Your guide to unemployment benefits as a self-employed person
Are you self employed and are in the process of closing your business, or if you run a business as a sideline, you may be entitled to unemployment benefits.
In this guide, we delve into the new rules and conditions for unemployment benefits as a self-employed person, and provide practical tips for the application process.
What is unemployment benefit?
Unemployment benefits, also known as unemployment benefits, is a temporary financial support usually provided in the event of unemployment.
Both employees and self-employed people have the opportunity to receive unemployment benefits when they are unemployed and meet certain conditions. The monthly benefit, also known as the unemployment benefit rate, is determined and paid by Unemployment insurance.
When am I independent?
Your status as self-employed depends on your role and ownership in the company.
A self-employed person is a person who has established their own company and performs tasks for other companies or private customers on an invoice basis. As a self-employed person, you are not employed as a salaried employee, unless you are employed in a limited liability company or limited liability company of which you are a co-owner.
As a self-employed person, you do not have a fixed monthly salary, but you have full control over the business and you act as your own employer. You decide your working hours, which tasks you take on, and which clients you want to work for.
New rules for unemployment benefits for the self-employed: What you should know
The new rules for unemployment benefits for the self-employed aim to equalize the rights of the self-employed and employees, as well as to modernize the unemployment benefit system to accommodate changing forms of employment.
The latest rules on unemployment benefits came into effect on October 1, 2018.
Significant changes to the unemployment benefit rules include the following:
- Activity focus rather than personal status – Previously, the person's status as an employee or self-employed person determined the right to unemployment benefits. Now it is the person's activities that are decisive, just like in the tax system.
- Earning unemployment benefits – Unemployment benefits are earned by combining A and B income as well as profits from self-employment. This allows those who have both a salaried job and self-employment to meet the income requirement.
- Unemployment benefit rate calculation – The unemployment benefit rate is calculated by adding together A and B income and profits from self-employment. The model follows the same calculation method as for employees, based on the best 12 months within 24 months.
- Objective criteria for main and secondary employment – The definitions of main and secondary employment are now determined based on objective criteria instead of estimates.
These changes to the unemployment benefit system ensure a fairer assessment based on activities, creating a transparent and understandable process for both employees and the self-employed.
You can read more about unemployment benefit act here
Who can receive unemployment benefits?
As a rule of thumb, you can receive unemployment benefits if you are registered with an unemployment insurance fund (a-kasse) and are registered as unemployed on the labour market. This means that as a self-employed person you can also receive unemployment benefits as long as the business is run as a sideline.
If you run a business as your main occupation, i.e. if your income comes exclusively from your business, you must close your business first in order to meet the conditions for unemployment benefits.
- Main occupation is your primary occupation – that is, where you earn the most.
- Side job is the secondary employment, which functions as an extra income alongside your main occupation.
The process for unemployment benefits as a self-employed person
The process for unemployment benefits as a self-employed person is largely the same as for employees, with a few differences. This includes membership in an unemployment fund for at least one year, meeting income and employment requirements, and setting up an employment account to record paid hours.
The income requirement
To meet the income requirement, your total income over the past three years is assessed. This includes A-income, self-employment profits in the company and any paid work. The income requirement means that you must:
- Meet the income requirement of at least DKK 254,328. (valid for 2023) within the last 3 years. This means that a maximum of DKK 21,194 per month (valid for 2023) can be included.
- Be available for the job market (be registered as unemployed at the job center).
The income requirement applies to self-employed people who:
- First time receiving unemployment benefits.
- Not previously been available.
- Have been unemployed previously, but are no longer eligible for unemployment benefits.
- Do not have saved hours in the employment account.
The employment account is a type of savings account where your paid hours are registered. Your unemployment insurance fund sets up the employment account for you and ensures that you continuously report the paid hours you receive from different jobs.
The employment requirement
The employment requirement requires a minimum number of paid hours within the past three years, depending on whether you are insured full-time or part-time.
If you are full-time insured, you must meet the following conditions:
- You must have been a member by an unemployment fund for at least one year.
- You must be registered as a job seeker. at your local job center from the first day you are registered as unemployed.
- You must have reported at least DKK 25,328. (valid for 2023) to the income register within the last 3 years.
