Lay-off or dismissal — what is the difference?

A lay-off (lomautus) is a temporary suspension of work and pay — the employment relationship otherwise continues, and work resumes once the lay-off ends. An employer may lay someone off if work has decreased temporarily (estimated at no more than about 90 days) or permanently for production-related or financial reasons; if the decrease is permanent, the employer may choose between a lay-off and dismissal.

A dismissal (irtisanominen) means the employment contract ends entirely once the notice period has run. A dismissal on production-related or financial grounds requires that the decrease in work be substantial and permanent — the employer must be able to demonstrate this credibly. Dismissal on personal grounds (e.g. repeated neglect of duties) became somewhat easier from the start of 2026: previously an "appropriate and weighty" reason was required, now an "appropriate reason" is enough — the threshold is lower than before.

Notice periods when the employer terminates (Employment Contracts Act, chapter 6, section 3)

• Employment lasted less than 1 year — 14 days
• 1–4 years — 1 month
• 4–8 years — 2 months
• 8–12 years — 4 months
• Over 12 years — 6 months

Your own notice period as an employee is shorter: 14 days if your employment lasted less than 5 years, otherwise 1 month. A collective agreement may set longer periods — always check your own agreement. Full pay is always paid for the notice period, even if the employer releases you from the duty to work.

Duty to re-employ

If you are dismissed on production-related or financial grounds, the employer must offer you work first if new employees are needed for the same or similar duties within 4 months (6 months if your employment lasted over 12 years) — provided you have registered as a jobseeker with the employment services. Change from 1 June 2026: the duty to re-employ now only applies to employers with regularly at least 50 employees.

Resigning during a lay-off

During a lay-off you may terminate your own employment contract to end immediately, without a notice period — except during the last 7 days before the lay-off's announced end date, if you know the exact return date. If the lay-off has continued unbroken for over 200 calendar days, resigning entitles you to compensation equal to the notice period's pay, just as if the employer had dismissed you.

Register immediately — this matters most

Register as a jobseeker in the Job Market Finland e-service (tyomarkkinatori.fi) at the latest on your first day of unemployment or lay-off. Your right to an unemployment benefit begins at the earliest from the day you register — not from the day your employment ended. You can register in advance if you know the exact date (for example your notice period is running, or the lay-off begins on an agreed date).

If you are not yet a member of an unemployment fund: you can still apply for Kela's general benefit, but consider joining a fund now for the future — the right to the earnings-related allowance requires 12 months of membership, so the later you join, the later that right begins.

What money you get: earnings-related allowance or the general benefit

Earnings-related allowance (if you belong to an unemployment fund)

The earnings-related allowance is always higher than what Kela pays — it is calculated from your own wage income, roughly around 60% of your previous pay (the exact amount depends on your income level and is calculated with a formula your own fund applies — use your fund's allowance calculator for an estimate). It requires the membership condition (12 months of fund membership) and the employment condition (12 months of work history within a 28-month review period, pay at least in line with the collective agreement or 1,463 €/month if there is no agreement). Apply for the earnings-related allowance in your fund's e-service 2 weeks after your unemployment or full-time lay-off began, and afterwards retroactively in 4-week or one-month periods.

The general benefit (if you are not a fund member, or have received the earnings-related allowance for the maximum period)

The general benefit replaced both the basic unemployment allowance and the labour market subsidy from 1 May 2026 — both were previously paid by Kela, and both ended the same day. The general benefit is 37.21 €/day, i.e. about 800 €/month (2026), and is the same for everyone who meets the conditions. Unlike the earnings-related allowance, the general benefit is means-tested: capital income, rental income and informal care allowance reduce it — a spouse's income, however, has no effect. Capital income has a protected threshold of €311/month, however: only half of the portion exceeding that is deducted from the benefit, and capital income below €311/month has no effect on the general benefit at all. There is no limit on how long the general benefit can be paid. If you lack a qualification beyond comprehensive or upper secondary school, a 21-week waiting period may apply.

