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Work in an employment relationship is, simplistically put, dependent work performed for an employer in exchange for a salary or other compensation. An entrepreneur, on the other hand, works independently on their own behalf and invoices the client for the work performed.

However, the distinction between an employee and an entrepreneur is not always clear-cut. If there is uncertainty about the form of work, ultimately a court will decide based on an overall assessment.

While labor law only recognizes employment relationships and entrepreneurship, the Unemployment Security Act also includes a third category: own work. Own work includes, among other things, working on a grant.

A gig worker can perform work stints both in an employment relationship and as an entrepreneur or on their own account. For example, a gig worker in the media industry may produce a podcast as an employee, write articles as an entrepreneur, and work on a non-fiction book with a grant as their own work.

Instead of gig workers, the terms freelancers or self-employed individuals could be used. These three concepts are used in different contexts and with slightly different meanings in different fields. In this guide, a gig worker refers to a person who may combine employment, entrepreneurship, and own work.

1.1 Do the characteristics of an employment relationship apply?

Work in employment relationships can be permanent or fixed-term, full-time or part-time. Sometimes, the exact working hours are not specified but rather a range of fluctuating work hours. In such cases, the employee works on an on-call basis, called “ttt work” or “work as called in.”

In practice, an employment relationship often involves working in the employer’s premises and using their tools, but work can also be performed remotely. Payment usually comes regularly according to the employment contract. The minimum terms of employment are determined by the collective agreement or labor legislation.

Characteristics of an employment relationship include:

• The employee works for the employer in exchange for a salary or other compensation.
• The employer determines the time and place of work.
• The employer usually provides the necessary equipment and supplies for the job, although there are exceptions. For example, musicians typically have their own instruments.
• The employer supervises and directs the work by giving instructions and directives. In temporary agency work, this right is exercised by the user company on behalf of the employer, such as a restaurant where an entertainment agency has sold a musician’s gig.
• The employee is entitled to receive their unpaid wages from the wage guarantee fund if the wages are not paid.
• The employee is entitled to sick pay.
• The employer decides on any substitutes.
• The employer takes out pension insurance for the employee.
• Working for other employers during the employment relationship is restricted.
• The employee is entitled to unemployment benefits between employment relationships.

Not all employment relationships have all of these characteristics.

1.2 Do the characteristics of entrepreneurship apply?

An entrepreneur can work as a sole proprietorship with or without a trade name, or through a limited liability company or cooperative. An increasing number of entrepreneurs are sole proprietors who mainly handle all of their company’s assignments alone. In this case, business activity may be more akin to practicing a profession than actual business. A sole proprietor earns a living through their own work, such as selling their expertise, billing fees to clients, and being responsible for their own pension and social security.

At first glance, one might think that an entrepreneur is recognized by having a business. However, it’s not quite so simple. One can meet the criteria for entrepreneurship even without having a trade name, as an entrepreneur can also work with a tax card. In this case, the client withholds taxes from the fee but does not pay pension or social security contributions.

Characteristics of entrepreneurship include:

• The entrepreneur works for themselves, providing services to clients. Payment for the work is a fee or compensation that the entrepreneur invoices the client for. The client does not separately reimburse the expenses incurred from the work; instead, the entrepreneur includes them in the fee.
• The entrepreneur has the right to refuse offered work.
• The entrepreneur procures their own equipment, tools, and materials needed for work.
• The entrepreneur has a business ID and is registered in the prepayment register.
• If the entrepreneur is not paid for their work, they can initiate debt collection.
• If the entrepreneur cannot perform the agreed-upon work due to illness, they are not entitled to compensation, but they can apply for daily allowance from the Social Insurance Institution of Finland (Kela).
• The entrepreneur has the option to use an assistant or substitute.
• The entrepreneur takes out entrepreneur’s pension insurance.
• The client does not restrict the entrepreneur from working for others.
• The entrepreneur bears financial risk, at least in terms of receiving assignments.
• The entrepreneur does not have working time protection, and they do not receive separate annual leave compensation.

Not all entrepreneurs meet all of these characteristics.

1.3 If necessary, the court decides the type of work

Distinguishing between an employee and an entrepreneur can sometimes be tricky. If unsure whether one is in the position of an employee or an entrepreneur, one can clarify by determining who the employer is. If there is no employer, one might be working in an entrepreneurial capacity. The form of work determines who is responsible for pension insurance and other social security matters.

Key questions for delineating between the two are:

• Is the work performed under an employment contract or a commission contract?
• Is one paid wages, fees, or compensation?
• Is the work done for an employer or a client?
• Who directs and supervises the work?
• Whose equipment and tools are used for the work?
• Who determines the place and time of work?

Employment and entrepreneurship cannot be identified solely based on the name used for the compensation paid. Often, compensation for employment is referred to as wages, while compensation invoiced by an entrepreneur is called fees or compensation. Sometimes, compensation for employment-related gig work is also referred to as fees. Gig workers may also receive usage compensation for transferring copyrights.

Members of work cooperatives own the cooperative and may be employed by it. Maintaining the cooperative as the employer requires, for example, that the cooperative offers services in its own name for which the job applicant has been employed. Usually, this practically means that work is done on behalf of the cooperative, and the cooperative is in a contractual relationship with the employer. If a member of the cooperative has at least 15 percent of the voting rights, the person is interpreted as a cooperative entrepreneur.

Those invoicing through billing service companies are often referred to as light entrepreneurs. However, legally, there are no light entrepreneurs; legislation only recognizes employment, entrepreneurship, and to some extent, one’s own work. Invoicing through a billing service company does not inherently imply employment or entrepreneurship; other factors determine whether the work is done as an employee or an entrepreneur. If a person employs themselves as an entrepreneur and invoices their own entrepreneurial work through a billing service, the person is generally considered an entrepreneur. If the billing service company leases labor, it is the employer of its employees.

In labor and social security legislation and taxation, individuals may be considered differently as employees or entrepreneurs. For tax purposes, a person may be considered an employee even though, under labor and social security legislation, they would be considered an entrepreneur.

If there is uncertainty about the form of work, ultimately a court, such as the Insurance Court or the Supreme Administrative Court, decides based on an overall assessment. In practice, issues such as whether a gig worker is entitled to unemployment benefits can be resolved. The decision differs depending on whether the gig worker is considered to have acted primarily as an entrepreneur or an employee. In such a case, one can appeal the decision first to the Social Security Appeals Board, whose decision can then be appealed to the Insurance Court.

If the issue is, for example, whether a gig worker should be paid holiday compensation according to the Annual Holidays Act, the delineation between employment and entrepreneurship is made by district courts. The district court’s decision can be appealed to the Court of Appeal unless prohibited, and the Court of Appeal’s decision can then be appealed to the Supreme Court, if the Supreme Court grants leave to appeal. Often, trade unions assist in legal proceedings.

1.4 Also self-employment is possible

In unemployment security legislation, there is talk of self-employment equivalent to business activity. However, it is not specifically defined in legislation. In practice, those self-employed in their own work operate similarly to entrepreneurs, but the difference from entrepreneurship is that one’s own work is not carried out for immediate profit. However, this does not mean that one cannot earn any income from their own work.

One’s own work encompasses various forms of independent activity that are not performed under an employment contract and are mainly carried out for purposes other than immediate profit. Examples of one’s own work include acting as a family caregiver, working on grants, or even practicing a musician’s customary professional skills beyond maintenance, even if no compensation is received.

Grants are a significant source of funding for many working in cultural sectors. With a grant, one can focus on activities such as research, photo exhibitions, writing books, composing music, or producing plays. Grants can be tax-free or taxable income. However, it’s worth noting that regardless, individuals insured under the Farmers’ Pensions Act (MYEL) are subject to the MYEL sickness insurance contribution and the public broadcasting tax based on their MYEL earnings. Entrepreneurs and employees pay the same contributions based on YEL income and wage income. The sickness insurance contribution is tax-deductible.

1.5 More information on the topics in this chapter

• You can find more information about the characteristics of employment relationships and entrepreneurship, for example, on the website of the Finnish Tax Administration (in Finnish).
• For information about cooperatives, you can visit the website of the Cooperative Development Center Pellervo.
• Details about unemployment benefits for those self-employed in their own work are available on the website of KEHA Center and the Ministry of Economic Affairs and Employment’s labor market service, Työmarkkinatori.
• Information about available grants can be found at least on the website Tiedejatutkimus.fi.

Managing pension matters as a gig worker requires self-reliance. Pension matters might seem distant, especially to young adults, but pensions accumulate throughout one’s entire working career. Additionally, one might retire due to illness long before reaching the official retirement age.

Pension insurance is mandatory. There are generally two types: pension insurance provided by employers for their employees and entrepreneur pension insurance paid by entrepreneurs themselves. Additionally, grant recipients can apply for pension insurance from the Farmers’ Social Insurance Institution Mela. Many accumulate pension from various forms of work throughout their lives, forming a comprehensive total pension in the end.

Pension accrual is influenced by age and the worker’s earnings for employees, the entrepreneur’s income for self-employed individuals, or the grant recipient’s income. Information about pension-earning earnings can be checked on a pension record.

For entrepreneurs, earned income refers to the value of the entrepreneur’s contribution to work, which is different from taxable earned income or company profits. The amount of pension insurance for entrepreneurs is determined based on earned income, but there can also be flexibility in this regard.

Grant recipient’s income indicates the amount of the grant intended for work, converted to an annual basis. Pension can only accrue from grants intended for artistic or scientific work.

Employers are also required to provide their employees with occupational accident and disease insurance. Grant recipients automatically have occupational accident and disease insurance in addition to pension insurance while working on a grant. For entrepreneurs, occupational accident and disease insurance are optional.

2.1 Pension accrues from even small work engagements

For earned work to contribute to a pension, it must be insured. Gig workers can accumulate pension from multiple different job tasks and pension systems simultaneously. For instance, a music teacher can accrue pension both from their regular job and gig work.

The applicable pension law depends on whether one works as an employee, entrepreneur, or grant recipient. Pension institutions provide guidance if there is uncertainty about which pension law applies to earned work. Ultimately, the Finnish Centre for Pensions resolves any uncertainties.

Employees of private employers are covered by the Employees Pensions Act (TyEL). Employees in the public sector, such as state and municipal workers, are covered by the Public Sectors Pensions Act (JuEL). Entrepreneurs’ pension accrues according to the Self-Employed Persons’ Pensions Act (YEL), and grant recipients’ pension accrues based on the Farmers’ Social Insurance Institution’s Pension Act (MYEL). Additionally, there is a separate Seafarers’ Pensions Act (MEL).

Pension accumulates from all work engagements, no matter how small, and these accumulations are totaled upon retirement to form the final pension. If pensionable earnings are low, as may be the case for gig workers, this directly affects the accrued pension. Besides a small occupational pension, it is also possible to receive a national pension.

Pension accrual rates are as follows:

• For individuals aged 17–52, 1.5% per year, except for entrepreneurs, whose accrual begins at age 18
• For those aged 53–62, 1.7% per year (temporarily during 2017–2025)
• For those aged 63–67, 1.5% per year.

Pension also accumulates for individuals working while receiving old-age pension, depending on their year of birth, up to the ages of 68, 69, or 70, except for grant recipients. Additionally, pension accrues from earnings received while on sickness, unemployment, parental, and infectious disease allowances, as well as from partial unemployment benefits and rehabilitation allowances. Pursuing studies leading to a degree and caring for one’s own child with home care allowance also contribute to pension accrual.

Pension does not accrue from so-called “black” work, travel allowances, or per diem allowances. Therefore, it is not advisable to accept compensation for work done in cash under the table, with fictitious mileage reimbursements, or as tax-free per diem allowances.

Copyright organizations’ payments for the use of works do not contribute to employees’ pension but may be considered in determining entrepreneurs’ income. However, payments received by employees for copyright may contribute to their pension if agreed upon in the employment contract or collective agreement.

Work done abroad can contribute to a pension in Finland or the country of employment. Sometimes no pension accrues at all. It is therefore important to clarify how pension matters work in one’s specific situation. More information about working abroad can be found in Chapter 9 of this guide. For those who have come to Finland to work from abroad, their pension accrues in the same way as for Finnish residents.

Information about pensionable earnings can be checked on an electronic pension record, often available through one’s pension institution’s online service and at least on the työeläke.fi website. It’s a good practice to annually verify that all work engagements and social benefits have had pension contributions made. Regular checks are essential because individuals are responsible for providing evidence of earnings for up to six years. For example, the tax authorities discard older data from which missing earnings could be clarified from the pension record.

Finnish residents aged 17–60 receive a paper pension record sent to their home every three years. Those over 60 who are still working receive the record annually. Pensioners do not receive a paper pension record at home. Public sector employees also no longer receive a paper record at home; it must be checked electronically.

Pension is calculated based on the earnings information presented in the pension record when the time comes.

2.2 Employer’s responsibility

The employer must arrange insurance for their employees aged 17 to 67 in accordance with the Employees Pensions Act. Even though it’s the employer’s duty to insure their employees, for example, for one-night gigs and other short-term employment, it’s advisable to ensure that the employer pays the pension and social security contributions. The employer also pays the pension contribution for part-time employees as usual.

The pension contributions include both the employer’s and the employee’s shares. The employer pays the entire pension insurance premium to their pension insurance company but deducts the employee’s share directly from the salary at the time of payment. In 2023, the employee’s contribution rate is 7.15% for those aged under 17–52 and 63–67, and 8.65% for those aged 53–62. Usually, the pension contribution is itemized on the payslip. In certain situations, the pension contribution must be paid even when the employer does not withhold tax from the salary. For example, as a student, one may earn a certain amount tax-free.

In 2023, employees under the private sector employer are covered by the Employees Pensions Act if they earn at least EUR 65.26 per month. Pension benefits under the Employees Pensions Act include old-age pension, disability pension, partial old-age pension, career pension, and survivor’s pension.

Unlike for entrepreneurs, the amount of sick pay, parental allowance, rehabilitation allowance, and unemployment benefits for employees depends on taxable earnings and not on pension contributions.

2.3 Entrepreneurs must take out their own pension insurance

Entrepreneurs’ pension insurance includes a person residing in Finland who works but is not in an employment relationship. Entrepreneur’s pension insurance, or YEL insurance, requires work. Simply owning a business is not enough. YEL insurance must be taken out if:

• You have been working as an entrepreneur for at least four months
• You are aged 18–67 and not on old-age pension
• Your earned income, i.e., the value of your work input, exceeds the annually established minimum amount, which was EUR 8,575.45 in 2023
• Your income is not insured under any other pension scheme.

YEL insurance is personal and mandatory, and the obligation to insure does not depend on the form of business activity. Even if you work with a tax card, you are obligated to insure yourself unless you are in an employment relationship with your employer. One insurance covers all business activities. The insurance is taken out from a pension insurance company or pension fund within six months of starting the entrepreneurial activity.

Part-time entrepreneurs must also take out YEL insurance if the conditions are met. YEL insurance can also be taken voluntarily for earned income below the minimum threshold, provided that the activity continues continuously for at least four months. Repeated seasonal business activities, such as running a summer kiosk, can be considered continuous and subject to YEL insurance when the earned income exceeds the minimum threshold, even if the activity is carried out for fewer than four months a year.

The basis for YEL insurance is the earned income. Entrepreneurs can provide their own estimate of the earned income, and the pension institution assesses and confirms the earned income based on the information received from the entrepreneur’s business. In 2023, the lower limit of earned income is EUR 8,575.45 and the upper limit is EUR 194,750 per year.

