The unemployment insurance benefit is paid retroactively: the benefit for the previous month will reach your bank account by the 10th of the current month.

Example. If you applied for the unemployment insurance benefit on 1 November, your benefit will be calculated from 8 November and paid for the first time by 10 December. As the benefit is calculated for the previous month, you will receive the benefit for the period of 8–30 November (23 days) in December. If you don’t find a job in December, you will be paid the full amount for the whole December, i.e. for 31 days, by 10 January.

The unemployment insurance benefit is paid to your bank account.

If you want your unemployment insurance benefit to be paid to another person’s bank account, you must submit a written application to the Unemployment Insurance Fund, a digitally signed electronic application or a notarised application.

If you reach retirement age during the payment of the unemployment insurance benefit, the unemployment insurance benefit will be granted to you until the date you reach the retirement age.

Waiting period of the unemployment insurance benefit

If you have worked for one employer for at least five years and your employment or service relationship ended because of redundancy or your employer could not give you the agreed work and reduced your remuneration, a waiting period applies. Unemployment insurance benefit will be calculated and paid after the waiting period and the benefit payment period will not be shortened as a result.

In the case of waiting time, the benefit will be calculated

• after 30 calendar days have passed from the termination of the employment or service relationship, if the employment with that employer or service in case of an official lasted 5–10 years;
• after 60 calendar days have passed from the termination of the employment or service relationship, if the employment with that employer or service in case of an official lasted more than 10 years.

Example. You were made redundant on 15 October and had worked for your last employer for 15 years and 2 months. You applied for the unemployment insurance benefit on 1 November. As your length of employment is more than 10 years, a 60-day waiting period will apply starting from the day your employment relationship ends. You will therefore be entitled to the benefit from 15 December. The first amount of benefit payment for 15–31 December (for 17 days) will be credited to your bank account by 10 January.

The unemployment insurance benefit and basic exemption

If you wanted the basic exemption to be taken into account when applying for unemployment insurance benefit, income tax 22 per cent (before 31.12.2024 - 20 per cent) will be withheld on the amount of benefit exceeding the basic exemption before the benefit is paid. If you did not want the basic exemption to be considered, income tax will be withheld on the full amount of the benefit.

From 2023 onwards, the overall basic exemption applied on all types of income will be up to €654 per month (up to €500 per month until the end of 2022) and will decrease as the person's income increases. Also from 2024 onwards, the basic exemption amount in the year of reaching pensionable age will be up to €776 per month, irrespective of the person's income. Read more on the website of the Tax and Customs Board. When claiming unemployment insurance benefits, you can ask not to apply the basic exemption, to apply the basic exemption at the maximum rate or at any other rate not exceeding the maximum rate.

Example 1. Your gross benefit per calendar day is EUR 14 and you will be paid for the whole month of April, i.e. for 30 days. In this case, your gross benefit is EUR 420.

If you wanted the tax-free income not to be considered, the Unemployment Insurance Fund will withhold income tax on the full amount before transferring the benefit: 420 x 0.22 = EUR 92,40. In this case you will receive EUR 420 - 92,40 = EUR 327,60 by 10 May.

If you wanted the tax-free income to be considered within up to EUR 654 per month, the Unemployment Insurance Fund will withhold income tax on the amount exceeding the tax-free income (EUR 654) before transferring the benefit. As the amount is less than EUR 654, you will receive EUR 420 by 10 May.

If you wanted the basic exemption to be considered within up to EUR 200 per month, the Unemployment Insurance Fund will withhold income tax on the amount exceeding the basic exemption (EUR 200) before transferring the benefit: (420 – 200) x 0.22 = EUR 48,40. In this case you will receive EUR 420 – EUR 48,40 = EUR 371,60 by 10 May.

If there are two or more benefit payouts then basic exemption is calculated by adding the totals of all payments for that month. The basic exemption is then up to 500 euro per month in total (not 654 euro for each payout individually).

Example 2. Your gross benefit for one calendar day is 25 euro and you will be paid benefits for the whole of April, i.e. 30 days. Then your gross benefit is 750 euro. If you wished to calculate basic exemption at 500 euro per month, then before transferring the benefit, the Unemployment Insurance Fund must withhold income tax for the part of the payment above the basic exemption limit (654 euro): (750 - 654) x 0.22 = 21,12 euro. Thus, on 10 May you will receive 750 - 21,12 = 728,88 euro.