Waiting period — 7 days before the first payment

Both the earnings-related allowance and the general benefit have a 7-day waiting period: nothing is paid for these fully unemployed days. The waiting period accrues at no more than 5 days per calendar week, and must be completed within 8 consecutive calendar weeks. The waiting period is set again every time the employment condition is fulfilled from scratch (for example after a new period of work).

Avoid a suspension period — these cut off the benefit

If you cause your own unemployment

• You resign without a valid reason: a 45-calendar-day suspension (30 days if the employment lasted no more than 5 days)
• You refuse an offer of work, or work you applied for yourself and were selected for, without a valid reason: a 30- or 45-day suspension depending on the duration of the work offered
• Occupational skills protection: during the first 3 months of unemployment you may refuse, without suspension, work that does not match your training or experience
• You may always refuse work as an entrepreneur without any consequence
• A valid reason to refuse includes, for example, pay that would be lower than full-time work would justify, work that conflicts with your convictions, or not being given reasonable time to arrange childcare or care for a dependant

If you neglect your jobseeking obligations

From March 2026 the sanctions system is two-tiered and stricter than before: even a first neglect (missing the initial interview, a jobseeking discussion, or not drawing up an employment plan when asked) leads to a 7-day suspension — previously only a warning was given the first time. If you neglect your obligations again within 12 months, a 6-week work obligation follows: no benefit is paid until you have worked or taken part in an employment-promoting service for 6 weeks.

The suspension and the work obligation are set by the employment authority, not the fund or Kela — the decision binds both. If you are at risk of a suspension, contact the employment authority immediately and explain the reason: a valid reason (e.g. illness, an obstacle you reported in time) can prevent the suspension entirely.

Final pay, holiday compensation and certificate of employment

Final pay

The employer must pay your final salary with all compensation no later than the last day of your employment, unless otherwise agreed. If payment is delayed, you are entitled to late-payment interest and so-called waiting-time pay — full pay for up to six days, if you notify the employer of the delay within a month and payment is not made within three working days of that notice.

Holiday compensation

All earned, unused holiday days are paid out in cash along with your final pay — including those accrued during the notice period. Part-time employees and fixed-term contracts ending are also entitled to holiday compensation on the same grounds. If the employer is insolvent or goes bankrupt, holiday compensation can be claimed from the wage guarantee scheme. If holiday compensation is missing or looks wrong, first ask the employer for a written calculation — a ready-made template is available on the Letter templates page, section End of employment.

Certificate of employment

The employer does not have to issue a certificate of employment on their own initiative — you must explicitly request it, orally or in writing. Once you ask, the employer must provide it without delay, preferably within a week. A brief certificate (duration of employment and duties) can be requested within 10 years of the employment ending. If you also want the reason employment ended and an assessment of your skills and conduct included, that must be requested within 5 years. Ask for the certificate as soon as possible — your fund or Kela may also need a separate salary certificate, which the employer fills in on request. Ready-made template: the Letter templates page, section End of employment.

If the dismissal feels unjustified

If you suspect the dismissal lacked a lawful basis — for example the claimed production-related reason does not hold up, or the notice period was not observed — it pays to act quickly, since some claims have a time limit. The first step is usually to contact your own trade union, if you belong to one: unions often assist their members with dismissal disputes free of charge. If you do not belong to a union, a legal aid office gives everyone a free short initial consultation regardless of income — including in employment matters.

For an unjustified dismissal you may be entitled to compensation equal to 3–24 months' pay, on top of the notice period's pay — these are two separate things, and both can be claimed if the dismissal is defective on both grounds. The Occupational Safety and Health Authority (tyosuojelu.fi) also advises on questions relating to the end of employment.

Important contact details in one place

If money for food or bills suddenly runs out, see the Emergency help page. Legal ways to get money quickly are covered on the Money when times are tight page, and if debt has already built up, the enforcement FAQ answers the most common questions.