Government proposes a change to unemployment security – paid employment and entrepreneurship could in future be combined
The Government proposes a new combined insurance scheme for unemployment security. Its aim is to improve the earnings-related security of people who work simultaneously or alternately as employees and entrepreneurs or receive income from other forms of work defined in the proposal. Parliament will decide whether to approve the Government proposal.
Currently, the employment condition for earnings-related allowance is accrued either through paid employment or business activities. Employment income and entrepreneurial income cannot be combined for the employment condition for earnings-related allowance or when calculating the amount of the allowance.
Under the proposed model, insured employment income and an entrepreneur’s insured income could be combined for the combined-insured person’s employment condition. In addition, a working grant and a family carer’s care fee could be taken into account. Work performed for non-wage compensation could be taken into account as an entrepreneur’s insured income in accordance with the conditions of the proposal.
The combined-insured person’s employment condition would be met when a total of 12 employment condition months had accrued during the 28-month review period. Under the proposal circulated for comments, a full employment condition month would accrue if the total eligible income for the month was at least EUR 930. The income threshold would be adjusted in the same way as the income threshold for an employee’s employment condition. The amount of the earnings-related allowance would be based on the insured income taken into account for the employment condition.
However, combined insurance alone would not guarantee entitlement to earnings-related allowance. Receipt of the allowance would also require the other conditions to be met. The proposal does not propose changes to, for example, the labour policy conditions for unemployment security.
The proposal would dismantle the current division into employee and entrepreneur unemployment funds
In future, an unemployment fund could insure employees, entrepreneurs or combined-insured persons or several of these groups. The fund would decide on the forms of insurance it offers in its own rules. Offering combined insurance would be voluntary for the unemployment fund, and members would also have to apply themselves
to become combined-insured.
Sotekassa estimates that the membership fee for combined insurance would be significantly higher than the current membership fee of an employee unemployment fund. The membership fee for combined insurance would have separate components based on employment income and entrepreneurial income. To the extent that the membership fee is based on employment income, it would be funded, as at present, through unemployment insurance contributions collected from employees and employers. The component based on entrepreneurial income, on the other hand, would be funded entirely through unemployment fund membership fees.
However, the final level of the membership fee depends on, among other things, the final content of the legislation, the number of insured persons and the decisions made by the fund. The amount of the membership fee may affect how many people who work in diverse ways consider combination insurance attractive to them and decide to take out the insurance.
Entry into force
It is proposed that the Act enter into force on 1 January 2028. Unemployment funds could accept combined-insured persons as members from the date of entry into force. As the employment condition would accrue over 12 months, earnings-related allowance based on combined insurance could be granted for the first time in 2029.
Sotekassa will monitor the parliamentary consideration of the proposal and inform its members of any changes and their effects as the content and implementation of the legislation become more precise.
