When an employee loses their job, they may be eligible for unemployment benefits. This is a temporary benefit intended to bridge the gap between two jobs. However, not everyone who becomes unemployed is automatically entitled to unemployment benefits. For example, there are requirements regarding employment history and availability for work. The reason for and manner in which the employment contract ends can also have an impact. In this blog, we’ll discuss when an employee is entitled to unemployment benefits and what employers and employees need to keep in mind.
When is an employee entitled to unemployment benefits?
To be eligible for unemployment benefits, an employee must meet a number of requirements. The most important requirements are:
- The employee is insured under the unemployment insurance program. This is usually the case when someone is employed as a wage earner.
- The employee must lose at least five working hours per week and is no longer entitled to wages for those hours. If the employee worked fewer than ten hours per week, he must lose at least half of his working hours.
- The employee must have worked for at least 26 weeks during the 36 weeks prior to becoming unemployed. This is also known as the “week requirement.”
- The employee is immediately available for paid work.
- The employee did not become unemployed through their own fault.
If the employee meets these conditions, he or she may apply for unemployment benefits from the UWV.
When is an employee considered to be at fault for being unemployed?
An employee is not entitled to unemployment benefits if he or she became unemployed through his or her own fault. This can happen if the employee resigns. Only if the employee has a compelling reason for doing so—which is rare—is he or she not considered to be unemployed through his or her own fault. If the employee is terminated because of serious misconduct on his or her part, then the employee is also considered to be unemployed through his or her own fault. In that case, they are not entitled to unemployment benefits. This is common in cases of summary dismissal or dismissal due to culpable conduct.
Unemployment Benefits in the Case of a Settlement Agreement
Even when an employment contract is terminated by mutual agreement, the employee may be entitled to unemployment benefits. The terms of the termination are then set forth in a Settlement Agreement (VSO). To that end, it is important to pay close attention to the wording in the VSO. Among other things, it must state that the termination is initiated by the employer, that the employee is not at fault, and that there is no urgent cause for termination. It is therefore important to draft a VSO carefully and to verify that the terms do not affect the employee’s right to unemployment benefits.
Another important point is the notice period. In the case of a settlement agreement, the notice period does not need to be taken into account when determining the end date. However, unemployment benefits do not begin until after the (notional) notice period has expired.
Example: Suppose there is a two-month notice period and the parties sign a VSO on September 21 with an end date of November 1. In that case, the notional notice period runs until December 1. The employment contract ends on November 1, but the employee is not entitled to unemployment benefits until December 1.
How long do unemployment benefits last, and how much are they?
The duration of unemployment benefits depends on the employee’s work history. Benefits are paid for a minimum of three months and a maximum of 24 months. To be eligible for unemployment benefits for longer than three months, the employee must meet the work history requirement: in the five years prior to becoming unemployed, the employee must have worked for at least four years.
The amount of the unemployment benefit is calculated based on the daily wage. For the first two months, the benefit is 75% of the daily wage. After that, it is 70%. A maximum daily wage applies. If an employee earns more than the maximum daily wage, the benefit is therefore not calculated based on the full salary.
Unemployment Benefits in Case of Illness or Work Disability
An employee who is sick on the first day of unemployment is generally not entitled to unemployment benefits. This is because the employee is not available for work at that time. Depending on the situation, however, the employee may be eligible for benefits under the Sickness Benefits Act.
In the event of long-term disability, an employee may be eligible for WIA benefits after two years of illness. Whether the employee qualifies depends on the degree of disability and their ability to continue working. If the employee is fit to work again after the period of illness has ended but is unemployed, they may still be able to apply for unemployment benefits (WW) under certain circumstances.
Advice on Unemployment Benefits (WW)
Whether an employee is entitled to unemployment benefits depends not only on the loss of their job, but also on the reason for and the manner in which the employment contract is terminated. It is particularly important to carefully assess the implications for entitlement to benefits in advance in cases involving a settlement agreement, summary dismissal, or termination during a period of illness.
Our employment law attorneys advise employers and employees on termination and its implications for unemployment benefits. We are happy to help you identify the options, risks, and next steps, and determine an appropriate strategy.
