Self-employment – how will it affect my social security?

If you are a member of PAM and start your own business, becoming an entrepreneur, please report your self-employment to PAM. You must notify PAM even if your self-employment is part-time. You can report your status on PAM’s website. 

PAM’s unemployment fund provides 18 months of extended protection 

While self-employed, you may keep your PAM unemployment fund membership for a maximum of 18 months (known as jälkisuoja, residual protection). The purpose of this extended protection is to ease the transition from employment to self-employment and vice versa. 

Your previous income as an employee determines your membership fees for the extended protection period. If you become unemployed during your extended protection period, you are entitled to receive earnings-related allowance like any employee if you meet the condition for previous employment.  

If you continue your self-employment after the extended protection period, your union and unemployment fund memberships will end. You may continue your union membership by notifying PAM, but not your unemployment fund membership. 

PAM recommends that you join the Entrepreneur Fund (formerly the SYT fund) when you start your business. The SYT fund merged with the AYT fund at the start of 2020, later renaming to Yrittäjäkassa, the Unemployment Fund for Entrepreneurs – the Entrepreneur Fund for short. The Entrepreneur Fund can advise you further on the unemployment security of entrepreneurs.  

Part-time self-employment 

You can remain or become a member of PAM’s unemployment fund if your self-employment is part-time. The earned income from part-time self-employment is considered adjusted employment income when determining the amount of earnings-related unemployment allowance. 

Read more about part-time self-employment on the PAM unemployment fund’s website. 

Could you be an entrepreneur without knowing? 

According to the Unemployment Security Act (Työttömyysturvalaki), even employees may be considered entrepreneurs (self-employed). Especially those who work in a family business should verify whether their unemployment insurance policy is that of an employee or an entrepreneur. You should check your status at the start of your employment – the PAM unemployment fund does not pay earnings-related unemployment allowance to entrepreneurs. Entrepreneurs have a dedicated unemployment fund. 

Entrepreneurs include anyone who is required to take out an insurance policy according to the Act on Entrepreneurs’ Pensions (Yrittäjien Eläkelaki, YEL) or the Act on Farmers’ Pensions (Maatalousyrittäjien Eläkelaki, MYEL). 

Co-owners working for their business are also considered entrepreneurs if they work in a managerial position and own a share of at least 15 per cent by themselves or at least 30 per cent with family members or have equivalent control, even if their statutory pension insurance is not based on YEL or MYEL. Likewise, co-owners working for their business are considered entrepreneurs regardless of position if they own a share of at least 50 per cent by themselves or with family members or have equivalent control. 

Those working in other companies or organisations are also considered entrepreneurs if they have the above control by themselves or with their family members. 

Read more

• Entrepreneur or employee? Characteristics of an employment relationship