EL can support employee retraining even before redundancy: how does the new system work?
In the European Union, an important labour market support mechanism changed in 2026: in the event of a major corporate restructuring, employee retraining no longer necessarily has to wait until people have already lost their jobs.
From 21 May 2026, the European Globalisation Adjustment Fund, or EGF, can also be used to support employees whose redundancy is planned in the near future. The aim is to equip people with new skills early enough to enable them to move to another position within the same company or find a new job before their current employment ends.
What does this mean for Estonian companies?
Estonian companies can also take advantage of the new opportunity. A restructuring Estonian company can contact Majandus- ja Kommunikatsiooniministeerium to apply for EGF support. The usual threshold is at least 200 planned redundancies, but for a small labour market, the rules allow an exception in justified cases if the impact on employment and the local or national economy is significant.
From the perspective of Estonian companies, the new option is particularly important for large employers or in cases of extensive restructuring.
For example, such a situation may arise when:
- a factory changes its technology and some existing positions disappear;
- production is automated;
- a company discontinues a major line of business;
- the green transition or digitalisation changes workforce needs;
- an international group restructures its Estonian unit.
What changed in 2026?
Previously, the EGF focused mainly on people who had already lost their jobs due to major restructuring. Regulation (EL) 2026/1139 of the European Parliament and of the Council extended the scope of the fund to employees at imminent risk of losing their jobs.
The regulation was published in the Official Journal of the European Union on 20 May 2026 and entered into force the following day.
The idea behind the new system is quite practical: if a company already knows that some jobs will disappear, it may make more sense to start teaching employees new skills immediately rather than only after they become unemployed.
The EGF can support upskilling and retraining that helps a person move to:
- to another position within the same company;
- to a new position with another employer;
- a field where their existing skills can be supplemented with new knowledge.
For whom can the support be used before redundancy?
It is important not to give the impression that every planned redundancy automatically provides access to European funding.
One of the key conditions of the new preventive mechanism is that the restructuring company plans the collective redundancy of at least 200 employees in one Member State.
The redundancy plan must be formally communicated in writing to employee representatives in accordance with the EL rules on collective redundancies.
In certain cases, the target group for support may also include employees of the company's direct suppliers or downstream producers if their planned redundancies are clearly linked to the restructuring of the main company.
In justified cases, the regulation also allows flexibility in smaller labour markets and especially in situations involving SMEs if the restructuring has a significant impact on the local, regional or national labour market. However, this does not mean an automatic exception—each case must be justified separately.
Can a company receive money directly from the European Commission?
No. This is one of the most important nuances.
A company may initiate the process and apply for support, but the official EGF application to the European Union is submitted by the Member State.
In simplified terms, the process is as follows:
- a company plans extensive restructuring and collective redundancies;
- employee representatives are informed of the planned redundancies;
- the company contacts the EGF competent authority in its Member State;
- a package of support measures for employees is drawn up;
- the Member State submits an application for EGF funding;
- The European Commission assesses the application;
- The use of EGF funds must then be approved by the budgetary authorities of the EL.
Therefore, this is not a standard business support application in which a company fills out an online form and receives money directly from Brussels.
How quickly must action be taken?
For the company, the 14-week deadline is important.
A restructuring company may submit a request to a Member State to initiate EGF support within 14 weeks from the date on which the first written notice was provided to employee representatives, specifying, among other things, the number of planned redundancies and the categories of employees.
This means that in the event of large-scale redundancies, investigating potential EGF support should not be left until the end of the process.
What can the EGF fund before redundancies?
According to the European Commission, the assistance offered to at-risk employees may include in particular:
- learning new vocational skills;
- upgrading existing skills;
- retraining;
- certification of skills;
- career counselling;
- assistance in moving to a new position or career;
- job-search support.
The measures must aim to improve a specific employee’s prospects in the labour market, rather than reduce the company’s usual training costs.
What does the EGF not fund?
The EGF does not aim to save a company undergoing restructuring or pay for its modernisation.
