As a light entrepreneur, can I apply for earnings-related daily allowance?
Light entrepreneurship as such does not prevent the payment of earnings-related daily allowance. However, as a light entrepreneur, you are often considered an entrepreneur with regard to unemployment security.
Working as an entrepreneur, on the other hand, affects whether you can be a member of an unemployment fund for wage earners, how you fulfil the working condition, how your income is taken into account and to what extent the entrepreneurial work becomes a labour policy obstacle to the payment of earnings-related daily allowance.
Labour policy preconditions
When you work as a light entrepreneur, you are usually considered an entrepreneur with regard to unemployment security. This affects whether you can be paid unemployment benefits or not.
The TE Office is responsible for assessing whether you are considered to be unemployed. You are not unemployed if you are engaged in entrepreneurial work. However, this will only become an obstacle to the payment of earnings-related daily allowance, if you are performing entrepreneurial work to the extent that it prevents you from accepting full-time employment. In such a situation, the TE Office shall consider you to be a full-time entrepreneur. A full-time entrepreneur is not entitled to unemployment benefits and you will therefore not be paid any unemployment benefits.
If you work only a little, the TE Office can assess that you are unemployed and working part-time. Part-time work as an entrepreneur does not prevent the payment of unemployment benefits.
When your business activities occupy you on a part-time basis, we can pay you an adjusted earnings-related daily allowance. This means that we will take into account any earned income from business activities in the amount of the earnings-related daily allowance. In practice, the income will somewhat decrease the amount of the benefit. You can estimate the effect of income from work on the earnings-related daily allowance by using the YTK calculator at ytk.fi/paivarahalaskuri.
Typically, the amount of work as a light entrepreneur is so minor that the TE Office has assessed light entrepreneurship as part-time. Therefore, there has been no labour policy obstacles to payment of the benefit.
Four-month protection
If you start a business while you are unemployed, the TE Office will not assess the effect of the work on the unemployment benefit for a period of four months. However, at the beginning of the entrepreneurial work, the TE Office will determine whether the work has been started when unemployed or not. This four-month period shall only be applied once per maximum payment period of unemployment allowance. In other words, you will be granted a new four-month protection period when you meet the working condition again, and the maximum payment period for unemployment allowance will then start from the beginning. After four months, the TE Office will assess whether the work as an entrepreneur is full-time or part-time.
However, the TE Office will not assess the employment potential of working as an entrepreneur, if the work lasts continuously for less than two weeks. For light entrepreneurs, this duration will be assessed by the length of their assignments. So, even if separate assignments would follow each other without a day’s interruption in between, the two-week period will not be exceeded, as long as the individual assignments are less than two weeks in duration.
Are the other conditions for payment in order?
Even if, according to the TE Office, there is no labour policy obstacle to payment of unemployment benefits, we will assess at the unemployment fund, whether other conditions for payment are in order. We will also check if there are any other obstacles to payment.
The most important condition for paying earnings-related daily allowance is the working condition. If the working condition is not fulfilled, you can apply for labour market subsidy from Kela (the Social Insurance Institution of Finland). When it comes to the working condition, the light entrepreneur is in an exceptional position. When a light entrepreneur is treated as an entrepreneur in questions regarding unemployment security, work done as a light entrepreneur cannot be included in the employee’s working condition. In practice, this means that in order to receive earnings-related daily allowance from an unemployment fund for wage earners, you must have fulfilled the working condition at the fund on the basis of a previous employment or service relationship.
If you have already fulfilled the employee’s working condition previously, you can apply for earnings-related daily allowance even if you work as a light entrepreneur. If there are no obstacles, we can pay earnings-related daily allowance for 300, 400 or 500 days.
By working as a light entrepreneur, you cannot fulfil the working condition again in the unemployment fund for wage earners. In other words, if unemployment or part-time work continues after the maximum payment period, you will transfer to applying for unemployment benefit from Kela.
Entrepreneurs have their own unemployment fund
As a light entrepreneur, you can take out unemployment insurance from the Unemployment Fund for Entrepreneurs. However, the membership fee at the Unemployment Fund for Entrepreneurs is higher than in an unemployment fund for wage earners. This is because a self-employed person finances a larger portion of their unemployment insurance themselves than the wage earner. If you work on a smaller scale, it may not be worth insuring yourself in the Entrepreneur Fund as a light entrepreneur. Because if you only work a little, you will not necessarily be able to fulfil the entrepreneur’s working condition, even if you were a member in the Entrepreneur Fund. For more information, please contact the Unemployment Fund for Entrepreneurs at yrittajakassa.fi (website only in Finnish and Swedish).