- You must include A-income and B-income. as well as profits from self-employment. However, you can only include a maximum of DKK 21,194 per month (valid for 2023).
If you are insured part-time, you must meet the following conditions:
- You must have been a member of an unemployment insurance fund. for at least one year.
- You must be registered as a job seeker. at your local job center from the first day you are unemployed.
· You must have reported at least DKK 169,548. (valid for 2023), and the maximum monthly inclusion is DKK 14,129 (valid for 2023).
Calculation of unemployment benefits for the self-employed
Calculation of unemployment benefits for the self-employed is different from the unemployment benefit rates for regular employees. There are basically three ways in which the calculation is done – these are explained below.
- Self-employed persons can receive unemployment benefits equivalent to 90% of their previous income. The maximum monthly amount is set at DKK 19,728 (2023) for full-time insured members. This calculation takes into account the individual's financial situation.
- Unemployment benefits are calculated based on the 12 months with the highest income within the last 24 months prior to the onset of unemployment. This gives a realistic picture of your finances just before unemployment.
- If you have income solely from self-employment, unemployment benefits are calculated as an average of the two years with the highest taxable profit before interest and other financial items. This covers the last 5 completed income years before the onset of unemployment. A-income from companies where the owner has a decisive influence is included in the calculation.
Supplementary unemployment benefits as a side job
If you are self-employed as a sideline, you have the opportunity to receive unemployment benefits for a limited period.
This also applies even if you ran a business alongside your salaried job before you became unemployed and continue with this business as a sideline.
This also applies if you start a new business during the period you receive unemployment benefits.
To be eligible for supplementary unemployment benefits, you must:
- Be unemployed and available for the labor market.
- Be able to take over full-time work at short notice.
You can continue to work in your company during normal working hours, but these hours will be offset against your unemployment benefits. In addition, any profits from the company can be used to extend the period of supplementary unemployment benefits and the right to re-earn unemployment benefits.
Please note that you can only receive supplementary unemployment benefits for 30 weeks within a period of 104 weeks. After this period, the right to supplementary unemployment benefits will cease.
FAQ – Frequently asked questions about unemployment benefits as a self-employed person
Your guide to unemployment benefits as a self-employed person
Are you self employed and are in the process of closing your business, or if you run a business as a sideline, you may be entitled to unemployment benefits.
In this guide, we delve into the new rules and conditions for unemployment benefits as a self-employed person, and provide practical tips for the application process.
What is unemployment benefit?
Unemployment benefits, also known as unemployment benefits, is a temporary financial support usually provided in the event of unemployment.
Both employees and self-employed people have the opportunity to receive unemployment benefits when they are unemployed and meet certain conditions. The monthly benefit, also known as the unemployment benefit rate, is determined and paid by Unemployment insurance.
When am I independent?
Your status as self-employed depends on your role and ownership in the company.
A self-employed person is a person who has established their own company and performs tasks for other companies or private customers on an invoice basis. As a self-employed person, you are not employed as a salaried employee, unless you are employed in a limited liability company or limited liability company of which you are a co-owner.
As a self-employed person, you do not have a fixed monthly salary, but you have full control over the business and you act as your own employer. You decide your working hours, which tasks you take on, and which clients you want to work for.
New rules for unemployment benefits for the self-employed: What you should know
The new rules for unemployment benefits for the self-employed aim to equalize the rights of the self-employed and employees, as well as to modernize the unemployment benefit system to accommodate changing forms of employment.
The latest rules on unemployment benefits came into effect on October 1, 2018.
Significant changes to the unemployment benefit rules include the following:
- Activity focus rather than personal status – Previously, the person's status as an employee or self-employed person determined the right to unemployment benefits. Now it is the person's activities that are decisive, just like in the tax system.
- Earning unemployment benefits – Unemployment benefits are earned by combining A and B income as well as profits from self-employment. This allows those who have both a salaried job and self-employment to meet the income requirement.
- Unemployment benefit rate calculation – The unemployment benefit rate is calculated by adding together A and B income and profits from self-employment. The model follows the same calculation method as for employees, based on the best 12 months within 24 months.
- Objective criteria for main and secondary employment – The definitions of main and secondary employment are now determined based on objective criteria instead of estimates.
