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Were you laid off? How it affects your employment relationship


  • Income security
  • Labour law
  • Lay-off

A lay-off means that your work and pay are temporarily suspended at the initiative of your employer. However, your employment relationship will otherwise remain in force.  

The lay-off may be indefinite or for a limited period. Your employer can lay you off either full-time or part-time, for example by giving you a shorter working week or working day.  

Your employer must have a reason for the lay-off under the Employment Contracts Act. Your employer can unilaterally lay you off on the basis of either:

  • a temporary reduction in your workload, which can last up to 90 days (known as a temporary lay-off), or
  • for economic or production reasons. In this case, the reduction in work is substantial and permanent (indefinite lay-off).

When you are laid off, you have the right to receive a earnings-related daily allowance from the unemployment fund. If you are part-time laid off, you can get an adjusted daily allowance.  

Even if your work and pay have been suspended during the period of lay-off, you still have a duty of loyalty to your employer. This means, among other things, that you must respect your confidentiality obligations. You also have no right to engage in any competitive activity with the employer who has laid you off that could harm the employer.

Remember that even if you are laid off during the summer, this does not change your right to take annual leave during the holiday period. The holiday period under the Annual Holidays Act is from 2.5. – 30.9., so even if you are laid off for the whole summer, you are still entitled to keep your holiday and be paid for it. The employer must also consult you on the timing of your leave, but ultimately it is up to the employer to decide. Remember to report your annual leave and the holiday pay you have received to the unemployment fund, as this will affect your earnings-related allowance.

The accumulation of annual leave will be affected by the lay-off. The effect varies depending on whether the lay-off is full-time or partial.

Read more in our Guide to working life!

Do this if you are laid off

  • Register as an unemployed jobseeker with the Labour Office no later than the first day of the lay-off.
  • Two weeks after the start of the lay-off, you can send your first application for daily allowance to the unemployment fund. You can find out more about applying for daily allowance during the period of lay-off on the website of the YTK Unemployment Fund.