The Unemployment Security System

Your livelihood during unemployment is secured by means of unemployment daily allowance or labour market subsidy. Daily unemployment allowance may be earnings-related daily allowance or basic daily allowance. Kela (the Social Insurance Institution of Finland) pays basic daily allowance and labour market subsidy. Persons who have insured themselves with an unemployment fund are paid earnings-related daily allowance. 

Wage-earners’ or entrepreneurs’ unemployment fund?

As a rule, wage-earner’s unemployment funds provide unemployment security for wage-earners and the Entrepreneur Fund provides unemployment security for entrepreneurs. You cannot be a member of two funds at the same time. You should always select your unemployment fund based on your main occupation i.e., salaried employment or entrepreneurship. 

If you are working both as an entrepreneur and as a wage-earner, you get to decide which type of fund you wish to join. This means that only one of your occupations will accrue the so-called work requirement i.e., your entitlement to earnings-related daily allowance.

As provided by the Unemployment Security Act, full-time entrepreneurs may be members of a wage-earner’s fund during a post-protection period only, i.e.,18 months counting from the date their entrepreneurial activities started. Provided that new entrepreneurs join the Entrepreneur Fund within three months from starting business operations, there will be no interruption in income security. 

Who is considered an entrepreneur?

In terms of unemployment security, persons working in companies where they alone or together with their families own a share as provided by law, are considered entrepreneurs. Persons who carry out paid work without employment in the private sector or public service (e.g., freelancers and light entrepreneurs working via invoicing companies) are also considered entrepreneurs. 

In addition to YEL and MYEL insured entrepreneurs, under certain circumstances TyEL-insured company shareholders and entrepreneurs’ family members working for the company are also considered entrepreneurs. Please note that the fact that you own a company or part of a company does not automatically make you an entrepreneur. 

Unemployment security for entrepreneurs

Entrepreneurs can obtain unemployment security provided that the work income on which their pension insurance is based is at least € 14,803 per year. 

Unemployment security is regulated by the Unemployment Security Act issued in 2002. This act contains provisions to secure improved financial possibilities for unemployed job seekers living in Finland to find employment and improved prerequisites to enter or return to the labour market, by way of compensating economic loss caused by unemployment in the form of unemployment daily allowance or labour market subsidy. 

The Ministry of social Affairs and Health oversees the developing and preparing of unemployment security related legislation.