Extended Salary Subsidies In March And April

• Published date: 02 August 2021
• Subject Matter: Employment and HR, Employee Benefits & Compensation
• Law Firm: Cobalt Legal
• Author: Cobalt Legal

The subsidies will be paid for March and April 2021.

Unlike before, eligibility for a subsidy is no longer linked to the employer's principal activity code registered in the Estonian commercial register. Under the new terms, the employer must meet the following criteria in order to be eligible for an Unemployment Insurance Fund subsidy:

1. the employer's turnover, or income for non-VAT registered entities, declared with the Tax and Customs Board has decreased by at least 50% in the 2021 calendar month for which the subsidy is claimed compared to the average monthly turnover, or income between December 2019 and February 2020 or between July and December 2020;
2. the employer is not subject to ongoing compulsory winding-up liquidation, or bankruptcy proceedings and has no tax debt at the time of submitting the application or the debt has been deferred;
3. the employer has taken one of the following measures in respect of the employee in the calendar month for which the subsidy is claimed:
4. • applied Section 35 of the Employment Contracts Act as a result of which the employee's working hours have reduced; or
   • reduced the employee's salary under Section 37 of the Employment Contracts Act.

Extended salary subsidies are only paid to employees that meet the following criteria:

1. one of the measures specified in point 3 above has been applied to the employee (Section 35 or 37 of the Employment Contracts Act);
2. the employee has a valid employment relationship with the employer applying for a subsidy at the time of applying, and the employee started work no later than 1 January 2021 (an entry for the employee's starting work has also been made in the employment register on the same date).

Subsidies are not paid for employees who were on sick leave or unpaid leave for the entire calendar month for which the subsidy is claimed.

Compensated amount and time period

Before submitting an application, the employer must pay the employee that is to be subsidized at least EUR 200 (gross) salary subject to an unemployment insurance contribution for the calendar month for which the subsidy is claimed.

For each calendar month, the Unemployment Insurance Fund will pay the employee a subsidy of 60% of the employee's average monthly salary but not more than EUR 1,000 (gross). The average monthly salary is calculated by taking the total amount of salary subject to unemployment insurance contributions paid by the employer to the employee during the nine months of employment preceding the...