Light entrepreneur

Last updated 15.12.2023

As a light entrepreneur, you acquire your own customers and do the work on your own. Instead, you handle billing, taxes, and any other statutory fees through an invoicing company. However, this is not specifically defined in the legislation. In unemployment security, you are either an employee or an entrepreneur. Therefore, your unemployment security as a light entrepreneur always starts with an assessment of whether you are an employee or an entrepreneur.

Typically, light entrepreneurs are entrepreneurs when applying the Unemployment Security Act.

Entrepreneur

When you work through an invoicing service company, you may have learned to think that you are a light entrepreneur. However, the law does not know what a light entrepreneur is. In essence, the matter is open to interpretation. However, often the situation is such that a person working through an invoicing company, or a ‘light entrepreneur’, is an entrepreneur in unemployment security.

The company providing the billing service is often not in an employer position in relation to you. If there is no employer, there is no employment relationship. When you work through an invoicing service for money, you are doing gainful work without being in an employment relationship. According to the Unemployment Security Act, a person who performs gainful employment without being in an employment relationship or an official or other public-law employment relationship is an entrepreneur.

When you work as a light entrepreneur through an invoicing service company, you do not need to start a business and you do not need a business ID. Therefore, you may not necessarily consider yourself an entrepreneur and therefore it may come as a surprise to you that in unemployment security you can still be defined as an entrepreneur.

Signs that you are a light entrepreneur

• the invoicing service company operates in a different industry than you
• you acquire the assignments yourself
• the contract with the invoicing service company only applies to the provision of support services, such as accounting, billing or payroll
• you own your own tools

Employee

The circumstances of working may also be such that you are an employee when applying the law.

Even if you are a light entrepreneur, there may be an employee in unemployment security if the company providing the invoicing service is in the same industry as you and acquires assignments for you. This can be the case, for example, in a cooperative in a well-defined field, where there are several factors in the same field.

It is possible that you will enter into an employment contract with an invoicing company. However, we cannot interpret you as a wage earner simply because of the existence of a potential employment contract. The actual circumstances of the employment are crucial and the key is that the other party to the employment contract is in an employer position vis-à-vis you. In order for us to consider you as an employee, the other party to the employment contract must be in an employer position.

When you work through an invoicing service company, you acquire the assignments yourself. In addition, you may also agree on prices and other terms completely independently. You can also do the actual work on your own premises or at the customer’s place, respectively. You may own your own tools or rent them. In addition, billing service companies often do not do the same business as you do. Instead, these companies mainly provide you with membership-based or contract-based support services. However, contracts for such support services do not impose a personal obligation on you as part of the employment relationship to work for an invoicing service company.

Signs that you are an employee

• the invoicing service company operates in the same industry as you
• the invoicing service company acquires commissions for you
• an employment contract obliges you to work for an invoicing service company
• you are a temporary worker

As a light entrepreneur, you can apply for earnings-related daily allowance

When, from the point of view of the Unemployment Security Act, light entrepreneurship does not exist, light entrepreneurship in itself is not an obstacle to the payment of earnings-related daily allowance. So you may well apply for and receive earnings-related daily allowance.

However, as a light entrepreneur, you are often an entrepreneur in unemployment security. In turn, working as an entrepreneur affects whether you can be a member of an unemployment fund for wage and salary earners, how the condition regarding employment accrues, how income is taken into account, and to what extent working as an entrepreneur becomes a labour policy barrier to the payment of earnings-related daily allowance.

Labour policy conditions

It is up to the Labour Authority to assess whether you are unemployed. You are not unemployed if you are employed in business.

However, this only becomes an obstacle to the payment of earnings-related daily allowance if you are employed in business full-time. A full-time entrepreneur is not entitled to unemployment benefit, and we cannot pay you earnings-related daily allowance.

If you work only a little, the employment authority can estimate that the business will only employ you on a secondary basis. Working as an entrepreneur on a part-time basis does not prevent us from paying you earnings-related daily allowance.

When your business activities employ you as a part-time employee, we can pay you an adjusted earnings-related daily allowance. This means that we take into account the earned income you receive from business activities in the amount of your earnings-related daily allowance. In practice, income reduces the amount of earnings-related daily allowance. You can estimate the impact of earned income with our calculator.

Typically, working as a light entrepreneur is so limited that the employment authority considers light entrepreneurship to be a secondary activity. The Labour Authority will make an assessment based on the report you have provided. When the employment authority asks you for clarification, answer carefully.

The employment authority does not assess the employment rate of working as an entrepreneur if the duration of the work is less than two weeks. This duration is assessed by the length of the assignments. Thus, even if different assignments follow each other without a day’s interruption, two weeks are not exceeded, as long as individual assignments are less than two weeks in duration. In practice, this means that even if you are employed as a light entrepreneur in business activities, the employment authority may not necessarily assess the impact of employment on unemployment benefit at any stage.

Are the other conditions for payment in order?

Even if there is no labour policy obstacle to the payment of unemployment benefit, we will assess in the unemployment fund whether the other conditions for payment are in order. We will also check if there are any other obstacles to payment.

The most essential condition for the payment of earnings-related daily allowance is the condition of employment. If the condition regarding employment is not met, you can apply for labour market subsidy from Kela. In terms of the condition of employment, a light entrepreneur is in a special position. When a light entrepreneur is an entrepreneur in unemployment security, work done as a light entrepreneur cannot be accepted into the employee’s condition of employment. In practice, this means that in order to receive earnings-related daily allowance from the employees’ unemployment fund, you must have met the condition regarding employment at the fund on the basis of a previous employment or service relationship.

If you have already met the employee’s condition regarding employment, you can apply for earnings-related daily allowance even if you work as a light entrepreneur. If there are no obstacles, we can pay earnings-related daily allowance. We take into account your income as a light entrepreneur in the amount of earnings-related daily allowance.

By working as a light entrepreneur, you cannot fulfill the employment condition in an employee fund again. Therefore, if unemployment or part-time work continues after the maximum payment period, you will be transferred to apply for unemployment benefit from Kela.

Entrepreneurs have their own fund

As an entrepreneur, you can take out unemployment insurance from the entrepreneurs’ unemployment fund. However, the membership fee in an entrepreneurial fund is higher than in an employee fund. This is because the self-employed self-finance a larger part of their unemployment insurance than the employee. If you work on a small scale, as a light entrepreneur, it is not necessarily worth insuring yourself in an entrepreneurial fund, because if you work only a little, you may not be able to collect the entrepreneur’s condition of employment, even if you are a member of an entrepreneurial fund. Ask more about the entrepreneur’s employment condition from the Entrepreneur’s Unemployment Fund.