The earned income should correspond to the salary that would be paid if an equally skilled person were hired to replace the entrepreneur, or a compensation that on average corresponds to the entrepreneur’s own work. The earned income is not determined based on the company’s profit or taxable income, but based on the value of the entrepreneur’s work input.

At the beginning of 2023, the determination of earned income was clarified. According to the amended law, the earned income is determined based on an overall assessment. When determining the earned income, the pension institution considers the median wage or compensation for full-time work in the private sector for the relevant industry and takes into account other factors such as the amount of work input, the scope of entrepreneurial activity, the entrepreneur’s skills, and information describing the value of the entrepreneur’s work input. Pension institutions have access to a calculation service that calculates the recommended earned income with a ±30 percent margin based on the entrepreneur’s revenue estimate and the industry. The calculation tool published by the Finnish Centre for Pensions can be used to calculate one’s own recommended earned income. The pension institution may deviate from the recommendation of the calculation service if the entrepreneur provides other evidence of their work input. Pension institutions are also obliged to review the entrepreneur’s earned income every three years.

There is a transitional period in the law reform. If the entrepreneur has taken out YEL insurance before the turn of the year, the pension institution will send a proposal for the earned income within the following three years. The earned income can be increased by a maximum of EUR 4,000 on the first review. Also, on the second review three years later, the earned income can be increased by a maximum of EUR 4,000.

The earned income affects the amount of the pension. The amount of sickness allowance, parental allowance, rehabilitation allowance, and unemployment benefits for entrepreneurs is also tied to earned income.

The final pension is calculated based on the earned income from the entire entrepreneurial career. The earned income can be reviewed along the way, but not retroactively. Increasing it significantly towards the end does not significantly improve the pension. Entrepreneur’s pension benefits include old-age pension, disability pension, partial old-age pension, work history pension, and family pension.

The Finnish Centre for Pensions oversees the pension insurance of entrepreneurs. If an entrepreneur has not taken out the statutory YEL insurance, the Finnish Centre for Pensions advises them to correct the omission. If the entrepreneur does not comply with the advice, the Finnish Centre for Pensions can take out insurance on behalf of the entrepreneur at their expense. In this case, the entrepreneur does not receive the discount for starting entrepreneurs. In addition, the State Treasury may impose a penalty for the omission.

YEL insurance can be taken out retroactively for the current year and the three preceding calendar years. The same rule applies to insurance taken out by the Finnish Centre for Pensions on behalf of the entrepreneur. The amount of the entrepreneur’s pension decreases if the insurance premiums are left unpaid. The outstanding premiums can be paid for a period of five years, but if they remain unpaid, they will reduce the pension.

A journalist and educator working through their own business stated at the turn of 2021–2022: My YEL earned income is over EUR 54,000 per year. My income has varied in different years, but the earned income averages out. My YEL premium is about EUR 1,200 per month. I would like to pay even more. The YEL premium also determines the amount of sickness allowance and disability pension. Anyone can get sick or have an accident and even permanently lose their ability to work. I have been an entrepreneur for decades, and various factors have reduced my pension level, such as working abroad. Also, I did not accumulate pension from work done before the age of 23, parental leave, or short-term jobs, even though they would accumulate nowadays. Once I reduced my earned income and thought about saving and investing instead. That time shows in a very poor pension accumulation. You have to have quite an investment portfolio to be able to replace your work pension. I believe that paying pension contributions also has a societal aspect: it is wrong to use all income for one’s own living expenses and try to increase one’s own wealth because the state already has to contribute several hundred million euros annually to cover entrepreneurs’ pensions. However, I am not expecting a very good pension. If I had had a similar career as an employee in expert positions or as a journalist, I would have a much better pension.

2.4 The YEL contribution is flexible under certain conditions

Pension insurance is a significant expense in entrepreneurship, and entrepreneurs must consider it as a cost factor when pricing their services. The entrepreneur’s pension contribution, or YEL contribution, is determined based on earned income. In 2023, the pension contribution is 24.1 percent for individuals aged 18–52 and 63–67, and 25.6 percent for those aged 53–62.

YEL contributions can be paid to a pension insurance company or pension fund in several installments, such as once a month. New entrepreneurs receive a 22 percent discount on their insurance premiums for the first four years of entrepreneurship. If business activities cease before four years have passed, the remaining time can be used in a possible second entrepreneurial period. There are no time limits between periods.

The YEL contribution can be fully deducted in taxation. The deduction can be made from personal income or as a natural deduction in the company’s taxation. YEL contributions can also be deducted in the taxation of a spouse in employment. The deductibility of separate voluntary pension insurance premiums from statutory YEL insurance is limited. They also do not accumulate social security benefits.

Entrepreneurs can pay more YEL contributions in good years and less in bad years. Based on the additional payment or reduction, the total earned income for the flexible year is calculated, from which the annual pension accrues. An increase in good years improves future pension benefits, while a smaller payment in bad years reduces it. The confirmed earned income remains the same despite the flexibility, so it does not affect, for example, the amount of sickness allowance.

A larger than normal payment can be made without restrictions for several consecutive years, but there are limitations on payment reductions. The additional insurance premium can be 10–100 percent higher than usual. The payment reduction can be 10–20 percent of the annual insurance premium. The use of flexible payments must be reported in writing to the pension insurance company, and the payment must be made during the calendar year in which the flexibility is desired.

There is no flexibility if any of the following apply:

• YEL contributions are in arrears.
• The insurance premium includes a discount for starting entrepreneurs.
• The entrepreneur is retired.
• An increase or decrease would raise the total earned income above the statutory upper limit or below the lower limit.

YEL insurance can be terminated if entrepreneurial activities are interrupted for a long time due to parental leave, illness, or other reasons. However, it is not advisable to terminate the insurance for a short interruption; instead, it is usually possible to agree on a payment plan with one’s own pension institution for the YEL contribution. If the entrepreneur receives a grant, the YEL insurance can be suspended for the duration of the grant-funded work or the YEL contributions can be paid normally or at a reduced rate. It is advisable to check with the grant provider whether working as an entrepreneur is allowed during the grant-funded period.

For example, a journalist who writes a book for a year with the help of a grant and does not work as an entrepreneur during that time may find it sensible to suspend their YEL insurance. In this case, social security and pension benefits are determined based on the grant. If, on the other hand, entrepreneurship continues while writing the book, the YEL insurance should be maintained.

2.5 Working with a grant can also contribute to your pension

The pension insurance for those working with grants largely follows the system for entrepreneurs. It is managed in accordance with the Farmers’ Pension Act. Insurance coverage is determined on a grant-specific basis. In this case, the Farmers’ Pension Insurance (MYEL) for agricultural entrepreneurs based on grant work is always temporary, and when the grant work ends, so does the insurance. However, the accrued pension remains in the system for later payments.

The basis for pension insurance is insuring work, so pension accrual only applies to grants directed towards artistic or scientific work. The grant must be awarded for artistic or scientific work. Activities such as completing a vocational qualification, a higher education degree, or a thesis related to these studies are not considered insured activities.

The right to MYEL insurance based on a grant awarded to a workgroup is determined in the same way as for individual grant recipients. The person leading the workgroup, i.e., the person in whose name the grant is awarded, must report the members of the workgroup to the Farmers’ Social Insurance Institution (Mela) before insurance can be granted to them. However, if the workgroup hires an external seamstress or actor for production purposes, for example, this individual is in an employment relationship with the workgroup and thus falls under a different pension scheme.

Working with a grant accrues pension if the grant work lasts continuously for at least four months, and the amount of the grant allocated to work exceeds the insurance threshold, which in 2023 is EUR 4,288. Additionally, for those working with grants, the following conditions apply:

• They must be covered by Finland’s residence-based social security system.
• They must be between 18 and 67 years old and not retired.
• They must not be in an employment relationship with the grant provider.

If the grant provider sets specific date limits for the work period, this timeframe binds pension insurance. If the work period exceeds four months, MYEL insurance must be applied for based on the grant. The insurance coverage for those working with grants is also bound if the grant provider sets the duration of the grant, even if the starting date is left for the grant recipient to decide. For example, for a grant awarded for a five-month work period, MYEL insurance must be applied for a five-month period.

There are also quite common grants awarded for artistic or scientific work without specifying the exact duration of the work period. In these cases, the grant recipient working with the grant determines the work period themselves, and if it exceeds four months, MYEL insurance must be applied for based on the grant.

The distinction between when one grant ends and another begins may not always be clear. However, from the perspective of insurance coverage, this boundary must be found.

For example, if an artist receives two EUR 3,000 grants for artistic work without specifying the work period, the artist can calculate a monthly income of EUR 1,500, allowing both grants to last for a total of four months. If the artist plans to use the grants consecutively, a four-month grant-specific work period and thus eligibility for MYEL insurance do not occur. By theoretically withdrawing EUR 750 per month from each grant simultaneously, the artist works with both grants for four months and is obligated to apply for insurance. Therefore, even part-time work with a grant can be insured.

When there is an existing valid MYEL insurance, it can be combined with a new grant period lasting at least one month but less than four months, granted for the same purpose. The grant to be combined must come from the same provider or the work must continue in the same workgroup. The work must continue simultaneously or without interruption compared to the already confirmed insurance period.

2.6 A grantee applies for MYEL insurance themselves

A grantee must apply for MYEL insurance themselves within three months of starting grant work. If funding has been granted for materials or travel expenses in addition to the grant for work, the grantee can optionally claim deductions with their insurance application. In this case, the amount of the grant to be considered for MYEL insurance decreases. Grants awarded solely for work do not allow for deductions.

MYEL insurance is based on annual earnings. The grantee’s earnings are tied to the amount of the grant received. Earnings are calculated on an annual basis, even if grant work lasts less than a year. Annual earnings are obtained by subtracting any deductions from the grant amount, multiplying the difference by 360, and then dividing the result by the number of days worked.

The amount of earnings determines not only the pension amount but also the level of accident compensation. It also forms the basis for social security, affecting, for example, the amount of sickness allowance.

The percentage of MYEL insurance contributions depends on the insured person’s age and the amount of earnings used as the basis for insurance. In 2023, for those under 53 years old and those aged 63 and over, the rate is 13.014% up to an earnings threshold of EUR 30,041, after which the rate gradually increases with earnings. For earnings exceeding EUR 47,208, the rate is 24.10%. For those aged 53–62, the corresponding rates are 13.824% and 25.60%. The amount of insurance premiums can be estimated using the calculator available on Mela’s website.

MYEL insurance can be suspended due to other employment, parental leave, illness, or similar reasons. The insurance must be suspended for at least four months, and both the preceding and following insurance periods must be at least four months long.

Mela sends a bill for MYEL insurance to the grantee, which includes payment for occupational accident and disease insurance as well as group life insurance. These payments are tax-deductible. If the payment is left unpaid, it can be enforced. Mela can collect the payment for up to five years after the payment year. If the payment remains unpaid after this period, the pension benefits will be reduced accordingly.

2.7 Protection is also available for workplace accidents and occupational diseases

Employers are required to provide not only pension insurance but also occupational accident and disease insurance for employees. In 2023, insurance must be taken out when the employer pays work earnings exceeding EUR 1,400 during the calendar year. The threshold is specific to each employer. If the employer is classified as a small employer, meaning they employ workers whose earnings in 2023 amount to EUR 1,400 or less, insurance is not required. The Workers’ Compensation Center handles damage events in uninsured employment relationships.

For individuals working on grants, occupational accident and disease insurance is always valid alongside pension insurance and does not need to be applied for separately. A separate fee is charged for occupational accident insurance. In 2023, the insurance-specific fee is EUR 4, plus an additional 0.085 percent of the work income. Additionally, optional leisure accident insurance can be taken out if desired.

For entrepreneurs, occupational accident and disease insurance is optional. The insurance premium is influenced by the YEL work income and the risk class of the insured work. Entrepreneurs can also take out voluntary leisure insurance for accidents that occur during free time.

A workplace accident can occur during work activities. It can also be an accident that occurs on the work premises in situations specified in the Occupational Accident and Disease Act, such as during lunch breaks at a workplace. Additionally, it can be an accident that occurs outside the work premises in situations specified in the law, such as during a regular commute between home and the workplace.

The work premises of an entrepreneur or grant recipient are considered to include the area where they are working at any given time, but not residential or primarily privately used areas.

The Occupational Accident and Disease Act does not specifically address remote work. When working from home, accidents strictly related to work are considered workplace accidents. For example, if a laptop falls on one’s foot while working, it is considered a workplace accident. However, an accident that occurs while eating at home is not considered a workplace accident. Workers’ compensation insurance covers medical and examination costs, daily allowances, disability pensions due to disability, compensation for rehabilitation costs, survivor’s pensions, disability benefits, care allowances, and funeral assistance resulting from workplace accidents.

Occupational diseases can be compensated for illnesses caused by physical, chemical, or biological factors encountered at work. The government’s decree on occupational diseases lists the most common diseases considered occupational diseases and the factors causing them, or the exposures. The list is not exhaustive or limiting, as a disease can be compensated as an occupational disease even if it is not mentioned in the list, provided that there is sufficient probability of a causal relationship between the disease and the exposure to a hazardous factor at work. For example, if one contracts a coronavirus infection at work or on the work premises, it can be recognized as an occupational disease.

Some professional organizations have also insured their members. For example, the Finnish Journalists’ Union’s membership insurance includes leisure accident insurance. Leisure insurance does not cover accidents that occur at work. However, for freelancers, the Finnish Journalists’ Union’s insurance is valid without distinguishing between work and leisure time. Regardless of the insurance provided by professional organizations, employers are still obligated to provide occupational accident and disease insurance for employees.

Collective agreements determine whether an employer must also provide group life insurance for employees. A group life insurance policy is always valid for individuals insured under the MYEL system, and no insurance premium is charged in 2023. Life insurance is optional for entrepreneurs.

2.8 Additional information on the topics in the chapter

• The website Työeläke.fi provides basic information about pensions. It is maintained by the Finnish Centre for Pensions (ETK), which is an expert in pension security and the central body of Finland’s statutory pension system.
• Information about pensions is also available on the ETK’s own website.
• Information about occupational pensions can also be obtained from all pension insurance companies and the public sector pension institution Keva.
• The Finnish Centre for Pensions provides a calculator to calculate the recommended YEL (Self-Employed Persons’ Pensions Act) income.
• The management of pension security for individuals working on grants is centralized to Mela.
• Kela (the Social Insurance Institution of Finland) manages residence-based national pensions as well as other benefits related to livelihood.
• For more information on occupational accident and disease insurance, you can contact the Workers’ Compensation Center and the insurance companies that provide statutory accident insurance.
• Information about group life insurance for employees is available at www.trhv.fi.

Parental leaves are determined based on the new regulations that came into effect on August 1, 2022. Now, parents are entitled to more leave per child, parental leave is divided equally between parents, and there is increased flexibility in taking the leave.

Parents are eligible for the new statutory parental allowances if the expected date of birth is on or after September 4, 2022, because maternity allowance could have been received starting from August 1, 2022, at the earliest. If the child was born on July 29, 2022, or earlier, parental allowances were determined according to the old law. Parents are also eligible for the new statutory parental allowances if they have taken a adopted child into care on or after July 31, 2022. If parental allowances have been paid for a child according to the old law, they could not be changed to comply with the new law as of August 1, 2022.

