When is an entrepreneur considered to be unemployed?

You are eligible for a daily allowance if you have closed down your business entirely or you no longer work for your company. To be eligible for daily allowance, you must register as a jobseeker at a TE Office, where they will check that you have closed down your business or no longer work for the company. Documents proving that the business has been closed down must be delivered to the TE Office.

Termination of entrepreneurial activities

If you have been employed full-time as an entrepreneur, you can receive daily allowance when your business has closed down.

A business is deemed to have closed down when the production and economic activities of the business have ended and you have

  • terminated YEL or MYEL insurance and
  • submitted notification (not required from a self-employed person or a business name) to the tax administration on
    • removing the business from the Prepayment Register
    • removing the business from the Register of Employers
    • removing or suspending the business from the VAT Register

You are eligible for daily allowance even if your business remains in the Trade Register, as long as the above-mentioned prerequisites are met.

A business is also deemed to have closed down entirely when it has been declared bankrupt or placed in liquidation, a dissolution agreement has been made between the partners, or it is otherwise clear that the company's production and economic activities have ended.

When entrepreneurial activities have ended you should provide the fund with an account of any capital gains (capital gains statement), even though the business may not have been sold.

Cessation of employment in a business

Under certain circumstances you are not required to close down your business in order to receive daily allowance if you are able to prove that your employment as an entrepreneur has ended. These situations are restricted in law in the following manner

  • Permanent and substantial reduction in work capacity

If you have received sickness allowance from Kela for the maximum period, your work incapacity continues and your disability pension application is either pending or has been rejected, you are eligible for earnings-related daily allowance.

  • Cessation of a commission relationship

If you have been self-employed in a capacity comparable to that of an employee and performed work on the basis of commission agreements, you are eligible for daily allowance when the commission relationship comes to an end. The requirement is also that the work you perform is similar, in terms of its non-autonomous nature, to work carried out as an employee.

 In practice, this means that

  • You have performed the work in a manner determined by the client themselves
  • You are in a commission relationship with the same few clients
  • You do not have a permanent location for buying or selling or a similar establishment for conducting business and
  • You have not, since registering as a jobseeker, had any employees working for you, other than occasionally, during the previous year

The commissions of a person self-employed in a capacity comparable to that of an employee must have ended, or the remaining commissions must not employ him or her full-time. Self-employment in a capacity comparable to that of an employee is always established retroactively by the TE-office.

  • The period of operation of a seasonal business has ended due to natural conditions

If, on account of natural conditions, you are able to carry on your business for a maximum of 6 months a year on average, you are eligible to receive daily allowance at the end of the business' operating period.

Termination of employment of a part-owner entrepreneur in a company

If you have been employed in a business in which you hold shares, you are eligible for daily allowance when the business has closed down. You are also eligible to receive daily allowance after becoming unemployed if you have relinquished your shares or position in the company and, therefore no longer meet the definition of an entrepreneur under the Unemployment Security Act. You can also receive daily allowance, for example, in a situation where you have disposed of the shares you own or your holding is less than 50%, provided that you are no longer in a leading position in the company, i.e. managing director, or member of the board.

In addition, in a case where entrepreneurial activities continue but you no longer work in the business you are, despite your holdings, eligible for daily allowance under the following circumstances

  • Your work capacity has permanently and substantially declined

If you have received sickness allowance from Kela for the maximum period, your work incapacity continues and your disability pension application is either pending or has been rejected, you are eligible for earnings-related daily allowance.

  • The period of operation of a seasonal business has ended

If, on account of natural conditions, you are able to carry on business activities for a maximum of 6 months a year, you are eligible to receive a daily allowance at the end of the business's operating period.

Termination of employment of a member of an entrepreneur's family in a business

You are eligible for daily allowance in the event that the business closes down completely or you become unemployed, for example, because of divorce or other changes in family relationships; if your holding in the company has been less than 15% in the last 2 years and you do not have proportionate control in the company, but you are regarded as an entrepreneur under the Unemployment Security Act because of your employment in the family business.

You are also eligible for daily allowance when employment has ended under the following circumstances, even if the business continues operations

  • Your work capacity has permanently and substantially declined

If you have received sickness allowance from Kela for the maximum period, your work incapacity continues and your disability pension application is either pending or has been rejected, you are eligible for earnings-related daily allowance.

  • The period of operation of a seasonal business has ended due to natural conditions

If entrepreneurial activities can, on account of natural conditions, be carried on for a maximum of 6 months a year on average, you are eligible to receive daily allowance at the end of the business's operating period.

  • Your employment has ended due to the discontinuation of a type of production or other similar reason

An example of discontinuation of a type of production is when, for instance, a shop selling the products of a bakery operating in conjunction with it closes down while the rest of the bakery operations continue.

  • You have been laid off completely
    • Provided that you are not covered by YEL or MYEL, and
    • The business has laid off or terminated the employment of at least 1 employee who is not a member of the family for economic and production reasons during a review period of a year
    • Total redundancy means being laid off for at least 1 calendar week
       
  • Your work and salary payment have been interrupted completely on account of a fire or exceptional natural disaster at the workplace
    • The requirement is that you are covered by insurance other than YEL or MYEL, and
    • The business has at least 1 employee who is not a member of the family, whose work and salary payment have been interrupted for the same reason
       
  • Your work has ended due to a permanent weakening of the conditions for entrepreneurial activities
    • The requirement is that the income generated from entrepreneurial activities by each person working in the business is less than EUR 12 564 per year (EUR 12 420 per year in 2016)
    • No employees other than members of the entrepreneur's family work in the business
       
  • Employment in the business has been of an occasional nature
    • If you have been self-employed full-time for a maximum of 6 months during the past 6 years
       
  • Or your work in a business has been due solely to participation in employment promotion measures or other training pertaining to self-motivated study

REASSESSMENT OF ENTREPRENEURAL ACTIVITIES AS PART-TIME SELF-EMPLOYMENT

If your entrepreneurial activities no longer employ you full-time, you may be eligible for adjusted allowance from the fund. These situations are precisely defined in the Unemployment Security Act, however and, in practice, are fairly rare. Full-time entrepreneurial activities can be considered to have become part-time mainly in a situation where, during the course of self-employment

  • You have studied full-time, and the studies have progressed normally having lasted for a period of six months during self-employment or
  • You have simultaneously been in full-time salaried employment for at least 6 months or
  • You have accumulated the wage-earners' employment condition of 26 weeks during your entrepreneurship

In order for entrepreneurial activities to be considered part-time in nature, there should be no changes to the scope of these activities. If, for example, the entrepreneurial activities expand after the start of unemployment, the TE Office should assess whether the activities can continue to be considered as part-time.