When a family member works in your company, does he or she need YEL or TyEL insurance or no pension insurance at all? We have compiled a checklist on how to insure a family member.
Who are considered family members?
If grandma helps out in the catering company, is she a member of the family in this case? What about a 16-year-old living on her own? Let's start by looking at who the law counts as family members and who it doesn't.
According to the earnings-related pension act, a family member is considered to be:
- The spouse or registered partner of the entrepreneur, regardless of whether he or she lives in the same household as the self-employed person
- The unmarried partner of the self-employed person who lives in the same household as the self-employed person
- A child, grandchild, parent, grandparent, adopted child or adoptive parent of the self-employed person living in the same household as the self-employed person
- A child, grandchild, parent, grandparent, adopted child or adoptive parent of a spouse living in the same household as the self-employed person when the spouse is employed in a managerial position in the company
On the other hand, family members are not:
- A child of the self-employed person living in his or her own household
- Siblings, uncles, or aunts, even if they live in the same household as the self-employed person
If the family member to be hired is under 18 years, the following should also be taken into account:
- A 15-year-old can be employed once he or she has completed compulsory education. A 15-year-old can also sign an employment contract himself or herself.
- A 13–14-year-old can do light work only with the permission of a guardian.
- A person aged 13 and under can only work with a permit from the Regional State Administrative Agency (AVI), for example as a performer or assistant at cultural events such as a summer theatre.
When does a family member need YEL insurance?
A family member working in the company needs his or her own self-employed persons' pension insurance, i.e., YEL insurance, when he or she works
- for a sole trader's business without a salary. An exception to this is the spouse of the self-employed person working in the company, who needs his or her own YEL insurance regardless of whether he or she receives a salary or not.
- in a leading position in a limited company (for example, CEO or board member) and owns more than 30% of the company's shares or voting rights alone or more than 50% together with other family members.
- as a partner in a general partnership.
- as a general partner in a limited partnership.
When must a family member be insured with TyEL insurance?
In general, family members working in a company are ordinary employees who are paid a salary and on whose salary a TyEL contribution is paid. A family member must be insured with the employer's pension insurance, i.e. TyEL insurance, when the family member works
- in a sole trader's company and is paid a salary. However, the spouse of the self-employed person is insured with YEL insurance, regardless of whether he or she receives a salary or not.
- in a managerial position in a limited company but his or her shareholding is less than 30% or, together with other family members, less than 50%.
- in a limited company and is paid a salary but does not hold a managerial position or does not own shares in the company.
- in a general partnership and receives a salary.
- in a limited partnership as a silent partner and is paid a salary.
- in another type of organisation, such as a cooperative or group, and is paid a salary.
In what circumstances does a family member not need pension insurance at all?
A family member does not need YEL or TyEL insurance if he or she is not paid a salary while working
- in a general partnership
- in a limited partnership as a silent partner
- in another entity, such as a cooperative or association.