Prior to the reform, maternity allowance was available for 105 weekdays or Saturdays, and paternity allowance for 54 weekdays or Saturdays. Additionally, parents could divide a 158-day or Saturday parental leave, or one parent could take it entirely. Parents could also work part-time and take care of the child alternately.

After the reform, a pregnant person can take pregnancy leave, which lasts for 40 weekdays or Saturdays. This is followed by parental leave, which can be taken for a maximum of 320 weekdays or Saturdays per child. Parental leave is divided equally between two parents, and part of the leave can be transferred under certain conditions. Parental leave can also be applied for partially.

The method of calculating parental allowance amounts did not change with the reform. The Social Insurance Institution of Finland (Kela) pays parental allowances based on the applicant’s annual income. The minimum daily allowance is EUR 31.99 in 2023.

After parental leave ends, various support options are available for childcare: home care allowance, private care allowance, flexible care allowance, and partial care allowance.

3.1 Before the reform: maternity allowance is only for the mother

Before the reform, entitlement to maternity allowance was based on a pregnancy duration of 154 days and being insured in Finland under the Health Insurance Act for at least 180 days immediately before the expected date of delivery. Periods of insurance coverage in another EU or EEA country, Switzerland, the UK, or Israel could also be included.

Maternity allowance was available for the duration of maternity leave. Maternity leave could be taken for 30–50 weekdays or Saturdays before the expected due date, with the starting date chosen by the individual. If the mother was employed, she could start receiving the minimum daily allowance 30 weekdays before the expected due date. Overall, maternity allowance was paid for 105 weekdays or Saturdays. Maternity allowance could be applied for from Kela as soon as the pregnancy was confirmed by a doctor or at a maternity clinic, and it had to be applied for at the latest two months before the expected due date.

An adoptive mother could not receive maternity allowance, but the adoptive family was entitled to parental allowance for a longer period. In a rainbow family, maternity allowance was only paid to the biological mother.

The employee had to inform the employer of maternity leave at least two months before the start of the leave. The employee also had to clarify whether the employer would pay salary during maternity leave, as this information was needed for the maternity allowance application. If the employee received salary during maternity leave, Kela paid the maternity allowance for that period to the employer.

During pregnancy before the actual maternity allowance period, special maternity allowance could be received from Kela if the working conditions or tasks posed a risk to the mother or fetus and she had to be absent from work for that reason. Special maternity allowance had to be applied for from Kela within four months from the day of absence from work. Special maternity allowance did not reduce the regular maternity allowance.

Maternity allowance was paid based on the applicant’s annual income. The calendar month preceding the start of maternity leave was not considered; instead, the annual income was calculated based on a specific formula for the preceding 12 calendar months. For the first 56 days, maternity allowance was paid at an enhanced rate, up to a maximum of 90% of earnings. After this period, maternity allowance was up to approximately 70% of earnings.

In special circumstances, only the last three calendar months of the review period determined the amount of maternity allowance. This was the case, for example, if during the 12-month review period, the individual had graduated or cared for a child under 3 years old at home. In addition, the income for the three months had to be more than 20% higher than the annual average for the 12-month review period.

If the due date of the child was before the previous child turned three, maternity allowance and other parental allowances could be received based on the same income as for the previous child. Different parental allowances paid for the same child were calculated based on the same income.

Annual income consists of one or more of the following:

• wage income
• insured earnings
• YEL and MYEL income
• certain benefits, such as unemployment benefits, sickness allowance, and parental allowance
• compensation for loss of earnings due to, for example, a work-related accident or occupational disease.

Usage royalties paid by copyright organizations do not accumulate for daily allowance. Copyright royalties paid as part of an employment relationship, however, do accumulate if they are included in the salary. If they are paid separately as usage royalties, they do not accumulate for daily allowance.

If a person worked during maternity leave, they received minimum daily allowance for work days. Since maternity allowance was paid for weekdays or Saturdays, work done on Sundays and public holidays did not affect the receipt of allowance and did not need to be reported to Kela. For example, a photographer on maternity leave could work on holidays. However, work done on weekdays and Saturdays during the maternity allowance period had to be reported to Kela. A full-time student also received minimum daily allowance for maternity leave.

YEL and MYEL insurance can be suspended during parental leave. Entrepreneurs accrue pension benefits based on the income used for the parental benefit, so they do not lose pension coverage even if they suspend their insurance. If an entrepreneur works during parental leave and the value of their work exceeds the annually determined minimum amount, insurance must be kept in force.

For recipients of a grant working under MYEL insurance, the insurance can be suspended due to childbirth or caring for a child under three years old, provided that at least four months have elapsed since the start of the insurance. In addition, work must be interrupted for at least four months, and there must be at least four months remaining in the insurance period. The suspension of work must be approved in writing by the grant provider.

3.2 Before the reform: fathers have their own paternity allowance

Paternity allowance paid by Kela can be received by the official father of the child or the biological mother’s spouse, regardless of gender, if they are in a registered partnership or marriage with the child’s mother and participate in caring for the child. Temporary living apart, for example, due to work, does not change this. The child’s father can also receive paternity allowance without a registered partnership or marriage if he is responsible for the child’s care.

The spouse of an adoptive mother is entitled to paternity allowance regardless of gender, but a partner in a registered partnership is not entitled to it if they are not the child’s parent. In a male couple’s family, the spouse of the child’s biological father is not entitled to paternity allowance. If the biological father of a child in a female couple’s family is responsible for the child’s care, he has the right to take paternity leave.

The condition for receiving paternity allowance is that the applicant has been insured in Finland under the Health Insurance Act for at least 180 days immediately before the expected due date. Periods of insurance coverage in another EU or EEA country, Switzerland, the UK, or Israel can be included in the insurance period. Paternity allowance is also paid to an adoptive father.

Paternity allowance is received for the duration of paternity leave. Paternity leave can be started when the child is born. The father is entitled to a total of 54 weekdays or Saturdays of paternity leave, of which 18 days can be taken while the mother is on maternity or parental leave. Paternity leave can be taken during the mother’s maternity and parental leave in up to four periods and thereafter in up to two periods. Paternity leave must be taken before the child turns two or before two years have passed since the adoption of the child.

The employee must inform the employer of paternity leave at least two months before the start of the leave. A month is sufficient if the leave is up to 12 days. The employee also needs to clarify whether the employer will pay salary during paternity leave, as this information is needed for the paternity allowance application. If the employee receives salary during paternity leave, Kela pays the paternity allowance for that period to the employer.

The amount of paternity allowance is calculated in the same way as maternity allowance, but paternity allowance is not paid at an enhanced rate. During paternity leave, no paid work can be done, except on Sundays and public holidays, and full-time study is not allowed during paternity leave. Paternity allowance must be applied for within two months from the date the child turns two or when two years have passed since the adoption of the child.

3.3 Before the reform: parental allowance can be shared

Both parents can receive parental allowance paid by Kela. Parental allowance is paid during parental leave, which begins after maternity leave. The female spouse or partner of the mother can take parental leave, but in a male couple’s family, the spouse of the child’s biological father cannot. If the biological father of a child in a female couple’s family is responsible for the child’s care, he has the right to take parental leave.

The condition for receiving parental allowance is that the applicant has been insured in Finland under the Health Insurance Act for at least 180 days immediately before the expected due date. Periods of insurance coverage in another EU or EEA country, Switzerland, the UK, or Israel can be included in the insurance period.

Parents can agree on how to divide parental leave between them. Each parent can divide their parental leave into a maximum of two periods. Together, parents can take parental leave for a total of 158 weekdays or Saturdays. However, parents cannot be on parental leave at the same time, except in multiple births families, where parents can receive more parental leave than usual. It is also possible for adoptive parents and single mothers caring for the child alone to take parental leave for a longer period than usual.

The amount of parental allowance is calculated in the same way as maternity allowance. Only work on Sundays and public holidays does not affect parental allowance. Also, if one is studying full-time and receiving study grant, they receive the minimum daily allowance during parental leave. Parental allowance must be applied for from Kela at least one month before the start of the period. Parents can apply for parental allowance at the same time as maternity or paternity allowance.

Parents can also take partial parental leave and receive partial parental allowance during the same period. The prerequisite is that the working hours and income of both parents decrease by 40–60 percent for at least two months. This applies to both employees and entrepreneurs. Those working on grants are not entitled to partial parental allowance. Partial parental allowance is half of the full parental allowance amount.

3.4 After the reform: maternity allowance for pregnant individuals

Under the new regulations, pregnant individuals have the right to maternity allowance paid by Kela when the pregnancy has lasted 154 days and the person is insured in Finland according to the Health Insurance Act. With the change in the law, the previous requirement of 180 days of insurance coverage has been removed, and parental allowances can now be received from the day the person is insured in Finland. Adoptive families cannot receive maternity allowance.

Maternity allowance is paid for the duration of maternity leave. For employees, maternity leave usually begins 30 weekdays or Saturdays before the expected due date, but an agreement with the employer can allow for a later start, provided that at least 14 weekdays or Saturdays are left before the due date. If one is not employed, they can choose to start maternity leave 14–30 weekdays or Saturdays before the expected due date. This applies, for example, to entrepreneurs and grant recipients.

Maternity allowance is provided for 40 weekdays or Saturdays. The timing of the child’s birth does not affect eligibility. If the child is born before the start of maternity leave, maternity allowance payments begin on the next weekday after the birth. Maternity allowance can be applied for from Kela as soon as one receives a pregnancy certificate from a doctor or maternity clinic, and it must be applied for within two months of the desired start date of the maternity allowance.

The employee must inform the employer of maternity leave at least two months before the start of the leave. The employee must also ascertain whether the employer will pay wages during maternity leave, as this information is needed for the maternity allowance application. If the employee receives wages during maternity leave, Kela pays the maternity allowance for that period to the employer.

Before receiving regular maternity allowance, one can receive special maternity allowance from Kela if there is a risk to the mother or fetus due to work conditions or tasks and the person must therefore be absent from work. Special maternity allowance must be applied for within two months of leaving work due to a hazard. Special maternity allowance does not reduce regular maternity allowance.

The calculation method for parental allowances did not change with the reform, so maternity allowance is also based on the applicant’s annual income. The calendar month preceding the start of maternity leave is not taken into account; instead, annual income is calculated based on a certain formula for the preceding 12 calendar months. Maternity allowance is paid at an increased rate for the entire period, capped at 90 percent of the earnings.

In special circumstances, only the last three calendar months of the assessment period determine the amount of maternity allowance. This is the case if, for example, during the 12-month assessment period, one has completed vocational training or cared for a child under 3 years of age at home. In addition, the income for the three months must be at least 20 percent higher when converted to an annual basis than during the 12-month assessment period.

If the due date of the child is before the previous child turns three, maternity allowance and other parental allowances can be received based on the same income as for the previous child. Different parental allowances for the same child are calculated based on the same income.

Annual income consists of one or more of the following:

• salary income
• insurance salary
• YEL and MYEL earnings
• certain benefits, such as unemployment benefits, sickness allowance, and parental allowance
• compensation for loss of earnings due to, for example, occupational accidents or diseases.

Compensation paid by copyright organizations does not accumulate daily allowance. Copyright royalties paid as part of an employment relationship, however, do accumulate if included in the salary. If they are paid separately as copyright royalties, they do not accumulate daily allowance.

If a person works during maternity leave, maternity allowance is not paid for those days. In this case, maternity allowance days must be canceled. However, the maternity allowance period still elapses, meaning that maternity leave cannot be postponed. Since maternity allowance is paid for weekdays or Saturdays, work done on Sundays and public holidays does not affect eligibility, and such work does not need to be reported to Kela. Maternity allowance can be received even if one is studying and receiving student financial aid.

YEL and MYEL insurance can be suspended during maternity leave and other parental leaves. Entrepreneurs accumulate pension based on the earnings used for the parental benefit, so pension security is not lost even if the insurance is suspended. If an entrepreneur works during maternity leave or other parental leave and the value of the work exceeds the annually determined minimum amount, the insurance must be kept valid.

The MYEL insurance of a grant recipient can be suspended due to the birth of a child or the care of a child under three years of age, provided that at least four months have passed since the start of the insurance. In addition, work must be suspended for at least four months, and there must be at least four months of insurance period remaining. The grant provider must approve the suspension of work in writing.

3.5 After the reform: parental allowance is split even

Under the new regulations, parental allowance paid by Kela can be received regardless of gender by a child’s biological or adoptive parent who is the child’s custodian. Additionally, parental allowance can be received by a person who has acknowledged paternity or maternity either at the maternity clinic before the child’s birth or at the registrar’s office after the child’s birth. There can be one or two parents entitled to parental allowance. To be eligible for parental allowance, a person must be insured under the Finnish Health Insurance Act.

Parental allowance is paid for the duration of parental leave. The parent who gave birth can take parental leave when maternity leave ends. The other parent can receive parental allowance when the child is born.

Parental leave can be taken for a maximum of 320 weekdays or Saturdays per child. If there are two parents entitled to parental allowance, the days are divided equally between the parents, so each parent has 160 days available.

Parental leave can be scheduled flexibly until the child turns two or until two years have passed since the adoption of the child, but the employer has the right to restrict the periods. According to the Employment Contracts Act, parental leave can be taken in a maximum of four periods, with a minimum duration of 12 weekdays each. However, the employer and employee can always agree on taking parental leave in more than four periods.

Parents can be on parental leave at the same time for 18 weekdays, or one can be on maternity leave and the other on parental leave. In addition, in families with multiple births, parents can care for the children together for a longer period, and more parental leave is available than usual. However, as a general rule, only one parent can be on parental leave at a time.

The child’s custodial parent and the person who has acknowledged parenthood can transfer parental allowance days to others. From the 160-day parental allowance quota, a maximum of 63 weekdays or Saturdays can be transferred to one or more persons who care for the child. More days can be transferred if the child is born prematurely, if there is only one parent, or if more than one child is born or adopted at the same time. Days can be transferred to:

• the other parent of the child
• the spouse or registered partner who is not the child’s parent
• the spouse or registered partner of the child’s other parent
• another custodian of the child.

Parental allowance must be applied for from Kela within two months from the desired start date. Parental allowance can be applied for at the same time as maternity allowance.

The amount of parental allowance is calculated in the same way as maternity allowance. If a person works during parental leave, parental allowance is not paid for those days. Working on Sundays and public holidays does not affect parental allowance, and neither does studying and receiving student financial aid while caring for the child.

There is an increase in parental allowance for the first 16 weekdays or Saturdays. The increased daily allowance is up to 90 percent of the income. Otherwise, parental allowance is up to about 70 percent of the income. The increase also applies to transferred parental allowance days, but each person can only receive the increase once.

Parental allowance can also be applied for partially. In this case, the daily working hours must be a maximum of five hours. The maximum daily working hours apply to both employees and entrepreneurs, and for employees, it must be stated in the employment contract. Grant recipients cannot apply for parental allowance partially. One day of partial parental leave consumes half a parental allowance day. Parents can also receive partial parental allowance for the same period. The partial parental allowance is half of the full parental allowance amount.

3.6 The main features of childcare support remain largely unchanged

After parental leave ends, parents can choose municipal or private daycare for their child, with the latter option being eligible for private daycare allowance. Alternatively, the child can be cared for at home with home care allowance. Home care allowance and private daycare allowance are not paid for the same period for which parental allowance is received.

