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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 an entrepreneur for the purposes of earnings-related security. This 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 parent or child of a person working in the company who 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. It is not necessary for the married couple to live in the same household. If a married couple wishes to end the family membership as referred to in the Unemployment Security Act, they must be living in separation 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 living arrangements from the Population Register. If the information in the Population Register does not reflect 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 an entrepreneur’s family member also 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 according to those acts, you will also be considered an entrepreneur 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 based on the 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 you may still be 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 and you personally hold at least 15 per cent of the share capital or votes or you have similar authority otherwise
  • you work in a senior position in a limited liability company and, together with your family members, you hold at least 30 per cent of the share capital or votes or you have similar authority otherwise
  • you work in a limited liability company and, together with your family members or on your own, you hold at least half of the share capital or votes or you have similar authority otherwise
  • You work in the way described above in a company other than a limited liability company and you personally, or together with your family members, hold the authority referred to above.

Rule of thumb

You will never be considered an entrepreneur for the purposes of unemployment security based on ownership alone. In order to be an entrepreneur, you must always work in the company you own. If you work in a company and your family members have ownership or authority in that company, this ownership or authority will not be considered unless you also have a share of ownership. The only exception is the Farmers’ Pension Act that includes instances where you may be considered an entrepreneur without having a share of ownership.

Who works 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 another company.

Working condition and entrepreneurs’ family members

If you work in your family member’s company and live in the same household with them, and you do not own a share of that company, you are considered an employee. This means that you can have unemployment security from YTK.

In order to qualify for the earnings-related daily allowance, you must fulfil the working condition. For entrepreneur’s family members, the working condition is 52 calendar weeks. When we calculate your employment history for the working condition, we include each calendar week during which you have worked a minimum of 18 hours while you have been a member of the unemployment fund. In addition, your salary must meet the minimum requirements, and taxes and other compulsory charges must have been paid.

The normal working condition requires an employment history of 26 calendar weeks. You cannot combine it with the work you do as an entrepreneur’s family member and the employment history you accumulate in that position.

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