In addition to regular employment and entrepreneurship, there is a third option for getting employed: cooperatives.
Regular employment in a company or public organization offers safety and regular income. Entrepreneurship implies freedom and independence but requires savings to live from during the 2-4 years that may take for an enterprise to be profitable and creating an income for the entrepreneur. The start-up support money offered by TE-Services for the first 6-9 months is way too short.
Being a member at a certain type of cooperative can offer economic security till employment becomes full-time or the business idea generates enough income. The advantages of joining a cooperative relies in shared resources (invoicing system, accounting, etc.) and lower operating costs. It is also possible to join forces with other members to accept larger customer projects.
There are three types of employment cooperatives:
- Entrepreneur cooperatives (yrittäjäosuuskunta)
- Invoicing cooperatives (laskutusosuuskunta)
- Working cooperatives (työosuuskunta)
To be a member of an entrepreneur cooperative requires to get a toiminimi, a trade name, and the status of the member is considered to be entrepreneur. Usually it is not possible to receive unemployment support even if the gained income is not enough for a living.
An invoicing cooperative offers the infrastructure for operating a business, such as invoicing and accounting. However the Unemployment Office may consider the member of an invoicing cooperative as an entrepreneur and refuse paying unemployment support, even if the amount of work and income are small.
Well-known invoicing cooperatives are:
Working cooperatives, the safest option for unemployed
The kind of cooperative compatible with getting unemployment support is a working cooperative (työosuuskunta).
The member of a working cooperative has the official status of an employee. If the member status is as a part-time employee (below 20 hours per week), it is possible to get adjusted unemployment benefit.
TE-services set certain conditions for members of working cooperatives:
- The cooperative must have as a minimum 7 members and the ownership/share percentage of the person must be below 15%.
- The cooperative makes a work contract with the member. If the member needs unemployment support, the contract states a maximum of 19 hours of work per week.
- The member is not part of the cooperative´s leadership team.
- The cooperative monitors the work of the member and offers premises and tools.
- The cooperative offers marketing and customer search.
- The cooperative takes care of the member´s taxes and insurances such as pension, unemployment and social security.
The member who wants to get unemployment money applies for permission from TE-services and sends TE-Services the work contract and a certificate of cooperative membership that states: that it is a working cooperative, the amount of cooperative members, the percentage of the member´s ownership/share in the cooperative, that the member status is “employee”, that the member is not part of the leadership team, that the cooperative monitors the work of the member, handles marketing of the member´s services and customer relationships and that the cooperative takes care of the member´s taxes and insurances such as pension, unemployment and social security.
With these papers, the member of a working cooperative can likely get permission From TE-services to work part-time in the cooperative and to get adjusted unemployment benefit. After that, the party that pays unemployment benefits will monitor the person's income and calculate the amount of adjusted unemployment benefit.
It is possible to earn 269 € net per moth (after taxes) without it affecting the amount of unemployment benefit. If the net income exceeds 269 €, half of the exceeding part will be discounted from the unemployment benefit.
Working cooperatives enhance employment opportunities
- Potential employers can test through gigs a member of a working cooperative and offer at some point a permanent work contract.
- For persons that don´t want to be a one-person-business or cannot take the risk of entrepreneurship, being a member of a working cooperative is a safe option to test and develop a business idea.
Through a working cooperative it is possible to start working without losing the unemployment benefits, till finding an employer, till the work becomes full-time or till the business idea succeeds.
It is very important to present the information to TE-Services stating that your cooperative is a working cooperative and that you have the status of a part-time employee as well as a certificate written by the cooperative certifying that it meets the requirements and limitations set by TE-Services, in order to prevent confusion and problems.
Some discussion about the confusing status of cooperative members in the eyes of TE-Services can be read (in Finnish) HERE
How to find a suitable working cooperative
The most difficult part is to find a working cooperative that meets the requirements set by TE-Services and that functions well. Before choosing a cooperative, ensure that the leadership team and the accounting team of the cooperative are qualified and that the invoicing system works well.
The administration of some cooperatives may not be qualified enough and that may cause delays and other problems for their members. If you know members of a cooperative, it is worth to ask whether it works well and they are happy with it.
Some examples of working cooperatives that meet the requirements of TE-Services are:
For a website that lists and describes further working cooperatives, click HERE
Joining a working cooperative
To join a cooperative, one needs to apply for membership and usually send a business plan of the own business idea and services. There is a fee for ownership varying from 20 € to 400 € and a commission. The commission taken by a cooperative ranges from 5% to 20% of the sums the member invoices from customers.
It is important to note that the cooperative pays the taxes and insurances 100% from the money earned by the member. That is the key difference in comparison with a normal employer. These costs of working through a cooperative need to be taken into account when deciding your prices of services.