The primary caregiver of the child or the custodian can receive home care allowance if there is a child under the age of three in the family who is not in municipal daycare. Home care allowance is also paid for other preschool-aged children in the family who are cared for in the same way. The caregiver can be a parent, the spouse or cohabiting partner of the parent, or another individual.

Adoptive parents can also receive support for the care of a child over the age of three. It is paid until two years have passed since the adoption of the child or until the child starts school.

Home care allowance is divided into care allowance, care supplement, and possible municipal supplement. Care allowance is paid separately for each eligible child. In 2023, its amount is EUR 377.68 per month for one child under the age of three, and EUR 113.07 per month for other children under the age of three in the family. For each child over the age of three but under school age, the allowance is EUR 72.66 per month.

Care supplement is paid for only one child. The amount of care supplement is determined based on the family’s size and income. In 2023, it is up to EUR 202.12 per month. In addition, a municipal supplement may be available, the amount and conditions of which vary by municipality. Not all municipalities pay a municipal supplement.

Home care allowance can enable flexible return to work for freelance workers. For example, a journalist or translator can work from home for a few hours a day if they don’t need to care for the child all the time and receive home care allowance. Home care allowance can be received at the earliest when the child is about six months old.

Private daycare allowance can be received if a child under school age in the family is in private daycare, with a private daycare center, a family daycare provider, or a hired caregiver. The private daycare allowance is paid directly to the caregiver. Private daycare allowance can be received at the earliest when the child is about nine months old.

Private daycare allowance is also divided into care allowance, care supplement, and possible municipal supplement. In 2023, care allowance is EUR 192.28 per month for each eligible child. The amount of care supplement depends on the family’s size and income and is up to EUR 265.85 per month per child starting from March 1, 2023. In addition, a municipal supplement may be available.

Flexible care allowance can be received for a child under the age of three if the parent works an average of up to 30 hours per week or 80 percent of the normal full-time work hours. Flexible care allowance can be received by both employees and self-employed individuals with YEL insurance, as well as grant recipients with MYEL insurance. Similarly, partial care allowance can be received if working up to 30 hours per week due to caring for a first or second grader.

Flexible care allowance ranges from EUR 269.24 to EUR 179.49 per month in 2023 depending on the parent’s working hours, and partial care allowance is EUR 108.15 per month. Flexible or partial care allowance cannot be received if parental allowance is received.

No childcare support is paid for a period shorter than a month. Both parents’ received childcare support is counted towards the minimum period. From August 1, 2022, childcare support could only be received for a minimum period of one month, whereas before that, shorter periods could be counted towards the minimum period. Therefore, from August 1, 2022, for example, home care allowance can only be paid alternately with parental allowance if the intervening home care allowance period is at least one month long.

3.7 Additional information on the topics in the chapter

• More information about benefits for families with children can be found on the Kela website.
• The website provides information on various topics, including parental allowances before the reform and after the reform.
• You can also read about childcare benefits on the website.

If you get sick, it can disrupt the life of a freelance worker quite a bit. To ensure your livelihood, it’s wise to be aware of your sickness benefits in advance.

Kela’s sickness allowance covers up to approximately a year of incapacity for work. The amount of sickness allowance is determined by your annual income. In 2023, the minimum daily sickness allowance is EUR 31.99. You are eligible for sickness allowance after the waiting period, during which you may receive salary, YEL daily allowance from Kela, or MYEL sickness allowance from Melasta.

Full-time employees or full-time entrepreneurs can also receive partial sickness allowance, which supports their return to full-time work. In this case, the working hours must be reduced to 40-60 percent of the previous level.

Infectious disease allowance, on the other hand, compensates for loss of earnings due to an infectious disease. You do not need to be incapacitated for work to receive it; it’s enough that a doctor orders you to stay away from work. There is no waiting period for infectious disease allowance. It can be received by both employees and entrepreneurs or grant recipients.

Employees are entitled to employer-provided occupational health care automatically and free of charge. However, the extent of this care varies from employer to employer. According to the law, only preventive occupational health care is mandatory. Entrepreneurs can arrange occupational health care for themselves if they wish and receive compensation from Kela for the costs incurred. Grant recipients do not have a similar right. Anyone can receive compensation from Kela for certain private healthcare expenses.

Rehabilitation can help if illness or disability affects your ability to work and function. For example, Kela and occupational health institutes provide rehabilitation services.

If a child under 10 years old gets sick, a parent can take temporary care leave from their employment. Kela does not pay benefits based on temporary care leave, but the employee may still receive their salary.

4.1 Sickness allowance can be obtained from Kela or Mela

Sickness allowance covers up to 300 working days or Saturdays, which is approximately a year of incapacity for work resulting in loss of earnings. To apply for sickness allowance, a medical certificate indicating the incapacity for work is required.

When an employee falls ill, the employer can apply for sickness allowance from Kela if they pay the employee’s salary during the sick leave. Otherwise, the employee applies for sickness allowance themselves. The employee always has the right to clarify their entitlement to sickness allowance by applying for it from Kela. The application will inquire about salary payments, and if necessary, Kela will investigate the matter with the employer.

Self-employed individuals insured under YEL apply for sickness allowance directly from Kela. Grant recipients insured under MYEL apply for sickness allowance from Melasta if the sick leave lasts for fewer than nine working days or Saturdays in addition to the day of illness onset, and from Kela if the sick leave continues longer. Sickness allowance from Mela can also be applied for from Kela concurrently with sickness allowance if the illness lasts for more than nine working days or Saturdays. In this case, the information about applying for sickness allowance from Mela is transmitted directly to Mela through Kela’s benefit system. If a grant recipient is also self-employed or an employee, sickness allowance must be applied for from Kela.

Sickness allowance must be applied for from Kela within two months and from Melasta within six months from the onset of incapacity for work. A medical certificate must be submitted as an attachment to the application.

Sickness allowance is paid after the waiting period. The waiting period for sickness allowance from Kela is usually the day of illness onset and the following nine working days or Saturdays. If the incapacity for work recurs due to the same reason within 30 calendar days from the end of the previous sickness allowance period, the waiting period is only the day of illness onset.

The collective agreement determines whether the employer pays the employee’s sick leave salary during the waiting period. Information about entitlements for sickness period compensation can be obtained from one’s own professional organization and the collective agreement. For example, the Musicians’ Union has a sickness fund that compensates for loss of income when there are no other sources of income available.

Self-employed individuals insured under YEL can receive YEL allowance immediately after the onset of illness until Kela’s general waiting period of nine working days or Saturdays is fulfilled. Grant recipients insured under MYEL can receive Mela sickness allowance from the day after the onset of illness and for the following three calendar days until Kela’s waiting period is fulfilled. Without YEL or MYEL insurance, no YEL allowance or Mela sickness allowance can be received during the waiting period. In this case, sickness allowance can only be received at the minimum rate after the waiting period.

Sickness allowance and YEL allowance are paid for working days as well as Saturdays and public holidays. However, Mela sickness allowance is paid for every day.

A freelance worker may receive sick leave salary from multiple employers. In this case, Kela distributes the sickness allowance payment to the employers based on the sick leave salaries paid by each. If a freelance worker is employed, self-employed, and on a grant, Kela divides the sickness allowance payment proportionally among the sick leave salary paid by the employer, YEL income, and MYEL income.

4.2 Sickness allowance is determined based on annual income

Annual income determines the amount of sickness allowance from Kela. The calendar month preceding the onset of incapacity for work is not considered; instead, the annual income is calculated based on the preceding 12 calendar months.

In special circumstances, only the last three calendar months of the assessment period determine the amount of sickness allowance. This applies, for example, if during the 12-month assessment period, one has completed vocational training or cared for a child under 3 years of age at home. Additionally, the income for the three months must have been more than 20 percent higher when converted to an annual level compared to the 12-month assessment period.

Annual income consists of one or more of the following:

• Salary income
• Insurance salary
• YEL and MYEL income
• Certain benefits, such as unemployment benefits, sickness allowance, and parental allowance
• Compensation for loss of earnings due to, for example, a work accident or an occupational disease.

So, if a freelance worker, for example, is in a part-time employment relationship and has YEL insurance as a self-employed person, both salary income and YEL income affect the amount of sickness allowance. However, if a freelance worker with multiple jobs is absent from only one job due to illness, only the salary income or YEL or MYEL income from that job affects the amount of sickness allowance. Royalties that are not part of annual income do not contribute to sickness allowance.

The minimum amount of sickness allowance is EUR 31.99 per day in 2023. In practice, the sickness allowance may be even lower because other statutory benefits and pensions paid for the same period can reduce its amount. On Kela’s website, there is a calculator that can estimate the amount of sickness allowance and partial sickness allowance.

The amount of Mela sickness allowance is based on MYEL income. The daily allowance is calculated as 1/514 of the annual earned income, rounded to the nearest euro.

4.3 Partial sickness allowance supports the return to full-time work

The partial sickness allowance paid by Kela is intended for employees or self-employed individuals working full-time who want to remain in the workforce and return to full-time work. If the primary source of income is a grant, there is no entitlement to partial sickness allowance.

To be eligible for partial sickness allowance, the working hours must be reduced to 40-60 percent of the previous level. The partial sickness allowance is half of the sickness allowance amount. Returning from sick leave to part-time work is voluntary and requires the consent of both the employee and the employer. A self-employed individual can decide to apply for partial sickness allowance. The part-time work arrangement is determined based on the assessment of a occupational health physician or another physician familiar with the working conditions.

A gig worker may have multiple part-time jobs. In this case, agreements must be made with all employers. Working hours can be reduced from one or more jobs. If a full-time entrepreneur or full-time employee has a side job, the working hours must be reduced from the main self-employment or full-time employment. The side job can continue.

Partial sickness allowance should be applied for as soon as the part-time work arrangement is agreed upon. The retrospective application period is two months from the date the part-time work arrangement is desired to take effect. A self-employed individual applies for partial sickness allowance themselves and provides Kela with a medical certificate and a description of the work arrangements. An employee’s partial sickness allowance can be applied for by the employer or the employee themselves. Often, the employer submits the medical certificate and the description of part-time work, but the employee can also submit them, provided that the description is prepared in collaboration with the employer.

The part-time work arrangement must last continuously for at least twelve and no more than 120 weekdays or Saturdays. The arrangement and the payment of partial sickness allowance can only begin after the entire waiting period for sickness allowance has been completed. The waiting periods are the same as for sickness allowance.

There is no separate waiting period if partial sickness allowance is paid immediately after sickness allowance or rehabilitation allowance. If the incapacity for work recurs for the same reason within 30 calendar days of the previous payment of sickness allowance or partial sickness allowance, the waiting period is one weekday or Saturday.

4.4 Sickness allowance compensates for loss of earnings

Kela can pay sickness allowance if the physician responsible for infectious diseases in the welfare region has ordered the individual to stay away from work, in quarantine, or in isolation to prevent the spread of the infectious disease. It is paid for as long as the physician has ordered the individual to stay away from work. If the illness continues thereafter and the individual is unable to work, they can apply for sickness allowance. To receive sickness allowance, one does not need to be incapacitated for work.

To be eligible for sickness allowance, one must be insured under the Finnish social security system or be a citizen of an EU or EEA country, Switzerland, the United Kingdom, or Northern Ireland. A person covered by the Finnish social security system can also receive daily allowance while in isolation or quarantine in an EU or EEA country or Switzerland. In this case, isolation or quarantine can be ordered by a physician authorized to do so in those countries. Additionally, a guardian of a child under 16 years of age can receive daily allowance if the child has been ordered to stay home due to an infectious disease and the guardian cannot work as a result.

Sickness allowance compensates for loss of earnings. Therefore, one is not entitled to it if, for example, they are working remotely, on vacation, on layoff, or on sick leave. Additionally, voluntary quarantine or waiting for the result of a COVID-19 test does not entitle one to sickness allowance.

An unemployed person or student generally cannot receive sickness allowance but can receive sickness allowance if a physician determines them incapacitated for work due to an infectious disease. However, if one is working while studying or unemployed and incurs loss of earnings, they may be entitled to sickness allowance.

Sickness allowance is a full compensation for loss of earnings without a waiting period. For an employee, it is determined based on the salary they would have received if they had not been ordered to stay away from work. The employer provides information or an estimate of the loss of earnings to Kela. If the employer has paid salary for the period of absence, the daily allowance is paid to the employer. For a self-employed individual, the daily allowance is based on the YEL income, and for a grant recipient, it is based on the MYEL income. Kela receives information about the income directly from the pension insurance company.

4.5 Employees have occupational health care – optional for entrepreneurs

Employees are automatically entitled to occupational health care. The employer arranges the occupational health care at their own expense, and it is free of charge for employees.

Employers are obliged to provide occupational health care for an employee who has been dismissed for financial or production-related reasons for a period of six months after the end of the employment obligation. This obligation applies to employers with at least 30 employees regularly employed. In addition, the employee must have been employed for at least five years. The employer’s obligation to arrange occupational health care ends when the dismissed employee enters into an open-ended or at least six-month fixed-term employment relationship with another employer.

Employers are required to provide preventive occupational health care for their employees. Its purpose is to promote:

• prevention of work-related illnesses and accidents
• healthiness and safety of work and work environment
• employees’ health and workability throughout their careers
• functioning of the work community.

In addition to the occupational health care prescribed by law, the employer can arrange general practitioner-level medical care. Other healthcare services can also be provided, but Kela does not reimburse the costs of occupational health care for them.

Grant recipients are not entitled to occupational health care. An entrepreneur can arrange occupational health care for themselves if they wish. A written agreement on occupational health care must be made between the entrepreneur and the service provider.

Kela reimburses part of the costs of occupational health care incurred by a self-employed person covered by the YEL insurance up to annually determined maximum amounts. Compensation can also be granted if the YEL insurance has been terminated due to incapacity for work while the entrepreneur is on rehabilitation allowance or temporary disability pension. The costs are divided into two compensation categories depending on whether the costs of preventive occupational health care or the costs of general practitioner-level medical care and other healthcare are reimbursed. Up to 60 or 50 percent of the calculated maximum amount of costs can be reimbursed.

4.6 You can get reimbursement for private healthcare expenses

Kela reimburses part of the costs incurred for procedures, examinations, or treatments provided by private healthcare providers. Kela also reimburses part of the costs of dental care provided by private dentists as well as the costs of treatment provided by dental hygienists independently.

The reimbursement is paid for necessary healthcare expenses. Necessary treatment refers to treatment provided according to generally accepted good medical practice due to illness, pregnancy, or childbirth.

Reimbursement rates can be found in the fee schedule, which Kela updates once a year. The reimbursement rate refers to the amount of compensation paid by Kela. If the fee charged is lower than the reimbursement rate, Kela pays it in full. Most often, the portion of the Kela reimbursement is deducted from the payment directly at the medical center or private hospital by presenting the Kela card. If this is not done, reimbursement can be applied for retrospectively from Kela within six months of the payment being made.

4.7 Rehabilitation can help maintain work and functional ability

Various organizations offer rehabilitation for different situations. Rehabilitation can help if illness or disability affects your ability to work and function.

Examples of rehabilitation provided by Kela include adaptation training, psychotherapy, and vocational rehabilitation. Adaptation training aims to help adapt to the changes brought about by illness or disability. Psychotherapy can help if work or study ability is threatened due to a mental health disorder. Vocational rehabilitation may include education that enables participation in the workforce despite illness or disability.

