Running a business and receiving unemployment benefit: is it possible?

Can an entrepreneur, such as a shareholder or managing director of a limited liability company (s.r.o.) or a self-employed person (SZČO), bridge a period without income with unemployment benefit? You will find the answers to these questions in the following article.

THE OBLIGATION TO HAVE UNEMPLOYMENT INSURANCE

Anyone who works under an employment contract, a similar legal relationship or agreements on work performed outside an employment relationship is required to pay unemployment insurance contributions. These obligations also apply to persons such as self-employed persons or a company’s managing director, who can be insured voluntarily.

Unemployment insurance is designed to secure an income in the event of job loss. Unemployment benefit is then paid out of unemployment insurance. But is it possible for an entrepreneur – a shareholder of an s.r.o., a managing director of an s.r.o. or a self-employed person – to receive this benefit as well?

CONDITIONS FOR RECEIVING UNEMPLOYMENT BENEFIT

The conditions for receiving unemployment benefit are laid down in Act No. 461/2003 Coll. on Social Insurance. One of the main conditions is that the insured person must have been covered by unemployment insurance for at least two years in the last four years before being entered in the register of jobseekers. This period does not include the period of a previous entitlement to unemployment benefit, nor any period in which the employee had no assessment base for unemployment insurance.
The maximum amount of this benefit changes from 1 July 2024.

VOLUNTARY UNEMPLOYMENT INSURANCE

Under the Social Insurance Act, the following may be voluntarily insured against unemployment:

• An individual who is at the same time voluntarily covered by sickness and pension insurance (for example, a managing director of an s.r.o.).
• A self-employed person who has permanent or temporary residence in Slovakia and is compulsorily covered by sickness and pension insurance, or whose compulsory sickness and pension insurance has been suspended.

A self-employed person can decide whether to take out insurance against unemployment. To be able to obtain unemployment benefit, they must have been voluntarily insured for at least two years in the last four years before being entered in the register of jobseekers.

ENTITLEMENT TO UNEMPLOYMENT BENEFIT

For a self-employed person, a shareholder or a managing director of an s.r.o. to be able to obtain unemployment benefit, they must meet these conditions:

• Be entered in the register of jobseekers.
• Have been covered by unemployment insurance for at least two years in the last four years before being entered in the register.

Once these conditions are met, entitlement to unemployment benefit arises from the day of entry in the register of jobseekers. Unemployment insurance does not apply to persons who have been granted an old-age pension, an early old-age pension or a disability pension due to a decline in their ability to perform gainful activity by more than 70%.

JOBSEEKER STATUS

A jobseeker is a citizen of the Slovak Republic who is able and willing to work, is looking for a job and is listed in the register of jobseekers. The conditions for entry in the register include that the person:

• Is not an employee.
• Does not perform gainful activity, apart from the exceptions laid down by law.
• Does not operate or carry out a self-employed activity.

RUNNING A BUSINESS AND UNEMPLOYMENT BENEFIT

Under the Employment Services Act, a person who performs gainful activity as a self-employed person, a shareholder or a managing director of an s.r.o. cannot receive unemployment benefit. This applies even if the person has no income from this activity.

If a self-employed person or a managing director stops performing their activity, they may be entitled to unemployment benefit. For example, if a lawyer suspends the practice of law, they may become entitled to unemployment benefit.

In conclusion, businesses and persons performing self-employed activity need to understand the conditions and restrictions associated with receiving unemployment benefit. For more detailed information and specific situations, we recommend consulting a social insurance expert or an accountant.