Registering Board Members As Unemployed Is Too Restricted

The state will restore the possibility for Board Members to register themselves as unemployed and obtain unemployment insurance indemnity. The Chamber supports this initiative, but considers the rules on registering as an unemployed person to be too strict. We defended our positions in the Parliament..

In 2014, the amendment of the Labour Market Services and Supports Act entered into force, according to which a Board Member who does not receive a fee for performing the duties of a Board Member cannot be registered as an unemployed person or receive unemployment insurance indemnity. The Chamber did not consider such amendment neither reasonable nor necessary already before it was entered into the law. In 2015, the Legal Chancellor also found that such restriction is in conflict with the Constitution. The Supreme Court reached the same conclusion in the spring of this year.

The aim of the current changes is to bring the Labour Market Services and Supports Act into alignment with the Constitution, i.e. ensure social protection in case of loss of work to the Board Members who in addition to managing companies did other work, but have lost that work.

According to the draft act, a Member of the Board has the right to register as an unemployed person only if they meet the three conditions for unemployment insurance benefit:

1. the Board Member is not allowed to gain benefits for performing their duties;
2. the Board Member must have at least 12 months of unemployment insurance history during the 36 months prior to registering as unemployed;
3. the Board Member has not left the last place of employment of service or work on their own initiative or by an agreement between the parties nor has  caused the loss work himself.

Unless all three conditions are fulfilled, a Board Member cannot register himself or herself as an unemployed person next year. For example if a person works on the basis of an employment contract, his contract is terminated by an agreement between the parties and he is a Board Member, he cannot register as an unemployed person because the third condition mentioned above is not fulfilled.

The Chamber proposed the Parliament’s Social Committee to restore the previous arrangement according to which Board Members have the right to register themselves as unemployed person, if they do not receive a fee for performing the duties of Board Member. If a person is in reality looking for work and needs the state’s help to find work, the person should have the right to register as an unemployed person.

The Chamber made an alternative proposal to the Social Committee. If restoring the old arrangement would increase significantly the opportunities for abuse of registering as an unemployed person, this risk could be managed by adding an additional condition to the draft act, according to which a member of the board of a company should have at least 12 months of unemployment insurance history within the 36 months preceding the registration as an unemployed person.

The Chamber participated at the meeting of the Parliament’s Social Committee where they explained their position.

Due to the fact that the draft act is still being processed by the Parliament, its contents may slightly change before it is passed and entered into force.

The planned entry into force of the amendment is 1 January 2018.