Taxation of job alternation compensation

The job alternation compensation is taxed the same as earnings-related allowance.