Like the rest of the world, Finland is currently immersed in the global pandemic caused by the coronavirus, which has forced severe changes in the way people interact, work and do business.
Many entrepreneurs and self-employed workers, especially in sectors such as tourism or catering, have had to temporarily close their businesses and have seen their economy seriously shaken. Some have even turned to public aid and the tools at their disposal, such as YEL insurance, to limit the harmful effects of Covid-19 on their companies.
But the damage caused by the Covid-19 crisis does not only affect entrepreneurs operating in sectors that have seen their freedom to do business restricted by the government. Entrepreneurs and freelancers are like anyone else; therefore, they can also get sick or in some cases have to undergo quarantines, for example. And in those cases YEL insurance can also help reduce the negative effects of the virus on their lives.
In this article we will see how to get the most out of YEL insurance in times of pandemic.
The first thing an entrepreneur should know is that YEL insurance is the safety net for the self-employed in Finland. The future pension, many social benefits such as unemployment benefits linked to income, as well as the amount of daily allowances for sickness, maternity or rehabilitation depend on the YEL income.
That is why it is important to be up to date in the payment of fees.
How to deal with reduced income
What has happened during the harshest months of the pandemic, in which many entrepreneurs have seen their income reduced or cut?
According to the pension insurance company Elo, the crisis has hit hardest entrepreneurs who own businesses such as cafes and restaurants, hairdressers and barber shops, but it has also harmed other self-employed such as physiotherapists, massage parlors, and in the construction sector.
Pirjo Kilpelä, a YEL specialist from Elo, explains that at the beginning of the pandemic, when the flow of income suddenly stopped for many entrepreneurs, there was an increase in insecurity that led many to throw in the towel.
"The new, unexpected situation caused insecurity among our customers and we received more terminations of YEL insurance than usual, but luckily many of those customers have come back and have taken out a new insurance after a few months."
However, Kilpelä clarifies that coronavirus does not amount to a general crisis for self-employment. Some businesses have performed even better than before, despite all the hardships:
"We have also customers who have been able to increase their YEL income despite of the corona situation," she says.
Extension of payment terms
As this expert explains, when it comes to YEL contributions, the company she works for has applied a time-extension policy for paying the contributions.
"Approximately 11,000 of our clients have asked us to postpone their bills to fall due a few months later. This is 13% of Elo's YEL insurance portfolio and it happened significantly more often than before the corona times. Things are returning to normal and as a whole, their payment situation is on a good level now."
Then, what should an entrepreneur who is still in trouble do?
"We encourage our clients to contact Elo as soon as possible in case of financial difficulties. We are ready to negotiate the extension of payments and find a mutual solution quickly. We always listen to our clients in order to reach the solution," Kilpelä emphasizes.
In cases of persistent difficulty, Elo advises to temporarily adjust the contributions downwards, so as not to lose the right to some social benefits. The effects of a temporary reduction on the amount of the pension will be very limited if the entrepreneur restores the original level of payments when the business begins to operate normally again.
Illness, quarantine, unemployment
Those entrepreneurs who have continued to pay their YEL contributions have been able to receive some benefits paid by the Finnish Social Security Agency (Kela).
This is the case, for example, of the sickness allowance and more specifically the sickness allowance linked to the contraction of an infectious disease. The amount of both is also determined by the amount of YEL income.
The YEL income-based sickness benefit compensates for approximately 60% of the income that would have been earned during the sick leave period.
In case of being quarantined at the request of the authorities, entrepreneurs are entitled to a sickness allowance for infectious disease. There is no waiting period to qualify for this benefit.
In order to collect the subsidy, the quarantined person must send a request to Kela and provide a decision issued by a doctor from the municipality or hospital district where they have been placed in isolation.
Entrepreneurs are also temporarily entitled to a labour market subsidy linked to previous entrepreneurial activity from Kela (Työmarkkinatuki) in case of a significant loss of demand and/or income due to the coronavirus epidemic.
This benefit concerns all self-employed persons regardless of their activities and will be in effect until 30 June 2021.