Combining Unemployment and Freelancing

Combining Unemployment and Freelancing: The Rules You Need to Know Before Getting Started

Combining unemployment benefits with freelance work is an increasingly attractive option for people in France who want to start their own business while maintaining a safety net. Whether you’re in the midst of a career transition or simply looking to supplement your income, it’s essential to fully understand the rules and conditions governing this combination. Starting as a freelancer while receiving unemployment benefits can offer a degree of financial security, but it requires adhering to specific criteria.

In this article, we’ll cover the essential information you need to know to embark on freelancing with peace of mind.

Can You Combine Freelance Work with Unemployment Benefits?

Many employees seeking independence ask this question. Indeed, becoming a freelancer presents many challenges, and having some security is quite reassuring.

Fortunately, it is entirely possible to combine freelance work with unemployment benefits in France. However, certain conditions must be met to continue receiving unemployment benefits (ARE). Understanding these rules is crucial for navigating the dual status of independent worker and unemployment benefit recipient.

There are several scenarios where a freelancer can receive unemployment benefits:

• Termination: If you have been terminated, you can receive unemployment benefits, provided you can justify a work period of more than six months.

• Mutual Agreement Termination: This is an agreement between the employer and employee to end the employment contract, which must be approved by the DIRECCTE to ensure the employee’s rights are protected.

• Non-renewal of a Fixed-Term Contract (CDD): If your fixed-term contract is not renewed, you can also claim unemployment benefits, provided you can justify a sufficient work period.

• Starting a Business: If you have at least 5 years of experience and wish to start your own business, you can submit a file to France Travail (formerly Pôle Emploi) to receive unemployment insurance after resignation. You will need to demonstrate the legitimacy and solidity of the project and present a detailed business plan.

Is There a Revenue Cap to Maintain Unemployment Benefits While Freelancing?

When you become a freelancer and combine this activity with unemployment benefits (ARE) in France, it’s important to understand the rules regarding revenue to continue receiving these benefits.

There is no strict revenue cap beyond which you automatically lose your unemployment benefits. However, the amount of unemployment benefits (ARE) you receive will be adjusted based on your freelance income. The total of your earnings (freelance revenue) and unemployment benefits must not exceed your previous salary. If your freelance income is high, your benefits will be proportionally reduced.

The calculation of unemployment benefits for freelancers is based on the amount of income declared each month to France Travail. You are required to declare your gross revenue, which is the total amount invoiced before deducting expenses. France Travail then applies a standard deduction to determine the income considered for the benefit calculation:

• 34% for liberal professions
• 50% for commercial activities
• 71% for merchandise sales activities

These deductions take into account professional expenses and determine the net income used as the basis for calculating the reduction in unemployment benefits.

Which Status Should You Choose to Receive Unemployment Benefits While Freelancing?

Several statuses are compatible with ARE:

• Micro-enterprise (auto-entrepreneur);
• Portage salarial (umbrella company employment);
• SASU (Single-member Simplified Joint-Stock Company);
• EURL (Single-member Limited Liability Company).

The choice of status depends on your personal situation, the nature of your activity, and your long-term goals. The micro-entrepreneur status is ideal for those seeking simplicity and a quick start. However, it is not the most advantageous for combining unemployment and freelancing since 70% of the income (revenue after deduction) is deducted from the benefit amount.

Portage salarial, on the other hand, offers social security and simplified administrative management, ideal for those who want to minimize risks. This status allows you to receive benefits while being employed by an umbrella company, making the calculation and combination with freelance income easier.

The SASU and EURL are suitable for those planning a more structured activity and who want to optimize their taxes while protecting their personal assets. A company status will be the most prudent choice if you want to receive all your unemployment benefits as a freelancer. In this case, you should not pay yourself a salary.

Combining Unemployment with Freelance Work: How Does It Work?

Here are the steps to follow and the points to consider to successfully combine unemployment and freelancing: