Light Entrepreneur’s Unemployment Security 2018
As of 1 January 2018, the new Unemployment Security Act amendment came into effect in Finland. The new changes brought to the unemployment benefit lower the threshold for starting light entrepreneurship as an unemployed jobseeker.
The new amendment allows unemployed jobseekers to receive unemployment benefits automatically for four months while already engaged in entrepreneurial activities. In other words, the primary or secondary nature of the entrepreneurship will not be assessed during its first 4 months.
When and if the income from entrepreneurial activities starts to grow, it will affect the daily allowance just as it has until now.
Light Entrepreneurship Easier For Unemployed
Before, the eligibility for unemployment benefit was lost if the entrepreneurial activities lasted for more than two weeks continuously and were seen as primary in nature by TE-services.
The new change to the Act is significant because until the beginning of this year, any activities as a light entrepreneur while receiving earnings-related daily allowance, were possible only when the entrepreneurship was assessed as secondary in nature. The assessment has been done on case-by-case basis by TE-services.
The new amendment follows the report where Maria Löfgren (the former Director of Akava) and Harri Hellstén, (Head of Labour and market Affairs at the Federation of Finnish Enterprises), identified the development needs of unemployment security for self-employed. The report called for clarifying the regulations on which an unemployed could rely, when aspiring to employ themself as an entrepreneur, without completely loosing their right to receive benefits.
The definition of the secondary in nature entrepreneurship has been causing a lot of insecurity within unemployed jobseekers, which then may have prevented one from starting any, even small scaled, business activities. Before the new amendment, unemployed jobseekers could not have been sure how the TE-office officials would see their entrepreneurial activities, while receiving benefits.
UKKO.fi has partially been involved in preparing the new amendment as our current CEO Aleksi Rautavuori gave the Employment Committee a statement at the end of last year, in which the effects of the amendment for light entrepreneurs were brought up.
Re-evaluation After Four Months
The new amendment will clarify the situation for unemployed jobseekers for the first four months, while wanting to simultaneously start light entrepreneurship. Any entrepreneurial activities lasting over two weeks still needs to be notified to the TE-offices, after which they will automatically give the decision for the first four months.
If the jobseeker, after the 4-month time period, does not notify that the entrepreneurial activities have ended, TE-services will re-evaluate the situation and make the decision on whether or not the activities can be seen as primary or secondary in nature. If the decision falls on the latter, unemployed jobseeker may still be eligible to receive benefits in addition to the income from the secondary activities as a light entrepreneur.
If the entrepreneurial activities are assessed as secondary in nature after the 4-month time period, the possibility to apply for startup grand remains.
Previously it was not possible for light entrepreneurs to accumulate the unemployment benefit for entrepreneurs, even though their status has, from the beginning of 2016, been "entrepreneur" in terms of the Unemployment Act. These days, light entrepreneurs may insurance themselves with YEL, the pension insurance for entrepreneur’s, which means they can be eligible to unemployment allowance when certain conditions are met. One must work as an entrepreneur for at least 15 months, so that YEL-insurance has been taken for an YEL income estimate of at least 12 576€ /12 kk (2018). The conditions are met only as a member of the Unemployment Fund for Entrepreneurs and the Self-Employed.
Light Entrepreneurship Means Activity as Well
The new amendment will most likely increase light entrepreneurship once the information reaches people. The positive effects will also show in the shortening of unemployment periods, as it becomes easier for people to employ themselves. This, on the other hand, will show as reduced costs for the society.
Light entrepreneurship is a way to work so that it benefits all, the unemployed, the employers as well the society. It offers those without an employment as well as those looking to change their field of work a great chance to get to know different businesses and organizations, which are up for hiring a light entrepreneur.
As the clientele grows, light entrepreneurship may prove to be the permanent choice of employment or a "gateaway" to starting an own company.
The Government’s so called "Active Model" also became into effect in the beginning of the year. Light entrepreneurship, along with the amendment, is also one way to show your activity as an unemployed jobseeker. In the active model, unemployed must show sufficient activity during a 65 payment-day period in order to receive a full benefit for the next equivalent period. If sufficient activity cannot be proved by the unemployed, the unemployment benefit will decrease by 4,65 %.
The entrepreneur’s employment condition is 246 € and this also includes income earned as a light entrepreneur.