The goal of Kela’s KIILA rehabilitation is to improve work ability and support staying in the workforce. Employees, entrepreneurs, or grant recipients can apply for KIILA rehabilitation if illness makes work difficult, assistance from occupational health care does not seem sufficient, and help is needed with vocational and work-related matters, health, and life management. You can apply for KIILA rehabilitation even if you do not have occupational health care.

Rehabilitation is also provided by health centers, public hospitals, occupational health care, welfare regions, and disability organizations, among others. You can inquire about rehabilitation opportunities from your doctor or Kela, which will refer you further if necessary. In addition to Kela, vocational rehabilitation is provided by pension institutions. It can support, for example, returning to work after a long sick leave.

4.8 An employee can take temporary care leave for a sick child

The Employment Contracts Act guarantees employees the right to take temporary care leave if their child or another child permanently residing in the same household falls suddenly ill. The parent has this right even if the child does not live in the same household. The child must be under 10 years old.

The purpose of temporary care leave is to arrange childcare or care for the child oneself. Temporary care leave can last for a maximum of four working days at a time. The employee should inform the employer about the leave and its estimated duration as soon as possible. If the employer requests, the employee must provide evidence of the leave’s reason.

Kela does not pay benefits for temporary care leave, but often the employer pays wages for these days. It’s advisable for the employee to clarify what their collective agreement stipulates regarding this matter. Entrepreneurs or grant recipients do not receive compensation for loss of earnings due to their child’s illness.

4.9 Additional information on the topics in the chapter

• Information about sickness allowance, partial sickness allowance, and infectious disease allowance can be found on the Kela website.
• You can use the calculator on the Kela website (in Finnish) to get an estimate of the amount of sickness allowance and partial sickness allowance.
• You can learn about the Mela sickness allowance from the Mela website.
• Information about entrepreneur’s occupational health care and the compensation paid by Kela can be found on the Kela website regarding this matter.
• You can find information about occupational health care on the website of the Finnish Institute of Occupational Health (in Finnish).
• Information about rehabilitation can be found on the Kela website and on the työeläke.fi website.
• Information about healthcare reimbursements from Kela and the reimbursement rates paid by Kela for private healthcare procedures can be found in the reimbursement schedule on the Kela website (in Finnish).
• Information about disability benefits can also be found on the Kela website.

There are several options available to support and finance one’s studies. It’s advisable to research in advance which option best suits one’s situation.

Adult Education Allowance: The Adult Education Allowance, granted by the Employment Fund, can be received for a total of 15 months during one’s career for one or more studies. Full-time studies can also be supported by applying for student financial aid from Kela. However, both benefits cannot be received for the same period. The Adult Education Allowance and student financial aid differ in terms of conditions, amount, and duration. Additionally, low-income students may be eligible for general housing allowance, as discussed in Chapter 8 of this guide.

Apprenticeship Training: Studies can also be pursued in the workplace in connection with practical work tasks. With apprenticeship training, one can complete a vocational qualification either entirely or partially, either as an employee or in one’s own company. The employer pays wages for the duration of the apprenticeship training.

Self-Directed Study while on Unemployment Benefits: Even when unemployed, one can study. Self-directed study is a service that promotes employment, and during this period, one can receive increased unemployment benefits. Additionally, unemployment benefits can be received during vocational training.

5.1 Adult education allowance can be received for up to 15 months

Full-time employees can receive adult education allowance for the period of part-time or full-time study leave, and full-time entrepreneurs can receive support to compensate for the decrease in income due to studies. The adult education allowance is granted by the Employment Fund. Grant recipients cannot receive adult education allowance.

The allowance is divided into the employee’s adult education allowance and the support intended for entrepreneurs. The conditions for granting the allowance are stipulated in the Adult Education Benefits Act. In the case of freelance workers, the conditions for granting the allowance may not be met. For example, if a fixed-term employment ends before the start of the education, adult education allowance cannot be received. The allowance can be utilized for one or more courses during the career for a total of 15 months of support.

Adult education allowance can be granted for, among other things, completing a degree or part of a degree at universities, universities of applied sciences, and vocational institutions, as well as for vocational supplementary training. Additionally, adult education allowance can be granted for liberal adult education, which enhances professional skills and competence.

Adult education allowance can be received for education if:

• At least eight years of pension-insured work time has been accrued.
• Full-time employment with the current employer or self-employment covered by YEL or MYEL insurance has lasted for at least one year.
• The individual resides in Finland and is covered by Finnish social security.
• There are no other benefits that prevent the payment of adult education allowance, such as Kela’s study grant or unemployment benefit.

Furthermore, the entrepreneur’s education must be full-time, taxable business income must decrease by at least one-third due to the education, and income from sources other than the business and statutory benefits can only be three-quarters of the amount of the support to be paid. The entrepreneur must complete an average of at least three study or competence points per support month.

For employees, they must take partial or unpaid study leave or similar leave from their work and complete studies averaging either four or two study or competence points per month, depending on the amount of other income received during the support month.

The entrepreneur’s adult education allowance is EUR 660.91 per month in 2023. For employees, the adult education allowance is an earnings-related benefit, consisting of a basic component and an earnings component calculated based on salary income for the 12-month period prior to submitting the initial application. If the employee has been absent from work due to illness or studies, the review period may be extended. Recipients of adult education allowance can also apply for government guarantees for student loans and general housing allowance from Kela.

Employees can apply for adult education allowance once they have been accepted into the education program and the employer has granted study leave. Entrepreneurs can apply for support once they have secured a place in the study program. Support can also be applied for retroactively for up to six months prior to the application month, even after the start of the studies.

5.2 Student financial aid ensures income during studies

Kela provides student financial aid for full-time post-primary studies lasting at least two months. Kela’s student financial aid can be received for university studies, vocational studies, upper secondary studies, some private educational institutions, and studying abroad. Additionally, it can be received for adult basic education and preparatory training for qualification studies. The duration for which student financial aid can be received varies.

The eligibility criteria for student financial aid include full-time study, progress in studies, and financial need. Student financial aid includes a study grant, a government guarantee for student loans, and for some students, a housing supplement. Until July 31, 2023, the amount of the study grant for those aged 18 and over living away from their parents’ home is EUR 268.23 per month, except for a guardian of a minor child, who receives EUR 385.40 per month with the guardian’s supplement. Additionally, students can receive a state-guaranteed student loan of EUR 650 per month.

Housing supplement for student financial aid can be received under certain conditions only by students studying abroad or in Åland, as well as those studying at folk high schools, sports training centers, or the Saami Education Center in Finland. Otherwise, students may be eligible for general housing allowance.

The amount of taxable income according to the Income Tax Act affects how many months per year a student can receive student financial aid. Income earned abroad is also taken into account. This applies to entrepreneurs as well, so the amount of student financial aid is not affected by the YEL income but by the amount of taxable earned and capital income established in personal taxation, such as the business income for sole proprietors. Similarly, taxable grants, scholarships, and copyright royalties are considered in the income monitoring of student financial aid, while tax-exempt grants are not.

Kela compares the student’s income during the year to the annual income limit, which is determined based on how many months the student receives student financial aid per year. In 2023, the income limit is EUR 18,720 if the student receives student financial aid for nine months a year. The student must ensure that the annual income does not exceed the annual income limit. The Tax Administration informs Kela of taxable income. If the income exceeds the annual income limit, Kela sends the student a proposal for recovery.

Student financial aid can be applied for once the study place has been confirmed. Support can be received no earlier than the beginning of the month in which the application is received by Kela. Therefore, support cannot be applied for retroactively.

5.3 Apprenticeship training is vocational education

Apprenticeship training is primarily practical training carried out in the workplace, based on a fixed-term employment relationship. Competence acquired in the working life is supplemented as needed in other environments, such as educational institutions or online learning environments. An appointed workplace instructor guides the student in the workplace. The employer pays the student a salary according to the collective agreement. The average weekly working hours must be at least 25 hours.

Entrepreneurs also have the opportunity to train through apprenticeship. In this case, the learning environment is their own business, and the entrepreneur’s workplace instructor can be another entrepreneur, for example. Entrepreneurial income can be earned normally during the apprenticeship. Working on a grant does not entitle one to apprenticeship training.

Through apprenticeship training, one can complete a full vocational qualification, a part of a qualification, or smaller units of a qualification. The training provider is responsible for individualizing the study plan, monitoring progress, and drafting and monitoring agreements. The training provider and the employer make an agreement on organizing the apprenticeship training. The employer and the student sign the apprenticeship contract, or alternatively, the contracting parties are the studying entrepreneur and the training provider.

During teaching that does not take place at the workplace or in the company, students may receive a daily allowance as compensation for loss of earnings, as well as accommodation and travel allowances. The amount of the daily allowance is EUR 15 per day. Additionally, a family allowance of EUR 17 per day can be granted if the student has a dependent child under 18 years old, and an accommodation allowance of EUR 8 per day.

The training provider may reimburse the employer or the person supervising the entrepreneur, or the employer of this person, if the guidance of work-based learning is deemed to incur costs.

5.4 Unemployment benefit can also be used for studying

Self-motivated study is a service aimed at promoting employment, which individuals aged 25 or over can use to incorporate various types of education, such as vocational or higher education aimed at a degree or additional and supplementary education at a university. Self-motivated study can be started as soon as unemployment begins. However, the training must be full-time and improve professional skills and job opportunities.

The need for training is assessed by the TE Office (Employment and Economic Development Office). When training is included in the unemployed person’s employment plan, an increased unemployment benefit is paid for up to 24 months per study unit. Basic education can be supported for 48 months. However, self-motivated study is not supported by unemployment benefits if the employee resigns from work solely to start self-motivated studies.

Unemployment benefits are paid by Kela (Social Insurance Institution of Finland) or an unemployment fund as either unemployment allowance or labor market subsidy. The daily allowance paid consumes the maximum duration of unemployment allowance of 300, 400, or 500 days. If the studies are not supported by unemployment benefits for self-motivated study, a full-time student is not entitled to unemployment benefits. Unemployment benefits can be received for part-time studies if otherwise eligible. The TE Office determines whether the study is full- or part-time.

Unemployment benefits and expense allowances can also be paid during labor market training. The daily allowance paid consumes the maximum duration of unemployment allowance. Entrepreneurs can enroll in labor market training even if they have not yet terminated or definitively suspended their business activities. In this case, the entrepreneur can receive the basic amount of unemployment allowance or labor market subsidy. The TE Office organizes the labor market training and selects the students. The training is primarily intended for unemployed adults who have completed their compulsory education or are at risk of unemployment.

A freelance event producer and student shared their experience at the turn of 2021-2022: I’m studying for a music master’s degree and currently receiving general housing allowance of about 420 euros per month. I live alone in a rented apartment in Helsinki, and the allowance barely covers the rent. Apart from my studies, I do gig work, earning little income, but otherwise, I live on savings. I studied with Kela’s student financial aid, but the support months ran out. I received about 250 euros per month in student allowance and also took out a student loan of 650 euros per month. I thought it would be sufficient because the university had long summer breaks, and I had a large and well-paying employer during summers. Then the pandemic hit, and all event jobs were canceled for summers 2020 and 2021. In summer 2020, I applied for social assistance but did not receive it because I had money in an ASP account. However, that summer, I received unemployment benefits while laid off due to the pandemic, as it temporarily became possible for students, and in summer 2021, I received a COVID grant from the Arts Promotion Centre Finland (Taike). Before starting my studies, I had been a client of the TE Office for a few years and sometimes received adjusted unemployment benefits because the earnings from gig work were not always significant. I did not know about self-motivated study, i.e., the opportunity to study for two years with unemployment benefits when I started my studies. For me, it would have been about five times more than Kela’s student financial aid. I hope that the new degree would help me find more stable employment. I graduated in 2016 as a cultural manager and have received general housing allowance every month since then because my annual income has been so low.

5.5 Additional information on the topics in the chapter

• Information about student financial aid can be found on the Kela website, and information about adult education allowance can be found on the Employment Fund’s website.
• Details about apprenticeship training and learning in the workplace in general are provided on the Finnish National Agency for Education (Opetushallitus) website.
• The TE Services website offers information about self-motivated studies and labour market training.

For many gig workers, quiet periods where there’s very little or no work at all are familiar. During these times, one may be eligible for unemployment benefits, such as earnings-related daily allowance paid by an unemployment fund, basic daily allowance paid by Kela, or means-tested labor market support also paid by Kela.

The Unemployment Security Act recognizes three forms of work: employment under an employment contract, working as an entrepreneur, and equivalent work in one’s own business. Working on grants, for example, falls into the category of one’s own work.

To qualify for earnings-related or basic daily allowance, you must meet the employment condition. Entrepreneurs and employees have different employment conditions. Additionally, the employment condition for creative and performance work accrues differently than the employment condition for regular employees. Working on grants does not fulfill the employment condition.

If the business activity is full-time, it will prevent the payment of unemployment benefits. However, part-time entrepreneurs, on the other hand, are entitled to unemployment benefits under certain conditions. Unemployed individuals can also experiment with entrepreneurship under certain conditions without losing their employee unemployment benefits.

For a full-time entrepreneur who wants to receive daily allowance, the business must be completely terminated or employment in the enterprise must have ended. If there was a capital gain in connection with the closure of the business, it can postpone the start date of the daily allowance payment.

In 2023, the basic daily allowance is €37.21. The means-tested labor market support is up to the same amount. The earnings-related daily allowance consists of a basic component equal to the basic daily allowance plus an earnings-related component based on income.

You may receive a child increase with unemployment benefits, and benefits can be increased if you participate in employment-promoting services. One of the services is self-motivated study, which is discussed in Chapter 5 of this guide.

If you work gigs or part-time or receive occasional income while unemployed, your unemployment benefits can be paid adjusted accordingly.

6.1 Funds and Kela pay unemployment benefits

As an unemployed individual, you can receive either unemployment allowance or means-tested labor market support. Unemployment benefits include earnings-related daily allowance and basic daily allowance. An unemployed individual aged 18 to 64 years who:

• Resides in Finland
• Registers as a jobseeker
• Seeks full-time employment
• Is capable of working and available for the labor market
• Meets the employment condition.

Additionally, a 17-year-old may receive basic daily allowance or labor market support if they have completed their compulsory education or have interrupted it due to long-term illness. A person aged 65–67 may receive unemployment benefits during a layoff.

To register as a jobseeker, one must register with the TE Office or the municipality under the employment trial. Registration is done through the TE Services’ “Oma asiointi” service, so the individual doesn’t need to know whether they belong to the TE Office or the municipality. In employment trials, some of the tasks assigned to the TE Office for specific customer groups have been transferred to municipalities starting from March 1, 2021. Employment trials end on December 31, 2024.

If one is a member of an unemployment fund and meets the employment condition, they receive earnings-related daily allowance from the unemployment fund. For the earnings-related daily allowance, only the work done while being a member of the unemployment fund counts towards the employment condition. It’s not possible to join the funds while unemployed, but the work done at the time of joining doesn’t have to be permanent. Many cultural sector workers belong to A-Kassa, which began its operations at the beginning of 2022, when the Industrial Unemployment Fund, Construction Industry Unemployment Fund, and Unemployment Fund Finka merged.

If one is not a member of an unemployment fund but meets the employment condition, they receive basic daily allowance from Kela. If the employment condition is not met, they may receive means-tested labor market support from Kela under certain conditions.

