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Small and medium-sized enterprises (SMEs)

Second career

Overcoming the obstacles faced by dependent employees who want to become self-employed and/or start their own business

Knowledge of markets and technologies is a key factor for the success of a start-up. In spite of this, the entrepreneurial potential of experienced dependent employees has as yet not received much attention. Special support to become self-employed is largely concentrated on young people (e.g. university graduates) or groups whose members might face special problems in finding adequate dependent employment (unemployed, minorities, women). As a result only a comparatively small number of new enterprises are founded by persons who have more than 10 years of experience in the sector in which they finally establish their own business.

In 2003 DG Enterprise launched a comprehensive study among the EU 15 countries on the obstacles that dependent employees face when they try to become self-employed.

In the second phase of the project a group of national experts from Member States analysed the issue further and identified some cases of good practices that could be interesting for all Member States.

The group of experts found that the most important problem faced by dependent employees who want to become self-employed is the often unclear legal definition of the self-employment status. In cases where the newly self-employed person keeps his former employer as a customer, his self-employment status might be challenged by tax and social security authorities which could entail serious financial liabilities, both for the self-employed and his customer.

Another structural problem that might prevent employees to risk changing to self-employment is the possible loss of unemployment insurance claims. There are however also good examples how to overcome this problem: the social security systems of some countries offer an insurance cover for self-employed and entitlements that were built during dependent employment can be transferred. In other countries a return into the unemployment insurance without a loss of entitlements is possible in case of failure.

Other examples of good practices that were identified by the experts concern the financing of start-ups with tax-favoured savings built up during employment or the possibility to take an unpaid leave from employment in order to try out a business idea.

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