Why do you need an unemployment insurance fund as a self-employed person?
You may have been in contact with the unemployment benefit system and are therefore probably familiar with having an unemployment fund.
If not, an unemployment insurance fund is a state-supported association where paying members buy insurance against unemployment and can therefore also secure an income in the form of unemployment benefits.
As a self-employed person, it can be a challenge to assess whether an unemployment insurance fund is the right thing to prioritize, as your income can vary.
So why should you consider an unemployment insurance fund as a freelancer? And what can they do for you as a freelancer?
An easier freelance life with Factofly
Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 3,000 others with an everyday life without administration.
Unemployment insurance and self-employment - do they go hand in hand?
You probably didn't start your business with the expectation of becoming unemployed, but it can be beneficial to join an unemployment insurance fund anyway.
A-kasse is an abbreviation for unemployment fund, where you as a self-employed person pay a fixed fee to an unemployment fund in the same way as employees.
This membership fee secures you financially in case you have to close your business and become unemployed.
If you are not a member of an unemployment insurance fund, you can receive unemployment benefits, where the benefit paid out is significantly lower than the unemployment benefit rate. You can read more about unemployment benefits as a self-employed person in our previous post here.
Or if, for example, you get injured while working and can't keep your business running for a period of time, you can find out more about insurance as a self-employed freelancer here.
So why should you join an unemployment insurance fund as a self-employed person? We give you the pros and cons below.
An easier freelance life with Factofly
Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 3,000 others with an everyday life without administration.
Side job or main job?
When it comes to unemployment insurance funds for the self-employed, a distinction is often made between whether you are self-employed as a secondary or main occupation.
If your business is considered your main occupation, you cannot receive unemployment benefits unless your business is closed.
You are considered self-employed as a second job if you either start a business while receiving unemployment benefits or if you have run a business before you become unemployed.
In addition, if you have had at least 80 hours of paid work per month in the previous 6 months or have worked as an employee for at least one hour in five of the six months.
Whether you are self-employed as a secondary or main occupation is crucial when you are a member of an unemployment insurance fund in order to receive unemployment benefits or supplementary unemployment benefits.
Benefits of joining an unemployment insurance fund as a self-employed person
- Economic security:
As a self-employed person, it can be uncertain how much you'll earn from month to month - especially as a startup where it can be reassuring to be financially secure if your business turns out not to be profitable.
If you are self-employed and a member of an unemployment insurance fund, you can supplement your income up to the unemployment benefit rate.
You can read more about supplementary unemployment benefits here (in Danish).
As a member of an unemployment insurance fund, you are insured in the form of being able to receive unemployment benefits if your business should close.
- Advice:
Navigating the unemployment benefit system, rules for the self-employed and many other areas of self-employment can be difficult.
Several unemployment funds have set up departments specifically for members with their own business, where job counselors are available to guide the self-employed in relation to self-employment.
You can read more about advice here.
- Sparring and knowledge sharing:
Maybe you're stuck, need new ideas for your project or want to get some inspiration.
Many unemployment funds have meetings, webinars and events specifically for the self-employed.
Here you can learn more about creative processes for the self-employed, internships or being self-employed on unemployment benefits.
Read more about different events here.
An easier freelance life with Factofly
Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 3,000 others with an everyday life without administration.
Disadvantages of joining an unemployment fund as a self-employed person
Economy:
As with everything else in the world, including self-employment, benefits are not free, and neither is membership of an unemployment insurance fund.
Membership of an unemployment insurance fund costs between DKK 451/month and DKK 591/month, which can be expensive for the self-employed if money is already tight.
You can see an estimate of unemployment insurance membership prices here.
Unemployment fund rules for the self-employed:
If you are a member of an unemployment insurance fund as a self-employed person as a second job, you can receive supplementary unemployment benefits.
As mentioned, you can supplement your income up to the unemployment benefit rate.
However, it is required by law that you must also be actively seeking work as a self-employed person and participate in interviews and activities with your job center and/or unemployment fund.
In addition, as a self-employed person, you can receive unemployment benefits for a maximum of 30 weeks and must register all activity in your business on a monthly basis and submit it to your unemployment insurance fund.
However, if you are self-employed as your main occupation, you will have to close your entire business and your CVR number in order to receive unemployment benefits from your unemployment fund, after which you will be registered as full-time unemployed.
You can read more about main and second jobs here.
Time and mind power:
As you might imagine, being self-employed as a side hustle can take up a lot of time looking for work, being active in unemployment insurance and job center-related activities, and maintaining your own business at the same time.
If you are self-employed as your main occupation, however, the dilemma can be weighing up whether or not to close your business and your love child in order to be eligible to receive unemployment benefits.
Should you have an unemployment insurance fund as self-employed?
As with everything else in self-employment, joining an unemployment insurance fund is about weighing up whether it makes sense for your particular business and situation, and of course it's up to you to assess the pros and cons.
Does it give you peace of mind so you sleep better at night? Or is your business particularly fragile? Then the money for an unemployment insurance fund can be money well spent!
You could say that the financial uncertainty of self-employment can be all-consuming, and membership of an unemployment insurance fund can help minimize this.
On the other hand, being a member of an unemployment insurance fund comes with requirements and rules. As a self-employed person, you have to be looking for work as a second job and participate in employment-related activities if you want to receive unemployment benefits, which can be time- and energy-intensive and take time away from your own business.
If you are self-employed as your main occupation, your financial security will be tied to the fact that you are guaranteed the right to unemployment benefits if you choose to close your business.
Whether you are self-employed as a secondary or main occupation, membership of an unemployment insurance fund will give you the opportunity to get advice, sparring, new knowledge and to participate in company-relevant courses.
