An individual switching from salaried employment to full-time entrepreneurship should join an entrepreneurs unemployment fund within three months of starting the business. This ensures that there will not be any lack of continuity regarding the earnings-related daily allowance. In addition, the membership in an entrepreneurs unemployment fund must start within one month after the withdrawal from the previous unemployment fund. By doing so, the entrepreneur’s existing right to a daily allowance is retained if the entrepreneurial operations cease within the first 18 months, the maximum period of 400 days is not used up, and the minimum term of employment for entrepreneurs is not met.
Conditions for claiming allowance
If you terminate business operations, register as an unemployed jobseeker at your local Employment and Economic Development Office (TE Office). An entrepreneur cannot lay off him/herself, so the unemployment security provisions regarding the layoff of employees and suspension periods, for example, do not apply to an entrepreneur. Unemployment is deemed to begin from the day you register as an unemployed jobseeker. The Employment and Economic Development Office issues a binding statement to the unemployment fund, based on which the unemployment fund can pay daily allowance.
An entrepreneur is entitled to unemployment allowance after 7 deductible days during which he/she is entirely unemployed and fulfils the minimum term of employment precondition - that is, has been a paying member of the Entrepreneurs’ Unemployment Fund (=insurance premiums paid) for at least 15 months.
When an unemployed member of an employees’ unemployment fund starts as an entrepreneur, he/she is entitled to daily allowance in accordance with the regulations covering employees, if the entrepreneurial operations cease within the first 18 months and the entrepreneur’s precondition for a minimum term of employment has not been met.
Earnings-related daily allowance is paid for five working days per week for a maximum period of 400 days.
Daily allowance is also paid if the business operations have been evidentially suspended for a continuous period of at least four months.
If the entrepreneur has received sales gains on selling the business or its assets, the work income serving as a basis for the daily allowance is used for calculating the period of work income corresponding to the sales gains. In this case, daily allowance is postponed for this so-called periodising time.
Earnings-related daily allowance is calculated on the basis of the amount selected by the member of the Entrepreneurs’ Unemployment Fund as his/her unemployment insurance amount for the previous 18 months. The amount may be increased by no more than 20 per cent at any one time.