These changes to the unemployment benefit system ensure a fairer assessment based on activities, creating a transparent and understandable process for both employees and the self-employed.
You can read more about unemployment benefit act here
Who can receive unemployment benefits?
As a rule of thumb, you can receive unemployment benefits if you are registered with an unemployment insurance fund (a-kasse) and are registered as unemployed on the labour market. This means that as a self-employed person you can also receive unemployment benefits as long as the business is run as a sideline.
If you run a business as your main occupation, i.e. if your income comes exclusively from your business, you must close your business first in order to meet the conditions for unemployment benefits.
- Main occupation is your primary occupation – that is, where you earn the most.
- Side job is the secondary employment, which functions as an extra income alongside your main occupation.
The process for unemployment benefits as a self-employed person
The process for unemployment benefits as a self-employed person is largely the same as for employees, with a few differences. This includes membership in an unemployment fund for at least one year, meeting income and employment requirements, and setting up an employment account to record paid hours.
The income requirement
To meet the income requirement, your total income over the past three years is assessed. This includes A-income, self-employment profits in the company and any paid work. The income requirement means that you must:
- Meet the income requirement of at least DKK 254,328. (valid for 2023) within the last 3 years. This means that a maximum of DKK 21,194 per month (valid for 2023) can be included.
- Be available for the job market (be registered as unemployed at the job center).
The income requirement applies to self-employed people who:
- First time receiving unemployment benefits.
- Not previously been available.
- Have been unemployed previously, but are no longer eligible for unemployment benefits.
- Do not have saved hours in the employment account.
The employment account is a type of savings account where your paid hours are registered. Your unemployment insurance fund sets up the employment account for you and ensures that you continuously report the paid hours you receive from different jobs.
The employment requirement
The employment requirement requires a minimum number of paid hours within the past three years, depending on whether you are insured full-time or part-time.
If you are full-time insured, you must meet the following conditions:
- You must have been a member by an unemployment fund for at least one year.
- You must be registered as a job seeker. at your local job center from the first day you are registered as unemployed.
- You must have reported at least DKK 25,328. (valid for 2023) to the income register within the last 3 years.
- You must include A-income and B-income. as well as profits from self-employment. However, you can only include a maximum of DKK 21,194 per month (valid for 2023).
If you are insured part-time, you must meet the following conditions:
- You must have been a member of an unemployment insurance fund. for at least one year.
- You must be registered as a job seeker. at your local job center from the first day you are unemployed.
· You must have reported at least DKK 169,548. (valid for 2023), and the maximum monthly inclusion is DKK 14,129 (valid for 2023).
Calculation of unemployment benefits for the self-employed
Calculation of unemployment benefits for the self-employed is different from the unemployment benefit rates for regular employees. There are basically three ways in which the calculation is done – these are explained below.
- Self-employed persons can receive unemployment benefits equivalent to 90% of their previous income. The maximum monthly amount is set at DKK 19,728 (2023) for full-time insured members. This calculation takes into account the individual's financial situation.
- Unemployment benefits are calculated based on the 12 months with the highest income within the last 24 months prior to the onset of unemployment. This gives a realistic picture of your finances just before unemployment.
- If you have income solely from self-employment, unemployment benefits are calculated as an average of the two years with the highest taxable profit before interest and other financial items. This covers the last 5 completed income years before the onset of unemployment. A-income from companies where the owner has a decisive influence is included in the calculation.
Supplementary unemployment benefits as a side job
If you are self-employed as a sideline, you have the opportunity to receive unemployment benefits for a limited period.
This also applies even if you ran a business alongside your salaried job before you became unemployed and continue with this business as a sideline.
This also applies if you start a new business during the period you receive unemployment benefits.
To be eligible for supplementary unemployment benefits, you must:
- Be unemployed and available for the labor market.
- Be able to take over full-time work at short notice.
You can continue to work in your company during normal working hours, but these hours will be offset against your unemployment benefits. In addition, any profits from the company can be used to extend the period of supplementary unemployment benefits and the right to re-earn unemployment benefits.
Please note that you can only receive supplementary unemployment benefits for 30 weeks within a period of 104 weeks. After this period, the right to supplementary unemployment benefits will cease.