Why do you need an unemployment insurance fund as a self-employed person?
You may have been in contact with the unemployment benefit system and are therefore probably familiar with having an unemployment fund.
If not, an unemployment insurance fund is a state-supported association where paying members buy insurance against unemployment and can therefore also secure an income in the form of unemployment benefits.
As a self-employed person, it can be a challenge to assess whether an unemployment insurance fund is the right thing to prioritize, as your income can vary.
So why should you consider an unemployment insurance fund as a freelancer? And what can they do for you as a freelancer?
An easier freelance life with Factofly
Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 3,000 others with an everyday life without administration.
Unemployment insurance and self-employment - do they go hand in hand?
You probably didn't start your business with the expectation of becoming unemployed, but it can be beneficial to join an unemployment insurance fund anyway.
A-kasse is an abbreviation for unemployment fund, where you as a self-employed person pay a fixed fee to an unemployment fund in the same way as employees.
This membership fee secures you financially in case you have to close your business and become unemployed.
If you are not a member of an unemployment insurance fund, you can receive unemployment benefits, where the benefit paid out is significantly lower than the unemployment benefit rate. You can read more about unemployment benefits as a self-employed person in our previous post here.
Or if, for example, you get injured while working and can't keep your business running for a period of time, you can find out more about insurance as a self-employed freelancer here.
So why should you join an unemployment insurance fund as a self-employed person? We give you the pros and cons below.
An easier freelance life with Factofly
Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 3,000 others with an everyday life without administration.
Side job or main job?
When it comes to unemployment insurance funds for the self-employed, a distinction is often made between whether you are self-employed as a secondary or main occupation.
If your business is considered your main occupation, you cannot receive unemployment benefits unless your business is closed.
You are considered self-employed as a second job if you either start a business while receiving unemployment benefits or if you have run a business before you become unemployed.
In addition, if you have had at least 80 hours of paid work per month in the previous 6 months or have worked as an employee for at least one hour in five of the six months.
Whether you are self-employed as a secondary or main occupation is crucial when you are a member of an unemployment insurance fund in order to receive unemployment benefits or supplementary unemployment benefits.
Benefits of joining an unemployment insurance fund as a self-employed person
- Economic security:
As a self-employed person, it can be uncertain how much you'll earn from month to month - especially as a startup where it can be reassuring to be financially secure if your business turns out not to be profitable.
If you are self-employed and a member of an unemployment insurance fund, you can supplement your income up to the unemployment benefit rate.
You can read more about supplementary unemployment benefits here (in Danish).
As a member of an unemployment insurance fund, you are insured in the form of being able to receive unemployment benefits if your business should close.
- Advice:
Navigating the unemployment benefit system, rules for the self-employed and many other areas of self-employment can be difficult.
Several unemployment funds have set up departments specifically for members with their own business, where job counselors are available to guide the self-employed in relation to self-employment.
You can read more about advice here.
- Sparring and knowledge sharing:
Maybe you're stuck, need new ideas for your project or want to get some inspiration.
Many unemployment funds have meetings, webinars and events specifically for the self-employed.
Here you can learn more about creative processes for the self-employed, internships or being self-employed on unemployment benefits.
Read more about different events here.
An easier freelance life with Factofly
Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 3,000 others with an everyday life without administration.
Disadvantages of joining an unemployment fund as a self-employed person
Economy:
As with everything else in the world, including self-employment, benefits are not free, and neither is membership of an unemployment insurance fund.
Membership of an unemployment insurance fund costs between DKK 451/month and DKK 591/month, which can be expensive for the self-employed if money is already tight.
You can see an estimate of unemployment insurance membership prices here.
Unemployment fund rules for the self-employed:
If you are a member of an unemployment insurance fund as a self-employed person as a second job, you can receive supplementary unemployment benefits.
As mentioned, you can supplement your income up to the unemployment benefit rate.
However, it is required by law that you must also be actively seeking work as a self-employed person and participate in interviews and activities with your job center and/or unemployment fund.
In addition, as a self-employed person, you can receive unemployment benefits for a maximum of 30 weeks and must register all activity in your business on a monthly basis and submit it to your unemployment insurance fund.
However, if you are self-employed as your main occupation, you will have to close your entire business and your CVR number in order to receive unemployment benefits from your unemployment fund, after which you will be registered as full-time unemployed.
You can read more about main and second jobs here.
Time and mind power:
As you might imagine, being self-employed as a side hustle can take up a lot of time looking for work, being active in unemployment insurance and job center-related activities, and maintaining your own business at the same time.
If you are self-employed as your main occupation, however, the dilemma can be weighing up whether or not to close your business and your love child in order to be eligible to receive unemployment benefits.
Should you have an unemployment insurance fund as self-employed?
As with everything else in self-employment, joining an unemployment insurance fund is about weighing up whether it makes sense for your particular business and situation, and of course it's up to you to assess the pros and cons.
Does it give you peace of mind so you sleep better at night? Or is your business particularly fragile? Then the money for an unemployment insurance fund can be money well spent!
You could say that the financial uncertainty of self-employment can be all-consuming, and membership of an unemployment insurance fund can help minimize this.
On the other hand, being a member of an unemployment insurance fund comes with requirements and rules. As a self-employed person, you have to be looking for work as a second job and participate in employment-related activities if you want to receive unemployment benefits, which can be time- and energy-intensive and take time away from your own business.
If you are self-employed as your main occupation, your financial security will be tied to the fact that you are guaranteed the right to unemployment benefits if you choose to close your business.
Whether you are self-employed as a secondary or main occupation, membership of an unemployment insurance fund will give you the opportunity to get advice, sparring, new knowledge and to participate in company-relevant courses.
