Family member of an entrepreneur

As a general rule, it makes no difference for the purposes of earnings-related security whether your family member is an entrepreneur. However, if you work in your family member’s company and you own even a small share of the company, you may be considered entrepreneur for the purposes of earnings-related security. Entrepreneurship may affect your unemployment security in different ways.

Family member

In the Unemployment Security Act, a family member refers to the spouse of a person working in the company and a person who is directly ascending or descending relative of a person working in the company and lives in the same household with that person.

Spouses refer to two persons who are married or cohabitate otherwise in conditions that resemble a marriage. Married spouses are not required to live in the same household. If married spouses wish to end the family membership as referred to in the Unemployment Security Act, living in separation must be due to a broken relationship.

Family members referred to in the Unemployment Security Act also include children, parents and grandparents, if they live in the same household with the person who works in the company.

We receive information on the residential arrangements from the Population Register. If the information in the Population Register does not correspond with the actual circumstances, you can provide us with a report on the actual circumstances. For example, there may be separate apartments in the same address or the information in the Population Register may not be otherwise up to date.

When is a family member of an entrepreneur considered an entrepreneur?

In the Unemployment Security Act, a person is considered an entrepreneur by referring to the pension acts of self-employed persons. So if you are considered an entrepreneur by virtue of those acts, you shall also be considered that for the purposes of unemployment security. The Unemployment Security Act also determines a part-owner of a company as an entrepreneur. Part-ownership is determined on the basis of share of ownership and authority. There are also similar provisions in the pension acts of self-employed persons, but the Unemployment Security Act sets the bar a little lower. So it is possible that you are not considered an entrepreneur for the purposes of pension acts but are considered an entrepreneur for the purposes of the Unemployment Security Act.

For the purposes of unemployment security you are considered a part-owner and, consequently, also an entrepreneur, if

  • You work in a senior position in a limited liability company in which you personally hold at least 15 per cent of the share capital or votes or otherwise comparable authority
  • You work in a senior position in a limited liability company in which you together with your family members hold at least 30 per cent of the share capital or votes or otherwise comparable authority
  • You work in a limited liability company in which you personally or together with your family members hold at least half of the share capital or votes or otherwise comparable authority
  • You work in the way described above in a company other than limited liability company and you personally or together with your family members hold comparable authority referred to in the above-mentioned items.

Rule of thumb

You shall never be considered an entrepreneur for the purposes of unemployment security on the basis of ownership alone. Entrepreneurship always requires working in the company you own. If you work in a company in which your family members have ownership or authority, they shall not be taken into account, unless you personally also have a share of ownership. The only exception is the Farmers’ Pension Act, based on which there may be instances in which you are considered an entrepreneur without having a share of ownership.

When are you working in a senior position?

One of the key concepts in the definition of an entrepreneur is senior position. Working in a senior position means that you are the Managing Director or a member of the Board of Directors of a limited liability company or work in a similar position in a limited liability company or other company.

Condition regarding employment for a family member of an entrepreneur

If you work in the company of your family member who lives in the same household, and you do not own a share of the said company, you are considered an employee. So you can insure your earnings in case of unemployment in YTK.

Fulfilling the condition regarding employment is a requirement for the right to receive earnings-related daily allowance. As a family member of an entrepreneur the condition regarding employment is 52 calendar weeks. Each calendar week during which you have worked a minimum of 18 hours while a member of the unemployment fund is included in the condition regarding employment. In addition, your salary needs to meet the minimum requirements and taxes and other compulsory charges need to have been paid.

The regular condition regarding employment is 26 calendar weeks. The work done as a family member of an entrepreneur and the condition regarding employment accumulated in that position cannot be combined with that.

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