Given that unemployment insurance was mandatory, and the status of management members did not exempt one from paying insurance premiums, but those same members couldn’t access unemployment benefits in the event of losing their job, this regulation strongly limited fundamental ownership rights, Madise’s office said.

Madise also found that the restriction had a large inhibiting effect on entrepreneurship, as it complicated the establishment of new companies. In the case of persons without other regular income, setting up a small company was, as a rule, only possible when combined with paid employment in the initial period.

However, any business involving seasonal or irregular economic activity or modest turnover would inevitably remain sidelined compared to an entrepreneur’s principal job. If the law deprived such people of the unemployment insurance benefits when their employment was terminated, the risk of losing income could make them abandon entrepreneurship, or not start a business at all.

The opinion of the Ministry of Social Affairs that running a company is an activity similar to employment was beside the point when it came to assessing the risk insured by the unemployment insurance scheme, Madise found. What mattered was whether the risk against which unemployment insurance was intended materialized when one loses one’s regular job.

In Madise’s view, the argument that management board members are not in a situation similar to that of an unemployed person, as their income is ensured by their companies, would only have weight if it was a paid position. In a situation where management board members receive no remuneration, their status did not protect them against the risk of losing job-related income, Madison argued.

Madise is also of the opinion that the restriction does not have a significant impact on preventing the abuse of the unemployment insurance system. If it was abolished, the risk of the system’s abuse would increase minimally, or not at all.

The chancellor proposed to the Riigikogu at the end of last year to amend laws so that members of a company’s management would have the right to receive unemployment insurance benefits when they lose their job and income. The proposal was backed by 69 members of the Riigikogu, with three abstentions and no votes against. The Social Affairs Committee was tasked with drafting a corresponding bill but has not done this so far.