Training compensation

The purpose of training compensation is to improve the employer’s opportunities to organize training for its employees, to develop their vocational competence. It can be granted to bodies such as municipalities, parishes, associations and foundations.

Employers can apply for training compensation after the end of the insurance year when wage sum report is submitted for 2018. As of 2019, payroll information is reported to the Incomes Register but applications for training compensation must still be submitted to the Employment Fund.  The training compensation for 2018 is deducted from the unemployment insurance contribution for 2018. As of 2019, training compensation will generally be paid to the customer as a reimbursement.

The training compensation is based on the Act on Training Compensation (1140/2013).

You can receive training compensation if you are not eligible for a training deduction granted by the Tax Administration on the basis of:

Training compensation can be received by:

  • entities referred to in sections 20 and 21 of the Income Tax Act (such as municipalities and parishes)
  • universities, as referred to in section 21a of the Act
  • associations
  • foundations
  • universities of applied sciences, as referred to in section 21b of the Income Tax Act (as of 2015)

Training compensation does not apply to household employers.

The requirements for receiving training compensation are that:

  • you have drawn up a training plan, which includes the training, in advance
  • the training is organised by the employer in order to maintain and enhance the employee’s vocational competence
  • the preconditions concerning the length of training are met
  • you pay the employee's wages during the training

Training compensation is not paid out on the training of employees who have been granted a wage subsidy referred to in chapter 7, section 1 of the Act on Public Employment and Business Service (916/2012).

 

Training plan

A prerequisite for receiving training compensation is that the training is included in a training plan drawn up in advance. The training plan must concern all employees by employee group or must be otherwise grouped in an appropriate way. It must be clearly defined that the employee belongs to the group in question.

You are subject to the Act on Co-operation within Undertakings

If you are subject to the Act on Co-operation within Undertakings, you must draw up a personnel and training plan in accordance with the Act on Co-operation within Undertakings. The training plan is stipulated in the Act on Co-operation within Undertakings (section 16) and in the Act on Co-operation between the Employer and Employees in Municipalities (section 4a).

You are not subject to the Act on Co-operation within Undertakings

With respect to employers not subject to the acts on co-operation, training plans are prescribed by the Act on Financially Supported Development of Professional Skills (section 3).

How should I draw up a training plan?

The training plan must be drawn up in advance, before the start of the training for which the compensation is applied. You can update the training plan during the calendar year.

Contact your employer organisation for instructions on drawing up training plans.

The wage cost acting as the basis for training compensation is calculated by multiplying the average daily pay by the number of training days that give entitlement to training compensation. The amount of training compensation is 10 per cent of the wage cost used as the basis for training compensation.

Instructions for calculating the average daily pay

The average daily pay is calculated by dividing the payroll amount for the insurance year that acts as the basis for the employer’s unemployment insurance contributions by the employer’s average number of employees. The resulting quotient is then divided by 200.

Section 19 a of the Act on the Financing of Unemployment Benefits (555/1998) lays down the provisions on wages that the employer’s unemployment insurance contribution is based on.

Instructions for calculating the average number of employees

The average number of employees is the sum of person-years ordered by the employer. A person-year means work carried out by a full-time employee for a full year.

Fixed-term or part-time employment contracts are converted into person-years by taking them into account as relative shares. The working hours of a part-time employee are converted into person-years according to their part-time work percentage. For example, a person working 50% of full-time hours corresponds to 0.5 person-years. Similarly, the working hours of an employee on a fixed-term contract are calculated in relation to the length of the contract by calendar year.

Example: A fixed-term full-time contract of employment for the period 1 June – 30 August. (3 months) corresponds to 0.25 person-years.

Instructions for calculating the number of training days

Indicate on the application the total number of training days during the insurance year which entitle you to training compensation. The maximum number of training days entitling you to compensation is three per employee. One training day computationally corresponds to six hours of training (a minimum 6 hours is required for training compensation for one day, while a minimum of 12 hours equals two days and a minimum of 18 hours equals three days of compensation). Training days are personal; the training hours of several employees cannot be added together and used towards training compensation. Specify on your training compensation application how many employees are entitled to training compensation for one, two and three days. When you enter the number of entitled employees, remember to state the number of training days to which they are entitled.

Example: Association X has three employees. The employer is entitled to apply for training compensation for 2 training days with respect to one employee and for 1 training day with respect to two employees. As such, the number of training days that entitle the association to training compensation is calculated as follows:

entitlement to 1 training day x 2 + entitlement to 2 training days x 1 = 4 training days that entitle the association to training compensation

Applying for training compensation

If you meet the requirements for training compensation and you have prepared a training plan, you can apply for training compensation from the Employment Fund. Employers can apply for training compensation after the end of the insurance year when the payroll report is submitted for 2018. As of 2019, payroll information is reported to the Incomes Register but applications for training compensation must still be submitted to the Employment Fund. Send the training compensation application on our online service by the end of January in the year following the insurance year.

Government agencies should apply to the Ministry of Finance for training compensation. Companies falling under the scope of application of the Business Tax Act or the Agricultural Income Tax Act should primarily apply for a training deduction from the Finnish Tax Administration.

Apply for training compensation on our online service

State the following on your training compensation application:

  • The average number of employees
  • The number of training days carrying an entitlement to compensation

Note: Do not append the training plan to the application

The number of training days eligible for compensation should be itemised in the application by separately specifying the number of employees for whom the entitlement to compensation arises for 1 training day, 2 training days, and 3 training days (see the instructions in the section, “Instructions for calculating the number of training days”).

In addition, the application must provide assurance that the requirements for training compensation are met. The requirements are met when a training plan complying with the legal requirements has been drawn up and you have not received any subsidy for the salary expenses of the employees for whom you are applying for training compensation.

The training plan should not be appended to the application. However, if necessary, we are entitled to request the training plan in order to decide on the training compensation. We do not gather training information on a personal level, but it is your duty to monitor and document the implementation of training with respect to each employee.

You should store the information that forms the basis for training compensation in the same way as other documents related to the determination of unemployment insurance.

Decision

The training compensation for 2018 is deducted from the unemployment insurance contribution for 2018. As of 2019, training compensation will generally be paid to the customer as a reimbursement.

Page updated: 31/12/2018