UNEMPLOYMENT SECURITY FOR ENTREPRENEURS

Unemployed persons must report their business activity to the Employment and Economic Development Office. The Employment and Economic Development Office decides whether the business activities are full-time or part-time. Business activities must also be reported to the unemployment fund. Persons engaged in full-time business activity may join a fund for entrepreneurs and retain membership of a wage earners' fund for a maximum period of 18 months.
 
Business activity and other self-employment may be carried out in several ways and through various company forms. Unemployed persons receiving earnings-related allowance must always notify the Employment and Economic Development Office of the commencement of business activity. The office then establishes whether the business activities are full-time or part-time.

Who is considered an entrepreneur?

Under the Unemployment Insurance Act, a person is recognised as an entrepreneur when obliged to take out insurance under either the Self-Employed Persons' Pension Act (YEL) or the Farmers' Pension Act (MYEL).

The part-owner of a company working for the company and covered by other statutory pension insurance is also considered to be an entrepreneur,

• if he or she is in a leading position and personally owns at least 15% of the company, or if his or her family or the two together own at least 30% of the company; or
• if he or she, his or her family, or the two together own at least 50% of the company

The managing director of a company as well as the chairman and ordinary members of the board are considered to be in a leading position. Family members include the married or common law spouse living in the same household with the entrepreneur, children and parents.

Part-time entrepreneurship

Part-time entrepreneurship does not prevent membership of a wage earners' fund. Earnings from part-time entrepreneurship are taken into consideration as adjusted income. If part-time entrepreneurship has lasted for an extended period, the earned income from the business activities are proven with the most recent confirmed tax decision.

Full-time entrepreneurship

Full-time entrepreneurs and the self-employed cannot join as members of wage earners' funds. If they wish to insure themselves against unemployment, they should join as a member of an entrepreneur's fund.

A member of a wage earners' unemployment fund who has entered full-time entrepreneurship may retain membership in the fund for the so-called requalification security period of 18 months. On the other hand, if a member of a wage earners' fund joins as a member of an entrepreneurs' fund within one month, six months of membership and time in employment are transferred over from the old fund to the new fund.

If the employment authorities consider that the person is a full-time entrepreneur, he or she will not be entitled to unemployment security before the company has been verifiably wound up or the business activities have been is a state of suspension for an uninterrupted period of at least four months.

The four-month waiting period is not required in the following situations:

• The person must be considered an entrepreneur comparable to a wage earner (working chiefly for one client).
• Owing to natural conditions the business activity must be considered seasonal.
• The person's full-time employment has been sporadic (employment in a company owned by a family member for a period not exceeding six months).
• The person's employment has ended owing to the discontinuation of the line production or comparable reason.
• The person's employment has ended owing to a permanent weakening in the conditions of business activity and the income from the business activity remains below the sum considered to be the minimum level of subsistence.

• The deterioration in the financial standing of the business is established on the basis of documents illustrating the financial standing of the business.
• The right to unemployment security is deemed to exist if the documents show a reduction in the work of the business of an extent that the income gained from the business activity does not meet amount of earned income establishing the substantial nature of business activity referred to in the Act on Unemployment Security.
• The minimum amount in 2010 for is EUR 710 per month for those insured under the Self-Employed Persons' Pension Act and EUR 400 per month for those insured under the Farmers' Pension Act. The financial standing of the business is reviewed for a minimum period of the past two years.

Seasonal entrepreneurship

Business activities which on average are possible for a maximum of six months during the year are considered seasonal. It is further required that the income from seasonal entrepreneurship does not secure, nor is meant to secure, earnings round the year. You may be eligible to receive earnings-related allowance after your seasonal entrepreneurship has ended.

Entrepreneur comparable to a wage earner

An entrepreneur comparable to a wage earner is an entrepreneur who personally takes part in the work and is in a permanent commission relationship with one client, working under the direct management and supervision of that client. In order to be eligible for earnings-related allowance, the person is not required to wind up the business activity upon termination of the commission.

Sporadic work for a family business

As a rule, family members gaining employment in a company owned by another family member are also considered entrepreneurs. Counted as family members are those directly descending and ascending family members who live in the same household. If a person is employed in a company owned by a family member for a maximum of six months, he or she may rejoin a wage-earners' fund to receive unemployment allowance.

Further information on the unemployment security for entrepreneurs is available from the websites of the unemployment funds for entrepreneurs:
 
The Unemployment Fund for Entrepreneurs and the Self-Employed: www.ayt.fi
The Unemployment Fund of the Federation of Finnish Enterprises: www.syt.fi