You will start work on 11 May and upon termination of your registration as unemployed you will still receive benefits for 10 days in the same month (1 May–10 May). Thus, your gross benefit is 250 euro. The total gross sum of the two benefits is (750 + 250) = 1000 euro. As the maximum basic exemption has been used for the previous payment, it cannot be applied to the other gross sum. The Unemployment Insurance Fund must withhold income tax from the whole sum: 250 x 0.22 = 55 euro. You will receive 250 - 55 = 195 euro with the second payment.

Example 3. Your gross benefit for one calendar day is 15 euro and you will be paid for the whole of April, i.e. 30 days. Then, your gross benefit is 450 euro. If you wished to calculate basic exemption at 654 euro per month then before transferring the benefit, the Unemployment Insurance Fund must withhold income tax for the part of the payment above the basic exemption limit (654 euro). If the sum is less than 654 euro, then on 10 May you will receive 450 euro.

You will start work on 16 May and upon termination of your registration as unemployed you will still receive benefits for 15 days in the same month (1 May–15 May). Thus, your gross benefit is 225 euro. The total gross sum of the two benefits is (450 + 225) = 675 euro. A basic exemption of 204 euro can be applied to the second gross sum as 450 euro of basic exemption has been applied to the previous payout. Before paying out the benefit, the Unemployment Insurance Fund must withhold income tax from the part exceeding basic exemption (204 euro): (225 - 204) x 0.22 = 4,62 euro. You will receive 225 - 4,62 = 220,38 euro with the second payment.

If the sum of the benefits (either as a one-time payment or the total of benefits in a month) exceeds 1200 euro then the basic exemption rate decreases (except for basic exemption in the year of reaching retirement age, which does not depend on the amount of income). If the sum of the benefits is 2100 euro or higher, the basic exemption is not applicable. Find out more on the Estonian Tax and Customs Board website:

For example, if at the time of the first payment it was unknown whether there would be another benefit payment in the same month and the basic exemption was calculated at 654 euro then upon payment of the second benefit, the basic exemption will be corrected so that the total withheld income tax from all sums would be within the legal limit.

Example 4. Your gross benefit for one calendar day is 30 euro and you will be paid for the whole of April, i.e. 30 days. Then, your gross benefit is 900 euro. If you wished to calculate basic exemption at 654 euro per month, then before transferring the benefit, the Unemployment Insurance Fund must withhold income tax for the part of the payment above the basic exemption limit (654 euro): (900 - 654) x 0.22 = 54,12 euro. Thus, you will receive 900 - 54,12 = 845,88 euro on 10 May.

You will start work on 21 May and upon termination of your registration as unemployed you will still receive benefits for 20 days in the same month (1 May–20 May). Thus, your gross benefit is 600 euro. The total of the two gross benefits is (900 + 600) = 1500 euro. The basic exemption of 654 euro cannot be applied to the second gross sum as the maximum basic exemption for one month has already been used with the previous payment. Additionally, the total of the two payments exceeds 1200 euro per month (900 + 600 = 1500). Starting at 1200 euro, the basic exemption for monthly income starts decreasing.

A basic exemption of 436 euro can be applied to the gross benefit of 1500 euro (900 + 600) and income tax must be withheld from the rest. The 22% income tax for 1064 euro (1500 - 436) is 234,08 euro.

As 54,12 euro was withheld in income tax from the first payment, the income tax for the second payment is 179,96 euro (234,08 -  54,12).

You will receive a total of 420,04 euro (600 - 179,96) with the second payment.

Example 5. Your gross benefit for one calendar day is 40 euro and you will be paid for the whole of April, i.e. 30 days. Thus, your gross benefit is 1200 euro. If you wished to calculate basic exemption at 654 euro per month, then before transferring the benefit, the Unemployment Insurance Fund must withhold income tax for the part of the payment above the basic exemption limit (654 euro): (1200 – 654) x 0.22 = 120,12 euro. Thus, you will receive 1200 - 120,12 = 1079,88 euro on 10 May.

You will start work on 26 May and upon termination of your registration as unemployed you will still receive benefits for 25 days in the same month (1 May–25 May). Thus, your gross benefit is 1000 euro. The total of the two gross benefits is (1200 + 1000)) = 2200 euro. The basic exemption of 654 euro cannot be applied to the second gross sum as the maximum basic exemption for one month has already been used with the previous payment. Additionally, the total of the two payments exceeds 2100 euro per month (1200 + 1000 = 2200). If the sum of the benefits is 2100 euro or higher, the basic exemption is not applicable.

