How does entrepreneurship affect my daily allowance?
If you continue your previous entrepreneurial activities as an unemployed person, report the activities to the TE Office and the unemployment fund. The TE Office will determine whether it is full-time or part-time entrepreneurship.
You are not entitled to daily allowance for the period of full-time entrepreneurship lasting more than two weeks.
If you start a new business while unemployed, its full-time or part-time status will not be reviewed within the first four months from the start of the entrepreneurial activities. During this time, you can claim adjusted daily allowance for the period of entrepreneurship with entrepreneurial income taken into account.
If your entrepreneurship continues after the four months, the TE Office will determine whether it is full-time or part-time in nature. If your entrepreneurship is then found to be full-time, you will not be entitled to the daily allowance for its duration after this. Daily allowance can still be paid out during part-time entrepreneurship.
|Family member of an entrepreneur|
|Am I an entrepreneur?|
|Post-protection daily allowance for wage earners|
If you have started as a full-time entrepreneur, you are not entitled to earnings-related allowance for the duration of the entrepreneurship. If you want to insure yourself in case of unemployment, you should consider joining, for example, the Yrittäjäkassa (Unemployment Fund for Finnish Entrepreneurs). A full-time entrepreneur cannot become a member of a fund for wage earners.
You can retain your membership in a fund for wage earners for the so-called post-protection period of 18 months. You can also join a fund for entrepreneurs while retaining your entitlement to daily allowance in accordance with the employment condition you have accrued as a wage earner for the post-protection period. The post-protection ceases when you fulfil the entrepreneur’s employment condition or have been an entrepreneur for more than 18 months. The entrepreneur’s employment condition is not accrued in a fund for wage earners.
If you have shifted from an entrepreneur to a wage earner, you can claim daily allowance for entrepreneurs during unemployment. This post-protection for entrepreneurs ceases when you fulfil the wage earner’s employment condition. You can be a member of a fund for entrepreneurs or for wage earners during the post-protection period, but the wage earner’s employment condition is not accrued in a fund for entrepreneurs.
If your entrepreneurship is part-time in nature or lasts less than two weeks, the income from entrepreneurial activities will be taken into account in the payment of adjusted earnings-related allowance. More information on applying for adjusted daily allowance is available here.
During part-time entrepreneurship, you can be a member of a fund for wage earners and also accrue the wage earner’s employment condition in other employment undertaken as a wage earner.
Light entrepreneur refers to a person who works independently through a billing service or similar organisation, such as a cooperative.
If you work through a billing service, the main consideration regarding your unemployment security is your employment status: are you considered a wage earner or an entrepreneur?
You are working as a wage earner when the billing service acts as your employer. This means you are employed by the billing service company to look after, for example, their accounts or payroll. You are also considered a wage earner when a company seeks contracts for you and operates within a strictly limited sector with a number of employees working in the same field.
You are working as an entrepreneur or sole trader when the organisation (e.g., a billing service) is not your employer and the company does not engage in the field of business that you work in. The organisation does not oversee or manage your work and merely finds contracts for you, markets your services and/or takes care of your accounting, billing, and payroll.
From the point of view of unemployment security, you may be considered an entrepreneur:
- if the company does not act in the role of an employer towards you; an employment contract with the company does not automatically make you a wage earner
- even if you do not have a business ID or have not set up a company.
The earnings-related allowance for a light entrepreneur is adjusted according to the earnings in the same way as earnings from part-time employment. The billing service company’s commission as well as other expenses are deducted from the income, just like with other entrepreneurs. Therefore, it is necessary that you send an income calculation to the fund indicating the deductions such as billing commissions.
|Please note that work carried out as a light entrepreneur does not count towards the 26-week employment condition applied for wage earners.|
|If you are employed mainly as a light entrepreneur, you need to establish your self-employed person’s pension status (YEL). You may be eligible for switching your membership to the entrepreneurs’ fund.|
A family member of an entrepreneur, who does not own any part of the business, can insure him/herself in a wage earner’s unemployment fund in case of unemployment. Mere employment in a company owned by a family member is not deemed as entrepreneurship.
Earnings-related allowance is, however, granted only after the member has worked for 52 weeks in the family business. Working weeks have to fulfil the employment condition and the family member must have been a member of a wage-earners unemployment fund during the employment. Work for another employer will fulfil the employment condition after 26 weeks of work. Work in the family business and for another employer cannot be combined in order to fulfil the employment condition.
In addition, the family member must not have owned any part of the business for 12 months before the unemployment period.
Work which has not been undertaken as a wage earner in an employment relationship is considered entrepreneurship in terms of unemployment security. Operating as a private entrepreneur, agriculture or forestry, operating through an invoicing company or charging a fee for an assignment, for example, may be considered entrepreneurial activities.
In unemployment security, you may be considered an entrepreneur if you have YEL or MYEL insurance, and
- you work as an entrepreneur, a partner in a partnership or an active partner in a limited partnership; or
- you own more than 30% alone or 50% with your family members (or family) of a limited company where you work in an executive position.
You are also considered an entrepreneur when you are covered by the Employees Pensions Act (TyEL) if
- you work in an executive position in a limited company of which you own at least 15% alone or at least 30% with your family members (or family); or
- you work in a limited company of which you by yourself or with your family own at least 50%.
The family members of an entrepreneur include the spouse and partner, children and grandchildren living in the same household as well as their own parents and grandparents. Executive positions include the company’s managing director and members of the Board of Directors.
When you start full-time business activities, you can insure yourself with us at the wage earners’ fund for a maximum of 18 months to receive a post-protection daily allowance.
The post-protection period begins from the date you became a full-time entrepreneur. If your business activities end within the 18-month post-protection period, you are entitled to a daily allowance from us based on your pre-entrepreneurial income.
You will not be entitled to a daily allowance from us if your business activities end after the 18-month post-protection period.
When you become a full-time entrepreneur, you should joint an entrepreneurs’ unemployment fund within three months from the beginning of your business activities to secure your right to an earnings-related daily allowance in the event of possible unemployment.
An entrepreneur’s work condition (15 months) is accrued only during a membership with an entrepreneurs’ unemployment fund.
If you become unemployed before you have met the entrepreneur’s 15-month work condition, you remain entitled to the unemployment allowance that you would have received if you were still a member of our wage earners’ fund. The condition for this is that you have joined the entrepreneurs’ fund within one month of ending your membership in the wage earners’ fund. Your daily allowance is granted and paid by the entrepreneur’s fund.
Make sure that you have insured yourself with the right fund depending on your situation to avoid any gaps in your income security. As an entrepreneur, you should insure yourself with an entrepreneurs’ fund and as a wage earner with a wage earners’ fund such as us, the Open Unemployment Fund A-kassa.
Although the law allows for a certain transition period when switching funds, it is always advisable to switch as soon as your situation changes to avoid any gaps in your income security. As soon as you move into paid work as a wage earner, you should switch to the wage earners’ fund and back to the entrepreneurial fund if you restart your business activities later.
When switching from an entrepreneur to a wage earner, you may be entitled to an earnings-related allowance based on the work condition you have fulfilled as an entrepreneur if you have not yet fulfilled your employment condition as a wage earner. You may remain a member of an entrepreneurs’ fund at the start of your employment or switch to a wage earners’ fund. Please note, however, that while a member of an entrepreneurs’ fund, you are not accruing your wage earner’s employment condition.