Generally, unemployment benefits can be received for a maximum of 400 days. If one’s work history is up to three years, they can receive unemployment benefits for 300 days. If the employment condition is met only at the age of 58, unemployment benefits can be received for 500 days. From the beginning of 2023, a person who turns 55 may apply for transition security if their employment contract is terminated due to production or financial reasons and the employer has remained the same for at least five years. Transition security includes transitional allowance, the right to education, and longer-than-usual employment leave.

Before the unemployment fund or Kela can pay unemployment benefits or labor market support, they must obtain a labor market policy statement from the TE Office or the municipality, stating whether there are any obstacles to the payment of unemployment benefits. Obstacles may include not seeking full-time employment or being primarily self-employed. For these reasons, it’s important to register with the TE Office or the municipality specifically as a full-time job seeker and not to impose any obstacles.

As an unemployed individual, one can earn up to EUR 300 per month or EUR 279 per four weeks in employment, self-employment, or one’s own work without affecting unemployment benefits. This is referred to as the earnings disregard limit.

6.2 The employment condition can be fulfilled even without continuous employment

For an employee, the employment condition is fulfilled when:

• The unemployed individual has been in paid employment for 26 weeks during the 28 months preceding the unemployment period.
• The working hours have been at least 18 hours per week, except in the teaching sector and certain situations in creative and performance professions where there are specific regulations.
• The salary for full-time work has been according to the industry’s collective agreement, or if there is no collective agreement in the industry, the salary has been sufficiently high, at least EUR 1,331 per month in 2023.

The required 26 weeks of employment for the employment condition do not have to be continuous. The necessary 26 work weeks can be collected in pieces, one week at a time. It is essential that the 18-hour weekly work requirement is met within a calendar week. The calendar week starts on Monday and ends on Sunday.

In creative and performance sectors, the employment condition is assessed based on weekly earnings rather than weekly hours. In a job where creative or performance work is essential, each calendar week during which the individual earns taxable income of at least EUR 1,331 per month in 2023 is counted towards the employment condition. This means EUR 309.53 per week. Therefore, whether, for example, a musician works for 15 minutes or 50 hours per week is not relevant in this case.

Exceptions include teachers, for example. For teachers, half of the weekly working hours of a full-time hourly teacher in the field can be accepted as meeting the weekly hour requirement, which could be, for instance, 16 hours. Therefore, eight hours may suffice. Additionally, a teacher’s employment condition can be considered fulfilled when the agreed weekly working hours in the employment contract meet the hourly requirement, even if the actual work hours fall below the hourly threshold in some weeks. In other sectors, average weekly working hours are not usually taken into account.

All gig work is counted towards the employment condition. For example, if someone earns EUR 200 from a musician gig and works four hours of teaching in the same week, the week fulfills the employment condition, even if neither job alone would be sufficient to fulfill it. It is advisable for those doing short gigs and working different hours per week to keep a work diary, noting both working hours and unpaid periods. This is of great help when examining the employment condition and calculating the amount of daily allowances.

Usage fees paid by copyright organizations are not included in the employment condition because they are not paid for work and therefore no unemployment insurance contributions are paid on them. Similarly, working on a grant does not count towards the employment condition.

Once the employment condition is acquired, it remains valid even if there are periods of unemployment between jobs. If one is out of the labor market without a valid reason for more than six months, they are not entitled to unemployment benefits until they fulfill the employment condition again. Valid reasons include illness, full-time studies, and a period on a grant.

6.3 A full-time entrepreneur cannot receive unemployment benefits

In full-time entrepreneurial activities, individuals are not entitled to unemployment benefits even if there is occasional or limited work. Therefore, unemployment benefits cannot cover the risk associated with entrepreneurship. However, part-time entrepreneurs have the right to unemployment benefits. A person engaged in full-time entrepreneurial activities is considered to have a barrier to accepting full-time work. If a job seeker indicates that they are continuously engaged in entrepreneurial activities and seeking new clients, their activities may be considered full-time.

Generally, taking out YEL insurance implies that the TE Office considers the applicant a full-time entrepreneur unless proven otherwise. However, entrepreneurial activities may be so small-scale that the entrepreneur is not obligated to take out YEL insurance. Insurance must be taken out if specific criteria are met, and the earned income exceeds the annually determined minimum amount, which was EUR 8,575.45 in 2023.

According to the TE Office’s guidelines, a billing service company is not considered an employer if it only provides information on work-related marketing, billing, and accounting. In this case, it is considered that the individual using the billing service is engaged in entrepreneurial work. The TE Office must assess whether entrepreneurship is full-time or part-time. The employment condition for an entrepreneur with YEL insurance is the same regardless of whether they use a billing service or not. According to the TE Office’s guidelines, the regulations regarding billing services do not apply to work cooperatives where work is done on behalf of the cooperative. Billing services are not work cooperatives.

A gig worker can have consecutive and overlapping gigs as both an entrepreneur and an employee. In such cases, the TE Office assesses on a case-by-case basis whether the person is primarily or secondarily engaged in entrepreneurial activities. The decision is based on evidence provided regarding the nature and quantity of work engagements and insurance coverage. Regardless of the individual’s place of residence, the Uusimaa TE Office’s unemployment security department provides a labor market policy statement on whether entrepreneurship is primary or secondary.

In practice, it is challenging to demonstrate that entrepreneurial work is secondary unless the individual has been engaged in employment fulfilling the employment condition for at least six months alongside entrepreneurial work. In the absence of other evidence, it is possible that the person will be deemed a full-time entrepreneur.

However, a person can engage in full-time entrepreneurial activities for 14 days without affecting the determination of whether they are considered full-time or part-time entrepreneurs. This allows individuals to accept individual gigs for up to 14 days without the fear of losing unemployment benefits. It is unclear whether there can be one day of unemployment in between, after which the person can again undertake a gig lasting up to 14 days. The TE Office may assess that, overall, the person is considered a full-time entrepreneur rather than an unemployed job seeker if gigs are performed regularly.

Entrepreneurial activities can also transition from full-time to part-time, allowing the entrepreneur to receive unemployment benefits if other conditions are met. However, these situations are strictly defined in the Unemployment Security Act and are relatively rare in practice. Full-time entrepreneurial activities are considered to have transitioned to part-time mainly in the following situations:

• The entrepreneur has studied full-time, and studies have progressed normally, lasting at least six months during the entrepreneurial activity.
• The entrepreneur has been simultaneously engaged in full-time employment for at least six months.
• The entrepreneur has fulfilled the employee’s 26-week employment condition during the entrepreneurial activity.

If the business expands after unemployment begins, the entrepreneur is obligated to report it to the TE Office, and the TE Office must assess whether the activity is still considered part-time.

6.4 An experimental entrepreneur may not necessarily lose their unemployment benefits

If an unemployed individual starts a business and becomes unemployed again before the business has lasted for more than 18 months, the basis for calculating unemployment benefits remains the same as when the individual started the business. Therefore, members of an employee’s unemployment fund continue to pay contributions as usual during the post-protection period. If the business ends within 18 months, the individual can receive unemployment benefits from the employee’s unemployment fund. However, this does not contribute to the entrepreneur’s employment condition.

A starting entrepreneur can also join the Entrepreneur Fund. If the business ends within 18 months, the Entrepreneur Fund pays the employee’s daily allowance. Only membership in the Entrepreneur Fund contributes to the entrepreneur’s employment condition. Post-protection unemployment benefits are only paid if the individual has not yet fulfilled the employment condition as an entrepreneur in the Entrepreneur Fund, has been in business for less than 18 months, or the employment condition fulfilled in the employee’s unemployment fund is valid.

If an unemployed person becomes an entrepreneur, the business does not affect unemployment benefits in the first four months except through income. After four months, the TE Office investigates whether the business is full-time and thus prevents the payment of unemployment benefits in the future. This method of starting a business can only be done once per unemployment benefit period.

A freelance worker in the arts sector who worked both as an entrepreneur and in employment stated at the turn of 2021–2022: I established a sole proprietorship in 2016 and started working as an art instructor. I applied for start-up support, which required full-time entrepreneurship. When the start-up support ended, I also worked part-time as an employee. I was in full-time employment for one year. After that, I decided to continue in my own business and was able to work as an entrepreneur full-time from the fall of 2019. Then came the pandemic, and all work was canceled. I threw in the towel and registered with the TE Office. I was fortunate to receive earnings-related daily allowance based on post-protection because my employment had ended less than 18 months earlier, and I still belonged to the employees’ unemployment fund. I did not close my sole proprietorship but canceled the YEL insurance, and my employment in the company was considered terminated. After four months of unemployment, I started postgraduate studies at the university and thus lost my unemployment benefits. At the same time, I started doing some assignments as an entrepreneur again. Now I am in full-time employment in one project, but occasionally I do small projects with my sole proprietorship. I often wonder if I should completely close my sole proprietorship and stick to being solely an employee to keep things clear.

6.5 If you close your business, you may be eligible for unemployment benefits

An entrepreneur who has been self-employed full-time can receive unemployment benefits from Kela or the Entrepreneur Fund if the business has been completely closed or employment in the company has ended.

An entrepreneur working full-time can insure themselves with the Entrepreneur Fund. The YEL insurance must be taken out for a minimum of EUR 14,088 in 2023 to join the fund. If working as a part-time entrepreneur, insurance can be taken out based on the main occupation from any employee unemployment fund. So, not all income can be insured if working both as an employee and an entrepreneur.

A person who has been self-employed full-time is considered to continue to be employed until the time when the company’s economic and production activities have completely ceased. Your own notification to the TE Office of the end of your business and the termination of the YEL or MYEL insurance can be considered sufficient. The company does not need to be removed from the trade register.

To receive a daily allowance, you must register as a job seeker with the TE Office or, as a municipal trial customer, with the municipality, where the termination of the business or employment is investigated. The documents proving the termination of the business must be submitted to the TE Office or, as a municipal trial customer, to the municipality. The business is considered completely closed also when the company has been placed in bankruptcy or liquidation, or if an agreement has been made among the partners to dissolve the company, or if it is otherwise evident that the company’s production and economic activities have ended.

However, the complete cessation or interruption of the entire business is not required in the following cases:

• The primary employment has been occasional, for example, as a family member of the entrepreneur.
• Work capacity has been permanently and substantially reduced, the maximum period of sickness allowance has expired, and an application for disability pension is pending or has been rejected.
• The employment relationship of a person equivalent to an employee, such as a radio journalist, has ended.
• The business is seasonal due to natural conditions, for example, operating a summer kiosk, and the income is not sufficient for the whole year.

In order to receive unemployment benefits, the entrepreneur must also meet the employment condition. If the condition is not met, under certain conditions, you can receive need-based labor market support from Kela.

The entrepreneur’s employment condition is met when the entrepreneur has been in business for at least 15 months in the four years preceding the unemployment, and the business activity has been so extensive that the annual income forming the basis for the YEL insurance is at least €14,088 in 2023. For the basic daily allowance, the entrepreneur’s employment condition can include both entrepreneurial activities and work included in the employee’s employment condition for the last 28 months.

All entrepreneurship periods lasting at least four months are included in the employment condition. Work done by the entrepreneur while receiving partial sickness allowance is not included in the employment condition, and the employment condition is not met during sickness allowance, parental benefits, childcare for a child under 3 years of age, or full-time studies.

The four-year review period can be extended by up to seven years. The extension is made if the reason for absence from the labor market is one of the following:

• illness, institutional care, or rehabilitation
• military service or civilian service
• full-time studies
• birth of a child or care of a child under 3 years of age
• grant period
• another reason comparable to these.

If you have worked while receiving partial sickness allowance or have participated in employment-promoting services, the review period is extended accordingly.

6.6 Selling a business and capital gains affecting benefit entitlement

If the last full fiscal year’s balance sheet of the business, after subtracting liabilities, exceeds EUR 20,000, Kela or the unemployment fund will investigate whether there has been any capital gains left upon discontinuing the business. The capital gains declaration form must be submitted to Kela or the unemployment fund when applying for unemployment benefits.

If capital gains are present, it will delay the start date of benefit payments. The capital gains will be distributed according to the period of time the income from the sale corresponds to.

Capital gains are not taken into account if the business has ended in bankruptcy, if the individual has been self-employed for a maximum of 18 months, or if the last full fiscal year’s balance sheet of the business, after subtracting liabilities, is no more than EUR 20,000. Capital gains are also not taken into account if the business has not ended but the individual’s employment in the business has terminated for one of the following reasons:

Permanent or substantially reduced work capacity, the maximum period for sickness allowance has been reached, and a disability pension application is pending or has been rejected.

The individual is a self-employed person equivalent to an employee, and the commission relationship has ended.

The business is seasonal due to natural conditions, and the production season has ended.

6.7 Full-time grant work does not entitle to unemployment benefits

Grant work is considered self-employment under the Unemployment Security Act, similar to full-time entrepreneurship. Therefore, those employed full-time in grant work are not entitled to unemployment benefits. The responsibility area for unemployment benefits at the Uusimaa TE Office determines the full-time nature of self-employment.

Unemployed individuals must report receiving a grant to the TE Office. Grant work is considered to begin when the grant recipient declares starting work. The payment schedule for the grant is agreed upon with the grant provider. In the absence of other evidence, work is considered to have started on the day the grant was available for withdrawal according to the payment plan made with the grant provider.

The start date can be postponed if the grant recipient cannot start work immediately due to reasons beyond their control. In such cases, the TE Office must be provided with a certificate from the party responsible for the project, explaining the delay in the start date. Other reasons for delaying the start of grant work may include planned field research periods, work periods or visits abroad, or periods of illness. If the grant decision does not specify the duration of the grant work, the applicant must provide their own account of the duration of the grant work to the TE Office. The work plan presented in the grant application may serve as the necessary evidence of the duration of the grant period. Therefore, it is important to carefully consider the work plan and duration of work in the grant application. Alternatively, the evidence may include proof of completion of work, such as holding a premiere or submitting a manuscript.

6.8 Many factors affect the amount of unemployment benefits

The amount of basic daily allowance paid by Kela is EUR 37.21 in 2023. The full labor market subsidy is the same as the basic daily allowance, but the labor market subsidy is subject to need-based assessment, taking into account the individual’s need for financial support. Therefore, factors such as capital income also affect its amount.

The earnings-related daily allowance consists of a basic component equal to the basic daily allowance and an earnings-related component based on the individual’s earnings. The earnings-related daily allowance for an employee is calculated based on the earnings of the preceding 26 weeks of unemployment. For example, royalties paid by copyright organizations do not increase the earnings-related daily allowance.

In addition to the basic or earnings-related daily allowance and the labor market subsidy, a child supplement is provided if the unemployed individual has children under 18 years of age. The amount of the child supplement in 2023 is EUR 7.01 per day for one child, a total of EUR 10.29 per day for two children, and a total of EUR 13.26 per day for three or more children.

Unemployment benefits can be received at an increased rate if the individual participates in employment-promoting services. The amount of the additional allowance in 2023 is EUR 5.29 per day. The increased earnings-related component is paid for up to 200 days for the duration of the service. Payment of the increased earnings-related component requires that the service has already been agreed upon in the employment plan. Employment-promoting services include job search training, career coaching, trials, rehabilitative work activities, labor market training, self-directed study, and self-directed study under the Act on the Promotion of Immigrant Integration.

