Legislative amendment concerning family members of entrepreneurs in progress

Finnish Government has proposed a legislative amendment to improve the position of a family member of an entrepreneur in the application of the Unemployment Security Act. Currently a family member who works in a business owned partially or wholly by his or her family can be interpreted as an entrepreneur, even if he or she does not own any part of the business or possess voting rights or use control. Spouse, child or parent, who live in the same household, are considered as family members.

The aim is to change legislation so that in future only working in a family owned company would not be interpreted as entrepreneurship. This would, however, affect the length of the membership and employment conditions, which would be extended to 52 weeks for those working in a family owned business. In addition, the person should not have owned any part of the company within the preceding 12 months. Currently all members of a fund for wage earners must meet the employment condition of 26 weeks. If the proposed legislation goes through, a double employment condition would develop in parallel to employment condition of 26 weeks. It would not be possible to combine these two employment conditions, that is, a person working in but not owning any part of a family business should accrue the employment condition of 52 weeks solely from the work in the family business or, if working for another employer, solely from that employer to meet the employment condition of 26 weeks.

From the perspective of unemployment security, the amendment would reduce confusion in such cases that the person him or herself is not aware of a position as an entrepreneur, when applying for earnings-related allowance from a fund for wage earners. At the moment, if a family member of an entrepreneur who does not own any part of the business has insured him or herself in a fund for wage earners, the person should have been covered for unemployment in a fund for entrepreneurs, in which case application for earnings-related allowance would have been rejected in a fund for wage earners. The amendment would change this: in future a family member of an entrepreneur with no ownership of the business could insure him or herself in a fund for wage earners, because he or she would be considered as a wage earner under the Unemployment Security Act.

The amendment is meant to take effect from 1 of July 2019. In practice, a family member of an entrepreneur with no ownership of the business would be considered as a wage earner from that day on. The preceding working period in a family business would not accrue the employment condition of 52 weeks as it would need to be fulfilled from 1 of July 2019 in its entirety.