Entrepreneurs and maternity leave

We are meeting in the couple’s light-filled home that also serves as an office. There is a stack of boxes for book deliveries in a corner, and the spacious kitchen inspires for creative cooking. It’s about 18 months since Gullichsen and Laurila founded their publishing company, No Tofu Publishing.

When will Gullichsen’s maternity leave start?

“Once my body says it’s time.”

Making coffee, Laurila comments that the ongoing projects are scheduled so that no customer relationship will suffer even though Gullichsen started her maternity leave tomorrow.

It’s self-evident for the couple that, in addition to Gullichsen’s maternity leave, Laurila also will have paternity leave periods. As they are expecting twins, it will be possible to have extended paternity leave.

“It would be foolish to simply carry on working and miss the unique experiences related to having a baby”, says Laurila.

Careful planning and advance preparation ensure relaxed parental leaves for self-employed persons.

Can I take maternity leave?

“The first time I actually considered giving up as an entrepreneur was when I reflected on my possibilities to take maternity leave”, says Gullichsen.

She has also spotted Facebook postings by fellow entrepreneurs who are anxious about their possibilities to take maternity leave.

Jukka Lehmussaari, Development Manager at Elo, recognises the concern, but he assures that it is quite possible for a self-employed person to be on maternity leave. Systematic planning is the key to successful parental leaves.

Gullichsen and Laurila also stress the role of a proactive approach: It is essential to find out about the relevant issues in advance and see to the matters related to YEL insurance when starting a business. For most self-employed persons, the amounts of future pension and social benefits – including parental allowance – are based on the YEL income reported and confirmed for the YEL pension insurance policy.

“If you have any instinct at all to protect yourself, a proactive approach is a must for an entrepreneur. You cannot simply surf and go”, Gullichsen sums up.

YEL income and its impact on benefits paid to parents

According to Lehmussaari, Elo is often contacted by mothers-to-be who have not clearly understood the key role of the YEL income and its impact on the benefits paid to parents.

“A common misconception is that, for a self-employed person, parental allowances would be based on the salary or wages actually received from the business. This is, however, not the case, but the benefits are calculated on the basis of the YEL income confirmed for the YEL insurance policy.”

Parental allowances paid by Kela are determined on the basis of the annual income. The annual income is calculated for a reference period of 12 calendar months prior to the calendar month that precedes the start of the entitlement to the benefit.

Lehmussaari points out that the self-employed persons themselves are responsible for pricing their own work input appropriately. In other words, they should always keep the YEL income at a sufficiently high level throughout the course of their entrepreneurial activities. The YEL income should be raised in proportion to any increases in the value of their work.

“Keeping the YEL income at an appropriate level is important since it affects the amounts of the social security benefits payable to entrepreneurs at various phases of life, including the periods related to parenthood.”

“Take a break from changing nappies”

According to Gullichsen, it’s vital for an entrepreneur to maintain customer contacts also during the maternity leave. You also need to keep track of what’s happening on the market and out in the world. Gullichsen presumes that she will probably long back to work quite soon.

“To take a break from changing nappies, I will probably start working on Sundays as soon as possible”, Gullichsen assumes.

If a self-employed person intends not to work during the periods of parental leave, or if the work input will be minimal, it is possible to interrupt the YEL insurance policy for the duration of parental leave. However, if the income from entrepreneurial activities exceeds the lower limit set for the YEL income (7,958.99 euro in 2020), the YEL policy must be held in force.

Gullichsen believes that she will gain excellent time management skills during her maternity leave. In the future, the daily routines of the family and business will presumably be managed by means of a wall memo board or planner of some kind.

By making careful preparations before parental leaves, the future parents will gain peace of mind and be able to fully focus on the family life.

Tips for entrepreneurs concerning their parental leave periods:

• A self-employed person shall keep the YEL insurance policy valid also during the periods of parental leave, if the entrepreneurial activities continue and the YEL income exceeds the minimum limit of 7,958.99 euro (in 2020). You should thus keep your YEL insurance policy in force, if you intend to work during your parental leave periods to the extent that the value of your work input would be equal to an annual salary of at least 7,958.99 euro payable to a person with corresponding competence. If you intend to work less or not at all during your parental leave, you can interrupt your YEL insurance policy at the start of your parental leave.
• For entrepreneurs, the parental allowance is determined on the basis of the YEL income confirmed for the YEL insurance policy. If your YEL income has changed during the preceding 12 months, the calculation will be based on the average monthly value over the 12-month-period preceding the calendar month prior to the start of the entitlement to the benefit. If, in addition to your entrepreneurial activities, you have a job from which you receive salary or wages, the sum of your YEL income and the salary/wages will serve as the annual income used for the calculation. The annual income does not include the pay you actually receive from your own company, or the amount of earned income from business activities.

For more information:

• Read more about the impact of the YEL income on the social security for entrepreneurs on our website.
• Use our YEL calculator to estimate how the YEL income amount will affect your parental allowance and other benefits paid by Kela.
• Additional information concerning the amount of parental allowance is available on Kela’s website.

Are you not Elo’s customer yet? Go on, read more and take YEL insurance from Elo.