6.9 Unemployment benefits can also be received with earnings taken into account

Unemployment benefits are paid with earnings taken into account if, during the adjustment period, the individual earns income from part-time work or full-time work lasting up to two weeks, or from part-time business activities. It does not matter when the work is performed. Adjustment means that half of the income earned during the unemployment period, exceeding EUR 300 per month or EUR 279 per four weeks, is deducted from the full unemployment benefit. The adjustment period is determined based on the pay schedule.

An individual employed in part-time work may receive adjusted unemployment benefits if the working hours are up to 80 percent of the working hours of a full-time job as defined by law or a collective agreement. In practice, this limit means four standard workdays per calendar week.

Temporary gig work in creative and performing arts sectors typically does not have regular weekly working hours based on collective agreements because, due to the nature of performing arts gig work, it cannot be performed part-time in the same sense as, for example, office work. Therefore, for example, an evening gig for an actor constitutes a temporary employment contract for one day. A theater engagement for an actor, on the other hand, is, for example, a contract for the duration of a play’s performance season, during which the periods between workdays, i.e., performances and rehearsals, entitle them to adjusted unemployment benefits.

A gig or fixed-term employment contract considered full-time work can last up to two weeks for eligibility for adjusted benefits. In the creative and performing arts sectors, there can be a maximum of four individual gigs per calendar week. A gig or fixed-term employment contract considered full-time work lasting more than two weeks interrupts unemployment, and no unemployment benefits are paid for that period. However, the earnings from full-time work lasting more than two weeks do not affect the unemployment benefits paid between gigs, so full benefits can be received during those periods.

Unemployment benefits are generally paid for five days per week. Part-time or gig work lasting up to two weeks does not reduce the number of days paid, but the amount of unemployment benefits paid per day decreases. However, the maximum duration counter for unemployment benefits accumulates based on the amount of adjusted unemployment benefits paid. The total adjusted unemployment benefit received together with earned income must not exceed 90 percent of the wage used to calculate the full unemployment benefit.

It is not mandatory to always apply for adjusted unemployment benefits, but it can be beneficial even if at times one’s earnings seem sufficient and one expects a negative decision. In that case, there is no need to provide documentation for the period not applied for afterwards. The applicant must always clarify what they have done between application periods so that the accumulation of work history can be monitored.

A gig worker receiving adjusted unemployment benefits can accrue work history. When 26 weeks of work history have accumulated, the amount of the benefit is recalculated based on the earnings from these weeks. At the same time, the waiting period is reset, and the maximum duration counter for unemployment benefits is reset to zero. The waiting period is five full workdays, which can also accumulate from partial workdays. The waiting period is not reset if it has been set within the past year, but the maximum duration counter is always reset when the work history requirement is met.

Royalties are not taken into account in the adjustment of unemployment benefits from the beginning of 2023 onwards. Therefore, they do not reduce the adjusted benefit.

A musician who primarily works on temporary contracts shared their experience at the turn of 2021-2022: When the pandemic chaos began and musicians’ work was prevented by official decisions and COVID restrictions, I applied to the TE Office for an assessment of my unemployment situation. The everyday life of a freelance musician like me involves many temporary job contracts. However, when I called the TE Office and started explaining my situation, they told me I was considered a business owner. I submitted a written application very carefully. I emphasized that the job contracts are often based on the employer informing when there’s work available, meaning the amount of work is not necessarily known when agreeing to work. In the application, I stressed that work had been prevented by restrictions and that I would be available at all times if work could be arranged. There was no request for additional clarification, and fortunately, I eventually received a positive decision. Since I belonged to an unemployment fund, I received earnings-related benefits. I was unemployed for about two months. When restrictions were eased, there were some gigs available, so I ended my unemployment. I am also fortunate to have a 40 percent part-time position as an official in an organization all along. That’s why I received adjusted benefits. My full daily allowance would have been EUR 117, but because of partial employment, half of the amount exceeding the EUR 300 protected amount was deducted. My adjusted daily allowance was EUR 72, and I also received a child supplement.

6.10 Additional information on the topics in the chapter

• For more information about unemployment benefits, you can visit the website of the Social Insurance Institution of Finland (Kela), as well as the labor market service provided by the Centre for Economic Development, Transport and the Environment (KEHA) and the Ministry of Economic Affairs and Employment called Työmarkkinatori.
• Työmarkkinatori also provides information about the municipal trial on employment.
• Information about unemployment funds can be found on the website of the Unemployment Funds Joint Organization. There, you can also find contact information for all unemployment funds.
• Information about the Unemployment Fund (A-kassa) can be found on its own website.
• For information about the impact of a company’s capital gains on the payment of daily allowances, you can read more on the website of the Entrepreneur Fund (Yrittäjäkassa).

In Finland, there are two complementary pension systems: the earnings-related pension system and the national pension system. Earnings-related pensions are earned through employment, self-employment, or in one’s own work, for example, through grants. If necessary, earnings-related pensions are supplemented by national pensions and guarantee pensions, which ensure a minimum income. Most retirees receive earnings-related pensions.

The name of the pension that begins at a specific age is old-age pension. The year of birth determines when one can retire on old-age pension.

Partial old-age pension and career pension provide flexibility in retirement. The age limits for these pensions are also determined by the year of birth. Partial old-age pension can be applied for by anyone, whereas career pension is intended for situations where one has worked for at least 38 years in physically demanding or wearing occupations and their work capacity has declined.

Transitioning to retirement may become necessary earlier than planned if illness or disability reduces work capacity. If illness or disability has reduced work capacity for at least a year, one may be eligible for rehabilitation allowance, partial rehabilitation allowance, disability pension, or partial disability pension. However, when work capacity decreases, the primary step should be to seek rehabilitation.

Additionally, under certain conditions, survivor’s pension may be paid to a widow, widower, former spouse, or children, ensuring financial support after the primary caregiver’s death.

In 2022, the average age of retirement was 62.2 years. This figure includes everyone except those who transitioned to partial old-age pension or receive survivor’s pension.

7.1 Old-age pension starts at a specific age

In Finland, one can retire on old-age pension no earlier than the minimum retirement age for their own birth cohort. For example, those born in 1958 can retire at the earliest at the age of 64. The minimum age increases gradually according to the year of birth, and for those born in 1965 or later, the minimum age is tied to life expectancy and has not yet been confirmed by law. According to an estimate made at the beginning of 2023, those born in 2003 may retire at the earliest at the age of 68 years and nine months.

To receive old-age pension, one must reach the minimum retirement age, apply for the pension, and possibly end any employment. However, one does not have to retire immediately upon reaching the minimum age. The longer one works and delays retirement, the larger their pension will be. The old-age pension is increased by a 0.4 percent deferral increment for each month beyond the minimum age.

The pension record includes a target retirement age, indicating until when the pension should be deferred to receive it in full. In this case, the deferral increments compensate for the life expectancy coefficient’s reducing effect on the pension. However, the target retirement age is not calculated for those born in 1987 and later because it would exceed the upper age limit for insurance obligation set by law, which is 70 years. The minimum retirement age and the target retirement age for one’s own birth cohort can be determined, for example, using the calculator on the työeläke.fi website.

The life expectancy coefficient was introduced in 2010 due to increasing life expectancy. It essentially spreads the same pension amount over a longer lifespan. For example, based on the coefficient for 2023, the pension of someone born in 1961 decreases by about six percent. The purpose of the life expectancy coefficient is to incentivize longer working careers. It applies to all pensions paid as earnings-related pensions except for survivor’s pensions. In the case of disability pension, the coefficient only affects the portion of the pension accrued by the onset of disability.

The old-age pension consists of the pension accumulated throughout one’s entire working career. The pension accrual is influenced only by the laws in force during the validity period of the respective pension acts. All these accumulations contribute to the pension eventually paid out. The average pension in 2021 was EUR 1,784 per month.

7.2 Partial old-age pension and work history pension provide flexibility

Those born in 1963 or earlier can apply for partial old-age pension at the earliest at the age of 61. For those born later, there is an opportunity for partial old-age pension three years before their own minimum retirement age.

Partial old-age pension does not have any restrictions on employment, meaning that employees, entrepreneurs, or grant recipients can continue working as usual, reduce their work hours, or even stop working altogether. One can receive either 25 or 50 percent of the accrued pension up to that point. However, this portion is reduced by 0.4 percent for each early retirement month, i.e., 4.8 percent per year until reaching the minimum retirement age. This reduction permanently decreases the future old-age pension.

On the other hand, work history pension is available to individuals who have worked for at least 38 years in physically demanding or wearing work and whose work capacity has decreased due to illness, impairment, or injury. Work history pension requires a minimum age of 63, and for those born in 1965 or later, work history pension can be granted only two years before the minimum retirement age for their own birth cohort. The work history pension is equal to the accrued pension up to that point. One can work alongside it and earn up to a certain euro limit. In 2023, this limit is EUR 922.42 per month.

The application for work history pension requires a doctor’s B-statement as well as the latest employer’s description of the current job and working conditions. Entrepreneurs and grant recipients can write the description themselves. The individual’s pension institution makes a decision based on the application. Work history pension does not require the same level of diminished work capacity as obtaining a disability pension. The pension institution also investigates whether the criteria for disability pension are met.

7.3 Vocational rehabilitation or disability pension?

Income is secured through a disability pension if incapacity for work results in the loss of earnings, either wholly or partially, for at least a year. Before granting a disability pension, rehabilitation opportunities and prerequisites for returning to work are explored.

Employees, entrepreneurs, and grant recipients have the right to vocational rehabilitation funded by pension institutions if incapacity for work is likely to occur within the next five years, if insured earnings reach a certain level, and if rehabilitation is deemed appropriate. The goal of vocational rehabilitation is to assist in continuing work for a longer period or returning to work after a long sick leave.

Vocational rehabilitation may involve education, training, or work trials. The individual undergoing rehabilitation may be supported in acquiring a new profession if their ability to work in their current field has diminished. For example, a dancer who, due to health reasons, cannot continue dancing may train to become a dance teacher or a nursing assistant. During vocational rehabilitation, rehabilitation allowance is paid, which is calculated based on the disability pension increased by 33 percent.

Rehabilitation is managed either by Kela or by a pension institution depending on the situation. The responsibilities of pension institutions include assessing rehabilitation opportunities, planning rehabilitation in cooperation with the individual, implementing rehabilitation, and ensuring income during rehabilitation. If necessary, Kela evaluates the individual’s need for rehabilitation already during the sickness allowance period. Rehabilitation organized by Kela may complement the vocational rehabilitation provided by pension institutions. Kela may offer, among other things, demanding medical rehabilitation or adaptation training.

If work capacity is reduced by at least 60 percent for at least a year, one may receive full disability pension. If work capacity is reduced by at least 40 percent for a year, one may receive partial disability pension. Additionally, it is required that earnings have decreased by at least the same percentage as compared to the previous established average earnings. The decrease in earnings may be due to, for example, a reduction in working hours or transitioning to new, lighter duties. Partial disability pension is half of the amount of full disability pension.

The determination of disability is based on a physician’s B-statement regarding health status. When making a decision, remaining work capacity and the possibility of earning income are assessed in addition to medical factors. Age, education, previous work experience, living conditions, and family relationships are also taken into account. Disability pension may be granted under less stringent conditions for those over 60 years old. Instead of disability pension, a disabled individual who has reached retirement age receives old-age pension.

Before granting full disability pension, loss of earnings is usually compensated with sick pay and sickness allowance. Kela pays daily allowance for about a year for the same illness. When sickness allowance has been paid for 150 days, Kela informs when the payment ends and encourages exploring rehabilitation opportunities or applying for a pension. Disability pension payments begin from the month following the end of the sickness allowance period. Disability pension may be granted either for a fixed term or indefinitely. A fixed-term disability pension is called rehabilitation support, and a fixed-term partial disability pension is called partial rehabilitation support.

Disability pension consists of both the accrued pension and a portion of the future pension. The future pension portion refers to the calculated accrual, which is calculated from the beginning of the year when the person is found incapable of work until the end of the month when the person reaches the minimum retirement age. During this time, the pension accrues at a rate of 1.5 percent per year based on the previous established earnings. Established earnings are generally based on the earnings of the last five calendar years before becoming incapacitated for work.

Instead of a pension institution, rehabilitation allowance or disability pension is received from Kela if, due to illness, impairment, or injury, the individual is unable to perform work ensuring reasonable livelihood, and other pension income does not exceed the income limit entitling to national pension. In 2023, while receiving rehabilitation allowance or disability pension from Kela, one may earn up to EUR 922.42 per month without affecting the continuation of rehabilitation allowance or disability pension payments. If one earns more than this amount, payments are suspended.

Compulsory traffic and accident insurances are essential when a person becomes disabled or dies as a result of a traffic accident or accident. These compensations are often higher than what would be received under the pension laws. Compensations are primary, and usually, no pension is paid alongside them. Nevertheless, it is advisable for the disabled person to apply for a pension because if work capacity later improves, pension accrues for the period of disability.

7.4 The pension application is directed to the correct pension institution

When preparing to retire, you need to submit a pension application. You can submit the pension application electronically through the pension institution’s application service or on a paper form. With the same pension application, you can also apply for the national pension in addition to the earnings-related pension.

The pension decision is issued by the pension institution, and they are also responsible for paying the earnings-related pension and providing guidance on pension matters. The pension institution where the applicant has had the highest insured earnings over the last two calendar years is responsible for handling the pension application. However, the applicant does not need to know which specific pension institution that is, as the application is directed to the correct pension institution based on registry information. You can submit the pension application to any pension institution, the Finnish Centre for Pensions, a representative of the Farmers’ Social Insurance Institution (Mela), or a service point of the Social Insurance Institution of Finland (Kela).

Pensions may also have accrued from work performed abroad. You can apply for a pension from EU and EEA countries, Switzerland, and countries with which Finland has a social security agreement using the same application used for applying for a pension from Finland. Social security agreement countries are those with which Finland has concluded agreements on social security. Examples of such countries include the United States, China, and Australia. The content of these agreements varies, and they may not necessarily cover all pension benefits. Pensions from so-called non-agreement countries must be applied for independently, if such pensions are even paid abroad. More information about working abroad is provided in Chapter 9 of this guide.

7.5 You can work while retired

To qualify for old-age pension, you need to terminate your employment, but you can start a new job while retired. Pension accrues from work earnings at a rate of 1.5 percent per year up to a certain age: for those born in 1957 or earlier, up to age 68, for those born between 1958 and 1961, up to age 69, and for those born in 1962 or later, up to age 70. Once you reach this age, you can apply to receive the pension portion accrued from work done while retired.

Entrepreneurial activities do not need to cease upon retirement. Retired entrepreneurs can continue their business activities without restrictions and without a YEL insurance. However, no additional pension accrues from entrepreneurial activities in this case. Nevertheless, if desired, entrepreneurs can voluntarily opt for YEL insurance, allowing pension accrual at a rate of 1.5 percent of the annual earnings equivalent, similar to employment, up to a certain age. Similarly, individuals can work on grants while retired, but such grants do not contribute to pension accrual.

Those receiving pensions other than old-age pension should contact the pension provider if they wish to work alongside their pension. Generally, those on disability pension can earn 40-60 percent of their pre-disability income. The income limit depends on whether one receives full or partial disability pension. Work performed during disability pension accrues new pension entitlements at a rate of 1.5 percent of the employee’s annual income or the self-employed individual’s earnings from work or grants. In such cases, the employer must have employee pension insurance for their employees, while self-employed individuals must have YEL insurance and grant recipients must have MYEL insurance.