According to the European Commission, the fund is not intended to finance the continuation, restructuring or modernisation of a company’s operations. Nor does it fund standard social protection measures, such as pensions or unemployment benefits.
The 2026 regulation specifically emphasises that short-time work schemes are not eligible for EGF support because they involve a temporary suspension of work rather than the loss of a job.
What proportion of the costs does the European Union cover?
Depending on the Member State and the applicable regulation, the EGF co-financing rate is generally 60–85% of the cost of the support package.
If support is used for employees who are still at risk of redundancy, the applicant company must provide the required share of national co-financing in accordance with the EGF rules.
In addition, the new regulation sets a limit on preventive support: in the case of planned job losses, the EGF contribution per company in a single Member State during one financial year may not exceed 4 million euros.
According to the European Commission, the EGB’s annual budget in 2026–2027 was 35 million euros.
Can an employee apply for EGF support themselves?
No.
Individuals do not submit personal applications for EGF support. When a company undergoes major restructuring, the process is handled through the company, employee representatives and the competent authority of the Member State.
If a person has already been made redundant, measures financed by the EGF may reach them through national or regional employment services, for example.
What does this mean for Estonian companies?
From the perspective of Estonian companies, the new option is particularly important for large employers or in cases of extensive restructuring.
For example, such a situation may arise when:
- a factory changes its technology and some existing positions disappear;
- production is automated;
- a company discontinues a major line of business;
- the green transition or digitalisation changes workforce needs;
- an international group restructures its Estonian unit.
In such a situation, alongside redundancies, the company could assess whether some people could be retrained for new positions.
On the European Commission's EGF contact page, Estonia's national contact is listed as the Majandus- ja Kommunikatsiooniministeerium. A company that believes its planned restructuring may meet the EGF criteria should contact the national contact point as early as possible.
A recent example from Finland: 1,1 million euros for paper industry workers
On 8 September 2026, the European Commission published a new EGF proposal concerning Finland.
The Commission proposed allocating 1,1 million euros to support 351 paper industry workers. The workers had been made redundant by four companies: Metsä Group, Stora Enso, UPM Communication Papers and SAPPI.
Kogu toetuspaketi hinnanguline maksumus on 1,8 million euros. The EGF would cover 60% of this, amounting to ehk ligikaudu 1,1 million euros, while the remainder would be funded by local labour market authorities.
The measures include, among other things, job search assistance, career counselling, training in new vocational and transferable skills, and other activities supporting a return to the labour market.
Why is the change important?
A major difference compared with the previous system is the timing.
If training only begins after the loss of a job, a person may be out of the labour market for several months. If retraining begins while restructuring is still underway, an employee can move from one job to another without a prolonged period of unemployment.
This is particularly important in sectors where technology is rapidly changing the nature of jobs. Automation, digitalisation and the green transition do not always mean that an employee is no longer needed — they often mean instead that an employee with a different skill set is needed.
Frequently asked questions
Does the EGF cover the retraining of employees at every company?
No. The EGF is not a conventional business training subsidy. The main rule for preventive support concerns collective redundancies planned during major restructuring.
Can the support be used before a person has lost their job?
Yes. From 21 May 2026, the EGF's target group may also include employees whose job loss has been officially planned and is imminent.
How many employees must be affected by the redundancies?
The standard threshold for preventive support is at least 200 planned redundancies per restructuring company in one Member State. Justified exceptions are possible in certain situations.
Can an employee apply for support themselves?
No. An official application to the EGF can be submitted by a Member State.
Does an employee have to leave the company after retraining?
Not necessarily. One of the aims of the new system is to provide employees with skills that enable them to move to another position within the same company.
Ametlikud allikad
- EUR-Lex — Regulation (EL) 2026/1139 of the European Parliament and of the Council
- European Commission — European Globalisation Adjustment Fund for Displaced Workers
- European Commission — Support for at-risk workers
- European Commission — how is EGF support applied for?
- European Commission, 08.09.2026 — proposal worth 1,1 million euros for Finnish paper industry workers
The article was prepared based on information available as of 11 September 2026.
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