The 22% income tax for 2200 euro (2200 x 0.22) is 484 euro.

As 120,12 euro was withheld in income tax from the first payment, the income tax for the second payment is 363,88 euro (484 - 120,12).

You will receive a total of 636,12 euro (1000 - 363,88) with the second payment.

Example 6. Your gross benefit for one calendar day is €14 and you will be paid for the whole month of April, i.e. 30 days. In that case, your gross benefit is €420. If you reach pensionable age in the year that the benefit is paid and would like the basic exemption of up to €776 per month to be applied, the Unemployment Insurance Fund will withhold income tax on the excess of the basic exemption (€776) before transferring the payment. As the amount is less than €776, you will receive €420 by 10 May.

If you reach pensionable age in the year in which the benefit is paid and you receive two or more benefits in the same month, the amounts of that month's benefits are added together to calculate the amount of your basic exemption. In this case, the amount of the basic exemption is €776 for the total sum of the payments (not up to €776 for each individual benefit payment).

Example 7. Your gross benefit for one calendar day is €28 and you will be paid for the whole month of April, i.e. 30 days. In that case, your gross benefit is €840. If you reach pensionable age in the year of payment of the benefit and would like the basic exemption of €776 per month to be applied, the Unemployment Insurance Fund will withhold income tax on the excess of the basic exemption (€776) before transferring the benefit: (840 - 776) x 0.22 = €14,08. You will then receive €840 - 14,08 = €825,92 by 10 May.

You start work on 11 May and, after you cease to be registered as unemployed, you will still receive 10 days' benefit in the same month (01.05 - 10.05). In this case, your gross benefit is €280. The total of the two gross amounts is (840 + 280) = €1120. As the maximum rate of the basic exemption for the calendar month (€776) has been used up by the previous payment, the second gross amount can no longer be subject to the basic exemption. The Unemployment Fund will withhold income tax on the full amount: 280 x 0.22 = €61,60. With the second payment, you will receive €280 - 61,60 = €218,40.

Example 8. Your gross benefit for one calendar day is €20 and you will be paid for the whole month of April, i.e. 30 days. In this case, your gross benefit is €600. If you reach pensionable age in the year that the benefit is paid and would like the basic exemption of up to €776 per month to be applied, the Unemployment Insurance Fund will withhold income tax on the excess of the basic exemption (€776) before transferring the payment. As the amount is less than €776, you will receive €600 by 10 May.

You go to work on 16 May and, after you cease to be registered as unemployed, you will still receive benefits for 15 days in the same month (01.05 - 15.05). In this case, your gross benefit is €300. The total of the two gross amounts is (600 + 300) = €900. The second gross amount can be subject to a basic exemption of €176, as a basic exemption of €600 has been used up by the previous payment. Before transferring the benefit, the Unemployment Insurance Fund withholds income tax on the part of the benefit exceeding the basic exemption (€176): (300 - 176) x 0.22 = €27,28. With the second payment, you will receive €300 - 27,28 = €272,72.

Example 9. Your gross benefit for one calendar day is €30 and you will be paid for the whole month of April, i.e. 30 days. In this case, your gross benefit is €900. If you reach pensionable age in the year of payment of the benefit and would like the basic exemption of €776 per month to be applied, the Unemployment Insurance Fund will withhold income tax on the excess of the basic exemption (€776) before transferring the benefit: (900 - 776) x 0.22 = €27,28. By 10 May, you will receive €900 - 27,28 = €872,72.

You go to work on 26 May and, after you cease to be registered as unemployed, you will still receive benefits for 25 days in the same month (01.05 - 25.05). In that case, your gross benefit is €750. The total of the two gross amounts is (€900 + €750) = €1,650, but your amount of basic exemption (€776) does not decrease as your income increases (because you will reach the pensionable age in the year of payment). As the maximum rate of the basic exemption for the calendar month (€776) has been used up by the previous payment, the second gross amount can no longer be subject to the basic exemption. The Unemployment Fund will withhold income tax on the full amount: 750 x 0.22 = €165. With the second payment, you will receive €750 - 165 = €585.

Only one withholding agent for income tax (such as the Estonian Unemployment Insurance Fund, the employer), as chosen by the person, can deduct the basic exemption. This principle must also be taken into account during temporary employment while being registered as unemployed: if you are already using the basic exemption for receiving the unemployment insurance benefit, it is not recommended to use the basic exemption for the remuneration received for temporary employment.

You can read more about basic exemption applicable from 1 January 2023 here.