If disability pension payments are suspended or put on hold due to employment, the retiree must inform the pension institution when ceasing employment to resume pension payments. The pension can be put on hold for a minimum of three months and a maximum of two years at a time.

7.6 Additional information on the topics in the chapter

• Työeläke.fi website provides extensive information about occupational pensions, including various pension benefits and how to apply for them.
• You can determine your own age group’s minimum retirement age and target retirement age using the calculator on the Työeläke.fi website.
• On Kela’s website, you can find comprehensive information about the pensions and benefits provided by Kela for retirees.
• Essential pension information for grant recipients can be found on the Mela website.

A freelancer may find themselves struggling to make ends meet. If there’s little or no work available, it’s worth checking if you’re eligible for unemployment benefits. Information about them is provided in Chapter 6 of this guide.

Low-income earners may also qualify for housing assistance and social benefits. General housing allowance can be obtained if your income doesn’t cover housing costs. Social assistance is a last-resort economic aid belonging to social services, so other benefits should be sought first.

In 2023, temporary electricity assistance may be available due to the rise in electricity prices. Information about electricity assistance can be found on Kela’s website.

Financial and debt counseling from state legal aid offices can help with organizing finances. Additionally, welfare districts offer social credits to low-income and economically vulnerable residents, although it’s voluntary until July 31, 2023.

8.1 Low-income individuals can receive support for housing

General housing allowance is intended for low-income individuals or households whose incomes are insufficient to cover housing costs. Kela grants housing allowance to households collectively, usually for a period of one year at a time.

Households typically consist of individuals living in the same dwelling, but there are exceptions. For example, friends renting separate apartments under different lease agreements usually do not belong to the same household, but it’s Kela’s obligation to determine if cohabiting individuals may be in a common-law relationship. Married couples, on the other hand, may belong to the same household even if they live at different addresses, for example, due to work or study reasons. More information about households can be found on Kela’s website.

General housing allowance can be granted for housing expenses related to a permanent rental apartment, right-of-occupancy apartment, partially owned apartment, or owned apartment located in Finland. These housing expenses may include rent, share of ownership costs, as well as separate water and heating costs.

Housing allowance covers up to 80 percent of the maximum allowable housing expenses defined by law. For example, the maximum allowable housing expenses for a household of three people in Helsinki are 1,072 euros and in Oulu 828 euros in 2023. The amount of support depends on the household’s housing expenses, number of people, the municipality where the residence is located, and the total amount of gross monthly income. However, incomes are considered to be lower than reality, as a 300-euro deduction is made per month from the earned income, self-employment income, or grant income of each household member.

The income of a freelancer can vary greatly from month to month or from year to year. In such cases, the monthly income can be estimated by Kela as the average income for the upcoming 12 months.

Employee’s gross monthly income may include wages, car benefits, and overtime pay, for example. For self-employed individuals, income is based on the earnings covered by the self-employed pension scheme. If a self-employed person does not have YEL insurance, income is assessed based on the amount of start-up grant, minimum income, wage income, or self-assessed income. Working grants are also considered as income. However, grants intended for the purchase of instruments, for example, are not taken into account. Other types of income may include copyright royalties, unemployment benefits, and capital income, such as interest on deposits.

In addition to general housing allowance, there are three other housing benefits: housing supplement for pensioners, housing allowance for military assistance, and housing allowance for student financial aid recipients. More information about different housing benefits can be found on Kela’s website.

8.2 Income support covers basic living expenses

Income support is a person’s or a family’s last-resort social welfare financial assistance that covers basic living expenses. Last-resort means that other support and benefits for which one is eligible should be applied for first. These could include, for example, unemployment benefits, housing allowances, student financial aid, and pensions. Additionally, individuals or families should primarily support themselves with their own income and assets.

Income support consists of three different parts: basic income support, as well as supplementary and preventive income support.

Basic social assistance provided by Kela can be received if funds are insufficient to cover essential everyday expenses, such as food, clothing, rent, or medication. Support is applied for from Kela. Basic income support is not a fixed amount but is based on the individual’s or family’s income, assets, and expenses. When determining basic income support, the applicant’s or family’s net income and expenses are taken into account. Additionally, available assets, such as money in a bank account, are considered. Therefore, applicants for basic income support must be prepared to thoroughly assess their own financial situation.

Basic social assistance consists of a basic amount and other basic expenses. For example, the basic amount for a single person is EUR 555.11 per month in 2023. The basic amount is a fixed sum, and no separate verification is required for the expenses included in it. The basic amount covers, for example, food, clothing, self-medication, and telephone use. Additionally, support for other basic expenses defined by law can be received upon presentation of receipts. Further details on what other basic expenses can be considered in the calculation can be found on Kela’s website.

Supplementary or preventive income support provided by the welfare region’s social services can be received for certain specific expenses for which the welfare region is responsible at its discretion. Supplementary or preventive income support can be applied for using the same application as for basic social assistance. At the applicant’s request, Kela forwards the application to the welfare region for the processing of supplementary and preventive income support if the application seeks support for expenses not covered by basic social assistance. Supplementary or preventive support can also be applied for directly from the welfare region if a decision on basic social assistance has already been received from Kela, whether it is negative or positive.

Entrepreneurs can also apply for income support, but it is not intended to support unprofitable business activities. Entrepreneurs engaged in unprofitable business activities should primarily cease their business operations and apply for primary unemployment benefits.

8.3 Counseling and social loans can help in financial difficulties

State legal aid offices provide free financial and debt counseling to individuals and small-scale entrepreneurs. Counseling is confidential and provided by financial and debt advisors.

Counseling covers various areas such as financial planning, budgeting, and debt situations. Financial and debt advisors can, for example, assess a person’s financial situation, help create payment agreements, and provide guidance on applying for debt consolidation loans and debt restructuring.

One can contact legal aid offices even if they do not have debt. Finland has 23 legal aid offices, and they may have multiple branches. Counseling can be requested from any legal aid office. Counseling can be received through electronic services, by phone, through pre-booked face-to-face or remote meetings, via chat, and in some locations, through financial counseling centers. Financial counseling centers may have financial and debt advisors as well as experts from social services and enforcement agencies.

Welfare regions provide social loans to their residents, but until July 31, 2023, it is voluntary. However, welfare regions must provide social loans if a person has agreed to a social loan with the municipality before 2023 and the agreement is still valid. From August 1, 2023, welfare regions are required to provide social loans in their area. However, they have the option to decide on the extent of provision, the amount of credit capital, and the size of the loans based on local needs.

Welfare regions may grant social loans to low-income and financially disadvantaged individuals who do not have access to reasonably priced credit through other means but have the ability to repay the loan. Social loans can be granted, for example, for balancing household finances, breaking the cycle of debt, or purchasing household items. Information on social loans can be obtained from welfare regions.

8.4 Additional information on the topics in the chapter

• You can find more information about social assistance and housing benefits on Kela’s website, along with instructions on how to apply for them.
• The Ministry of Social Affairs and Health’s website provides information about social loans.
• For more information about financial and debt counseling, you can visit oikeus.fi. There, you can also find contact information for counseling services.

What happens to social security when work takes you abroad?

For many freelance workers, working in different countries is a part of everyday life. It’s advisable to clarify social security matters before going abroad with the Finnish Centre for Pensions (Eläketurvakeskus) and the Social Insurance Institution of Finland (Kela). Finnish citizenship or paying taxes in Finland does not automatically mean being covered by the Finnish social security system.

Social security in different countries is regulated by the EU’s social security regulations and bilateral social security agreements. Additionally, there are so-called countries without such agreements.

Generally, employees and entrepreneurs are covered by the social security system of the country where they work. However, in some cases, they may also be covered by the Finnish social security system. Grant recipients are treated similarly to entrepreneurs when working abroad, but grant recipients may not be insured abroad as comprehensively as entrepreneurs.

9.1 Social security is regulated by EU social security regulations and agreements

The EU social security regulation governs the statutory social security of individuals moving between EU member states. The regulation also applies to Switzerland and EEA countries, including Iceland, Liechtenstein, and Norway. The same practices are also followed in the United Kingdom. The regulation broadly covers social security, including health insurance, unemployment benefits, and pensions.

In some countries, the right to social security in another country is based on social security agreements. Finland has agreements with Australia, Chile, South Korea, India, Israel, Japan, Canada, China, Quebec in Canada, and the United States. The content of these agreements varies, but they all cover at least pension benefits.

The EU social security regulation and bilateral social security agreements aim to ensure that each individual belongs to the social security system of one country at a time.

Additionally, there are so-called countries without such agreements, such as Russia. If you work in a country without such an agreement, you may have to pay social security contributions in both the country of work and Finland, and yet social security coverage may be inadequate.

9.2 Employees are generally covered by the social security of the country where they work

In EU and EEA countries, Switzerland, the United Kingdom, and countries with which Finland has a bilateral social security agreement, employees are generally covered by the social security of the country where they work. In this case, social security contributions and entitlements are determined according to the laws of the country of work. Bilateral social security agreements do not cover all the same benefits as the EU social security regulation, and the content of the agreements varies by country.

However, in certain situations, an employee may be covered by Finnish social security even when working in an EU or EEA country, Switzerland, the United Kingdom, or a country with a social security agreement. This is the case if the employee goes abroad sent by a Finnish employer, is covered by Finnish social security when leaving Finland, and works abroad temporarily, depending on the country, for up to two to five years. For example, a musician may be covered by Finnish social security when touring in France or the United States for a month, sent by a Finnish booking agency. If the musician directly contracts with, for example, a French booking agency in France, the musician would be covered by French social security.

Additionally, there are specific rules for individuals working in two or more EU or EEA countries, Switzerland, or the United Kingdom. If a person works in their country of residence and elsewhere at the same time or alternately during the year, they usually belong to the social security of their country of residence. The number of employers does not matter. For example, if a musician performs at festivals in multiple EU countries throughout the year but has a permanent residence in Finland and regularly works in Finland, the musician may belong to the Finnish social security.

For employees working in an EU or EEA country, Switzerland, or the United Kingdom, an A1 certificate regarding Finnish social security coverage must be obtained from the Finnish Centre for Pensions, and a corresponding certificate for work in a country with a social security agreement. Certificates are applied for using the same application form regardless of the country. If a certificate is not applied for or cannot be issued, the employee is insured under the social security of the country of work.

The employer applies for the certificate on behalf of the employee, but if the employee has multiple employers in Finland and abroad, the employee can also apply for the certificate themselves. Additionally, employees working remotely abroad must obtain the certificate. The employer is always responsible for paying statutory social security contributions, regardless of whether the employee belongs to Finnish or the country of work’s social security.

With the A1 certificate, the employee receives a European Health Insurance Card (EHIC) from Kela. With this card, the employee can receive treatment for illnesses in EU or EEA countries, Switzerland, and the United Kingdom. Social security agreements, except for Australia, do not cover healthcare. If the dispatched employee is covered by health insurance, they receive the same Kela reimbursement for treatment received abroad as they would for equivalent treatment in Finland.

If an employee goes on a work assignment outside the EU and EEA countries, Switzerland, or the United Kingdom, to a country with which Finland does not have a social security agreement, the dispatched employee may be covered by both Finnish and the country of work’s social security. In this case, they may have to pay social security contributions twice, and yet the social security received may be inadequate. When going to a country without an agreement on a work assignment, both the employee and the employer each submit their own notification to Kela. When the notification is made in time before moving abroad, any benefits from Kela can continue uninterrupted for up to five years. Notification is also required when the work ends or when the country of work changes.

9.3 Social security agreements usually do not have rules concerning entrepreneurs

An entrepreneur is generally covered by the social security of the country where they work. However, there are exceptions. If an entrepreneur temporarily goes to an EU or EEA country, Switzerland, or the United Kingdom to work for up to two years, they can usually still be covered by Finnish social security. The condition is that the business has been operating and the YEL insurance has been valid in Finland for at least four months before going abroad. Similarly, an entrepreneur working remotely from abroad to Finland can, under the same conditions, be covered by Finnish social security.

For entrepreneurs working in an EU or EEA country, Switzerland, or the United Kingdom, they must apply for an A1 certificate from the Finnish Centre for Pensions as proof of their coverage by Finnish social security. If the certificate is not obtained, the entrepreneur must insure themselves under the social security of the country of work.

With the A1 certificate, the entrepreneur continues to pay their YEL contributions to a Finnish pension insurance company from abroad. Sickness allowances and parental allowances are determined based on Finnish YEL income. These benefits are paid to EU and EEA countries, Switzerland, and the United Kingdom. With the A1 certificate, the entrepreneur can also receive medical treatment in these countries if they have obtained a European Health Insurance Card (EHIC) from Kela.

For example, if a translator working as an entrepreneur in Finland moves to Italy for three years and continues to work for Finland from there, the translator can still be covered by Finnish social security if certain conditions are met. Working in an EU or EEA country, Switzerland, or the United Kingdom for more than two years requires a special permit and the consent of the country of work. An application for an exemption can be made with an A1 application form.

In EU and EEA countries, Switzerland, and the United Kingdom, there are separate provisions for situations where an entrepreneur works in two or more countries. If an entrepreneur resides in Finland and works in Finland plus one or more of these countries during the year, the entrepreneur may be covered by Finnish social security.

The situation becomes more complicated if an entrepreneur goes to work in a country with which Finland has a bilateral social security agreement or a country without an agreement. Bilateral social security agreements usually do not have rules concerning entrepreneurs. In such cases, the rules regarding entrepreneurs for Kela coverage apply according to the regulations for countries without agreements.

If an entrepreneur intends to work in a country without a social security agreement, they must notify Kela. The entrepreneur can keep their Finnish YEL insurance valid and be covered by Finnish social security if working in a country without an agreement lasts for less than a year, and the intention is to return to Finland thereafter. The YEL insurance must be terminated before leaving if it is known that working abroad will continue for more than a year.

9.4 Grant recipients going abroad are equated with entrepreneurs

There are no specific rules for grant recipients in the EU social security regulation and bilateral social security agreements. Therefore, when working abroad, grant recipients are equated with entrepreneurs. However, grant recipients are not insured abroad as extensively as entrepreneurs, as the concept of a grant recipient is not recognized in nearly all countries.

Finnish grant recipients working in an EU or EEA country, Switzerland, or the UK for up to two years can generally be covered by Finnish social security. When leaving, grant recipients must belong to Finnish social security and pay MYEL insurance throughout their work abroad. Grant recipients are not required to have four months of MYEL insurance before going abroad, as entrepreneurs are required to have YEL insurance.

Grant recipients working in an EU or EEA country, Switzerland, or the UK should apply for an A1 certificate from the Finnish Centre for Pensions as proof of their affiliation with Finnish social security. If the certificate is not available, grant recipients should insure themselves under the social security of the country where they work, if possible.

In some situations, social security can be maintained in Finland if the grant recipient moves to a country with a social security agreement. This is the case, for example, in the United States, if the grant recipient was immediately affiliated with Finnish social security before going to the US and takes out MYEL insurance for the period of work in the United States. Similar arrangements exist with other treaty countries where grant recipients may remain under Finnish social security.

If a grant recipient intends to work in a country without a social security agreement, social security matters should be clarified with Kela (the Social Insurance Institution of Finland).

9.5 Additional information on the topics in the chapter

• You can read more about the social security of those working abroad on the websites of Kela and the Finnish Centre for Pensions.
• On Mela’s website, information is provided about working abroad with a grant.