Entrepreneurship and membership
The Finnish unemployment security system is divided into an earnings-related allowance scheme for employees and an earnings-related allowance scheme for entrepreneurs. Since Unemployment Fund Ote provides coverage for employees, we are not the right unemployment fund for those whose main occupation is entrepreneurship. Entrepreneurs can insure themselves against unemployment through the Entrepreneur Fund.
If you are already a member of Unemployment Fund Ote and start a business, you do not necessarily need to resign immediately, as a so-called post-protection period applies to those starting business activities. However, please notify us of the start of your business via the link below.
We recommend that, at the early stages of entrepreneurship, you check your eligibility to join an unemployment fund that covers entrepreneurs and your entitlement to possible post-protection from the Entrepreneur Fund. Do this especially if you have started your business with the intention of making it your main occupation.
If you become unemployed, inform the employment authority about your business activities when you register as a jobseeker. If you are already registered as a jobseeker, contact the employment authority before starting your business. The employment authority will determine your entrepreneurial status, assess whether your business is full-time or part-time, and provide the fund with a labour policy statement.
You can find more information about how business activities affect the payment of earnings-related allowance under the section Life situations.
Effects of entrepreneurship
Work you do as an entrepreneur or as own work does not count towards the employee’s employment condition. Therefore, your entitlement to earnings-related allowance from Unemployment Fund Ote cannot be based on income earned as an entrepreneur or from so-called own work. When you start a business (including starting work in a family business), it is worth checking whether Unemployment Fund Ote is still the right unemployment fund for you.
- If you transfer to an unemployment fund that covers entrepreneurs at the early stages of your business, you can carry over the entitlement you have already accrued. If the transfer takes place within one month of starting your business, you have the possibility of uninterrupted unemployment security through the Entrepreneur Fund. You must join the new fund within one month after resigning from your previous fund.
- If you become unemployed before you have accrued the entrepreneur’s employment condition as a member of the Entrepreneur Fund and have worked as an entrepreneur for less than 18 months, you will receive unemployment allowance based on your previous wage income before entrepreneurship.
- If you do not transfer your membership to a fund that covers entrepreneurs and your full-time business activity lasts more than 18 months, you will lose your entitlement to earnings-related allowance based on the employment condition you accrued as an employee.
Who Is considered an entrepreneur under unemployment security?
You are regarded as an entrepreneur under the unemployment security system if you are a person referred to in section 3 of the Self-Employed Persons’ Pensions Act (1272/2006) or sections 3–5 of the Farmers’ Pensions Act (1280/2006). According to the Self-Employed Persons’ Pensions Act, an entrepreneur is a person who performs gainful work without being in an employment relationship or in a public-law service relationship.
In addition, you are considered an entrepreneur under the unemployment security system even if you are covered by the Employees’ Pensions Act (TyEL), if you work in a company as a so-called partial owner. You are regarded as a partial owner if:
- you hold a managerial position and own at least 15% of the company alone, or you and your family together own at least 30% of the company; or
- you, your family, or you together with your family own at least 50% of the company; or
- you, your family, or you together with your family exercise equivalent control as described above (for example, in a general partnership, limited partnership, sole proprietorship, or as a member of a cooperative).
A managerial position includes being the company’s Chief Executive Officer (CEO), Chair of the Board, or an ordinary Board Member.
Family members are defined as a spouse or cohabiting partner, children, and your own parents living in the same household as the entrepreneur.
Entrepreneur’s family member
Under unemployment security, a family member of an entrepreneur who works in a family business but has no ownership, voting rights, or control in the company is considered an employee. Their pension insurance must be in accordance with the Employees’ Pensions Act.
Working both as an employee and an entrepreneur
An increasing number of people earn their livelihood through both employment and entrepreneurship. Individuals working simultaneously as employees and entrepreneurs must assess for themselves which activity constitutes the greater part of their employment. The choice between an employee unemployment fund and an entrepreneur unemployment fund should be made on the basis of this personal assessment.
If employment and entrepreneurial work do not occur at the same time but in successive periods, it is advisable to transfer the insurance to the system corresponding to the current form of employment. Membership of an unemployment fund can be switched between the employee fund and the entrepreneur fund so that all periods of work are credited as insurance periods against unemployment.
Post-protection
A person starting a business is subject to a so-called post-protection period of 18 months.
- If the business ends within this period, the earnings-related unemployment benefit will be paid at the same amount as before you became self-employed, provided all eligibility conditions are met.
- If the 18-month post-protection period has expired, entitlement to earnings-related allowance does not exist until a new employee’s employment condition has been met.
- If business activity continues beyond the 18-month post-protection period, it may be considered that the person has permanently moved away from the sector. Under the Unemployment Fund Act, in such situations the fund should terminate the membership unless the person has resigned or transferred to an entrepreneur fund.