Entrepreneur, don't forget the unemployment fund – how to obtain unemployment allowance if needed

If, for one reason or another, your entrepreneurial activities cease, you can receive unemployment allowance from the entrepreneurs' unemployment fund.

Like employees, entrepreneurs can join an unemployment fund and receive unemployment allowance when their business ceases to exist. How does the Entrepreneur Fund work, who can join, and on what conditions can you obtain unemployment allowance? Learn the most important information about unemployment security for entrepreneurs and membership of the unemployment fund.

What is the Entrepreneur Fund?

The Entrepreneur Fund is the only unemployment fund for entrepreneurs in Finland. Entrepreneurs who are members of the fund receive earnings-related unemployment allowance during unemployment. Entrepreneurs who are not members of the fund receive an unemployment benefit paid by Kela.

Read more about Kela's benefits for entrepreneurs whose self-employment ends.

Who can join the Entrepreneur Fund?

Joining the Entrepreneur Fund is voluntary, as is joining an employee fund. You can join if your YEL or MYEL insurance is in force and your annual income, i.e. your YEL income, is at least EUR 14,803 per year (2024).

If you are a part-owner of a company, you can also join the Entrepreneur Fund under certain conditions provided that you are insured under TyEL.

What are the advantages of being a member of a fund?

If you become unemployed and meet the fund's work requirement, you will receive earnings-related daily allowance during your unemployment. The daily allowance is higher than the unemployment benefit paid by Kela.

How much is the daily earnings-related daily allowance paid by the Entrepreneur Fund?

The amount of daily allowance depends on your YEL income. The maximum amount you can insure yourself for is the amount of your YEL income. If you wish, you can also insure yourself for a lower amount. For example, if you report an YEL income of EUR 30,000 per year, you will pay a contribution of around EUR 36 per month to the Entrepreneur Fund and your daily allowance as an unemployed person would be approximately EUR 1,565 per month (in 2024). Accordingly, your unemployment benefit from Kela would be EUR 800 per month (in 2024).

You can find out the amounts on the Entrepreneur Fund's website.

As a general rule, the daily allowance is paid for 400 days. If you are 58 or over, you can receive 500 days of daily allowance.

Can a light entrepreneur join the unemployment fund?

Yes. The business form does not matter, only whether you are subject to YEL insurance. A light entrepreneur, for example, can become a member of the Entrepreneur Fund if his or her YEL income exceeds EUR 14,803 per year (in 2024).

When is an entrepreneur considered unemployed, or in other words, when can you receive unemployment allowance?

Even if the number of orders has decreased, the entrepreneur is not considered unemployed, but must formally cease his or her business activities. The difference between unemployment allowance for entrepreneurs and that for employees is that entrepreneurs receive unemployment allowance without a waiting period, even if they decide to close their business themselves.

Unemployment allowance can be obtained once these steps have been taken:

  1. Terminate your YEL or MYEL insurance.
  2. If your company is a limited company, remove it from the Tax Administration's registers, i.e. the prepayment, employer, and VAT registers.
  3. Register as an unemployed jobseeker with the TE Office. Do this on the first day of unemployment, as entitlement to unemployment allowance is not granted retrospectively.

How can I make sure that my unemployment security is not interrupted if I transition from being an employee to being an entrepreneur?

If you are an employed person covered by an employees' fund and you start a business, you can ensure the continuity of your unemployment security by joining the Entrepreneurs' Fund within three months of starting your business. The easiest way to transfer is to authorise the Entrepreneur Fund to notify your previous fund of your resignation when you join the Entrepreneur Fund. This way, your unemployment security will remain uninterrupted.

There must not be a gap of more than two months when you transfer from one fund to another: if you resign from an employees' fund and do not join the Entrepreneur Fund until more than two months later, your unemployment security will not start until you have been a member of the Entrepreneur Fund for 15 months.

The purpose of Varma's marketing communications is to promote earnings-related pension insurance and to market Varma's services. We also publish other content that may be relevant or of interest to an insurance policyholder or a person starting a business. This content is general information, and Varma is not responsible for its exhaustiveness. We cannot guarantee the applicability of the content to all situations and are therefore not liable for any damages caused by the use of the information in the published content. Any use of the information in the published content shall be at the user's own risk.

You might also be interested in these