Sickness unemployment and pension

Unemployment benefits as self employed

Regardless of whether you decide to set up as self-employed or consider to stop being self-employed and you have no other income, you need to be aware that the rules for unemployment benefits as an employee and a self-employed person differ.

Although you expect your business to generate a suitable income, it is important to know the rules for unemployment insurance for self-employed. Therefore, we recommend that you contact an unemployment insurance fund before you set up your business – also if you start a business as an additional source of income.

You can choose to become a member of Akademikernes A-kasse or other unemployment insurance funds especially aimed at self-employed, e.g. ASE or DANA.

Effective from 1 October 2018, new unemployment insurance rules were introduced on the termination of self-employed activities as the principal occupation and on self-employed activities as an additional source of income as unemployed. See the description of the new rules on the website of Akademikernes A-kasse.

Supplementary insurance

As self-employed, it might be difficult to live on unemployment benefits if your business closes down. If you want the best possible financial security, you can take out Djøf Income Protection for Self-Employed. 

Read more about self-employed and unemployment benefits on the website of Akademikernes A-kasse.

Pregnancy and maternity leave

Self-employed have the possibility of taking maternity/paternity leave without closing down their business. Payment of maternity/paternity benefits depends on your income and workload. It should be possible to have children and start a family. Also as self-employed. Therefore, maternity/paternity benefits for self-employed have been introduced.

Criteria

In order to qualify for maternity/paternity benefits, you must meet the following criteria:

• You must have worked for at least 6 months within the past 12 months before you start your maternity/paternity leave, including the last month before your maternity/paternity leave.
• You must have worked at least 18.5 hours a week for your business. 

The highest rate of maternity/paternity benefits is DKK 4,355 per week (2019). In order to qualify for the full amount, you must have had an income of at least DKK 226,460 (2019) in your latest tax assessment notice to SKAT. You can find further information here.

As a self-employed person, you need to apply for maternity/paternity benefits from Udbetaling Danmark (Public Benefits Administration).

Additional cover

If your income fluctuates a lot, e.g. during the start-up phase, you can take out health insurance with the Danish Agency for Governmental Administration which will guarantee you at least two-thirds of the maximum amount of benefits during your maternity/paternity leave regardless of your income. The insurance must be taken out at least 6 months before your request for maternity/paternity benefits. 

If your business has a company registration number: Read more and register.

If your business does not have a company registration number: Read more and register.

Duration of leave and resumption of work

As a mother, you are entitled to maternity benefits 4 weeks before expected birth. After giving birth, you are entitled to 14 weeks of maternity leave with benefits (of which the first 2 weeks are mandatory).

As a father, you are entitled to 2 weeks of paternity leave with benefits.

In addition, there are 32 weeks of parental leave which the parents can split between them.

Self-employed may choose to take full-time or part-time leave. Part-time is based on the number of hours you have specified in the application for maternity/paternity benefits to Udbetaling Danmark (Public Benefits Administration). So, if you want to continue your business part-time during your leave, this is also an option. 

Sickness benefits as self employed

Anyone can get ill, but it may have special consequences for self-employed. As a self-employed person, you bear the risk of your own illness and the resulting loss of income. However, after 2 weeks of illness, you are entitled to sickness benefits from your municipality of residence, and this way, you can maintain an income while you are ill.

Deadlines and conditions

As a self-employed person, you must report and apply for sickness benefits with NemRefusion no later than 3 weeks after the first day of absence. Your municipality will handle the payment. 
If you have insurance, see below, you must request sickness benefits no later than 1 week after the first or third day of absence. If you request sickness benefits later, you will not be entitled to sickness benefits until from the day on which the municipality of NemRefusion receives the request. 

• It is a condition for receiving sickness benefits that you meet the work requirement under the Danish Act on Benefits in the event of Illness or Childbirth. This means that within the past 12 months, you must have been self-employed for at least 6 months, working an average of 18.5 hours a week. One of the 6 months must be the month immediately preceding the beginning of absence.
• You must live and be liable to pay tax in Denmark.
• You can find the rules on calculation of sickness benefits for self-employed in part 6 of the Danish Executive Order on Sickness Benefits.

Special supplementary insurance - sickness benefit cover

As a self-employed person, you can take out a special type of insurance that will entitle you to sickness benefits already from the first or third day of absence during a period of illness, and which will also provide a minimum amount corresponding to two-thirds of the benefit rate regardless of your earnings.

At Udbetaling Danmark (Public Benefits Administration), you can read about the supplementary Sickness Benefit Insurance and take out the insurance. 

If your business has a company registration number: Read more and register.
If your business does not have a company registration number: Read more and register.

Pension for self employed

As a self-employed person, it is important that you consider whether to establish a pension scheme that provides cover on disability, retirement and death.

Djøf recommends that self-employed members establish a pension scheme.

A pension scheme should include: 

• Life annuity
• Disability, spouse's and children's pension
• Life and accident insurance
• Insurance for critical illness.

Moreover, you should consider adding an annuity pension to your savings which will be paid out as annuities over minimum 10 years and maximum 25 years.

If you have just set up as self-employed and come directly from a job as an employee, you have probably had a pension scheme via your employer. You may choose to continue such scheme.

In any case, we recommend that you contact JØP – Juristernes og Økonomernes Pensionskasse or on telephone +45 38 18 87 00 to find out what is the best solution for you. See more in this JØP Pension overview for self-employed.

Self-employed are not required to pay Labour Market Supplementary Pension Scheme (ATP) contributions. However, in some cases, you might do so if you want. In order to make voluntary contributions to the Labour Market Supplementary Pension Scheme, the following conditions must be met: 

• You must have been a member of the Labour Market Supplementary Pension Scheme for at least three years as an employee
• You must have contributed an amount to the Labour Market Supplementary Pension Scheme corresponding to three years' full contribution
• You must register with the Labour Market Supplementary Pension Scheme yourself. Use the form on ATP as self-employed. 

As a self-employed person, you will usually not be paid during illness. Therefore, you should consider taking out health insurance that entitles you to quick medical assistance, including in connection with surgery.