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What is the amount of the wage subsidy and on what basis is it paid out?


Lisatud 20.12.2016 | Uuendatud 13.01.2020

Wage subsidies can be requested for both fixed-term employment contracts and employment contracts entered into for an unspecified term. A fixed-term employment contract must be entered into for at least six months or in the case of applying for a "my first job" subsidy, for at least two years. You can read about the latter by clicking here: My first job.

The amount of the subsidy is 50% of the employee's salary (gross) but no more than 50% of the employee's one-month estimated salary provided in the wage subsidy contract that has entered into force and no more than the minimum wage established on the grounds of § 29 section 5 of the  Employment Contracts Act  (584 euros per month in 2020). In the case of the "My first job" subsidy, no more than twice the minimum wage.

Period of subsidy

The wage subsidy is paid for 6 months from the commencement of work in the case of employment contract for unspecified term. In the case of a fixed-term contract, the wage subsidy is paid for half of the period of employment contract but for no longer than 6 months.

The "My first job" wage subsidy is paid for 12 months from the commencement of work.

People with decreased working ability receive the wage subsidy for 12 months. In the case of fixed-term employment contract, the wage subsidy is paid for half of the period of employment contract but for no longer than 12 months.

Wage subsidy is paid on the basis of payments declared to the Tax and Customs Board and for those months during which the employee receives remuneration from which unemployment insurance premiums have been withheld according to the data in the unemployment insurance database.

Included in the wage cost specified in the wage subsidy contract are the employee's salary and all of the other costs incurred in paying for employment, including remuneration on economic performance and performance pay, from which unemployment tax is withheld according to the Unemployment Insurance Act. The salary does not include compensation for holiday pay from state budget on the basis of  Employment Contracts Act  § 66. 

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