Overview

Thanks to its reliable infrastructure, open culture, low tax rates and high funding, Finland is an excellent country to expand your business to. These factors welcome an environment of innovation, collaboration and success.

The country’s largest sectors are electronics, chemicals, machinery, forestry, vehicles, and other engineered metal products. Its most important natural resource is trees, with three-quarters of the total land area being forested.

Finland is also a world leader in technology and ICT. Some of its most globally renowned companies include Nokia, Metso, Neste Oil and Stora Enso.

Like many other Nordic countries, most Finnish employees belong to trade unions that help to negotiate conditions of employment via collective bargaining agreements (CBAs) on behalf of the employee. These terms typically revolve around issues related to working hours, minimum wage requirements, holiday entitlements,  benefits, notice periods and other statutory requirements. 

Whether you're looking to hire employees to work remotely for your business or are interested in building a team on location in Finland. Our guide to hiring in Finland can help you understand some of the key employment terms that make up Finnish employment law, hiring practices and more.

Capital                           Helskinki

Languages spoken       Finnish and Swedish are the two official                                                      languages spoken. Many locals also speak Sami,                                        Romani, Finnish sign language and Karelian. English                                     is spoken by most Finnish as a second language. 

Population size         5.542 million

Payroll frequency     Monthly

Currency                  Euro

VAT                           24%

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For more economical and fiscal information on Finland you can visit the dedicated section.

 

Payroll and taxes in Finland

Social security contributions in Finland are split between employers and employees, with the employee’s part withheld from their salary. The employer must remit the amounts to the appropriate instances on the employee’s behalf.

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Employer contributions in Finland

Employer contributions are as follows:

• Employment Pension Insurance contributions vary from company to company, but the average percentage is 17.4%

• Unemployment Insurance contributions are at a rate of 0.5% up to EUR 2,197,500 on total compensation paid and 2.05% on any compensation exceeding that limit

• The Statutory Accident Insurance rate is an average of 0.7% of the employee’s total wage
  The average Statutory Group Life premium is 0.06% of the employee’s wage

• The Employer’s Sickness Insurance Contribution rate is 1.34%

 

Employee contributions in Finland

Employee contributions are as follows:

• Employment Pension Insurance is 7.15% for people ages 17-52 or 63-67, and 8.65% for those aged 53-62

• Employee’s Sickness Insurance contribution is 1.7% and consists of the Medicare contribution (0.53%) and daily allowance (1.18%). The latter is not collected if the employee’s annual salary is less than EUR 15,128

• Employee’s Unemployment Insurance contributions are 1.5%

 

Minimum wage in Finland

There is no universal minimum wage in Finland. However, most collective agreements specify minimum pay rates for different sectors. Employers must provide employees with a calculation indicating the amount of their pay and how it has been determined.

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Employee benefits in Finland

Mandatory benefits 

Social insurance

All employers and employees in Finland must contribute towards social insurance funds. These cover maternity leave, sick leave, health insurance and unemployment benefits.

Healthcare and workplace safety

Finnish workers are entitled to preventive occupational healthcare financed by their company. Employers must also provide workplace safety and offer guidance on the work environment, equipment and regulations.

Employers are required to provide accident insurance, as detailed in this guide's payroll and taxes section.

Supplementary benefits

Offering your employees benefits beyond the mandatory requirements demonstrates that your company is invested in staff wellbeing.

Supplementary benefits should reflect your employees’ needs and provide them with additional support for their everyday expenditures.

In addition to the mandatory benefits, many employers in Finland often provide extra perks for their employees. These include:

• Flexible working hours

• Meal benefits

• Health, travel and group life insurance policies

• Stock options

• Private pension plans

• Gym memberships

 

Working hours in Finland

According to Finland's Working Hours Act, regular working hours cannot exceed eight hours a day and 40 hours a week. However, it is common for many companies in Sweden to set normal working hours at 7.5 hours a day and 37.5 weekly hours. Finnish employers are obliged by law to monitor actual working hours and arrange compensation for overtime. 

Any overtime hours must be agreed upon beforehand and recorded each time there is an overtime request in the employment agreement (EA). Employees are allowed to work for a maximum of 48 weekly working hours during a four-month period; however, this can be increased to six months if there is a collective bargaining agreement.  

Overtime payment is calculated as such:

• 50% of the employee's hourly rate for the first two hours of daily overtime

• 100% of the employee's hourly for any subsequent hours of overtime

 

Types of leave available in Finland

Annual leave

Employees accumulate annual holiday leave during the holiday credit year, which runs from 1st April to 31st March each year. Employees are typically entitled to 30 days of annual leave per year, which is usually four weeks of summer holiday and one week of winter holiday.

Staff members are eligible for holiday pay during their annual leave. This is equivalent to their regular wage.

Annual leave is accrued on the basis of the 14-day or 35-hour rule. This means that employees who work a minimum of 14 days every month are entitled to days of holiday for each month during which they have accumulated at least 14 hours of work. In the case of the 35-hour rule, employees who work less than 14 days per month but at least 35 hours during one month are eligible for annual leave days for each calendar month in which they have worked for at least 35 hours.

Family leave 

New regulations in the Health Insurance Act highlight that all parental leave and care responsibilities are split evenly between parents in two-parent families. If a child has two parents, parental days are divided equally between the two, and a parent can transfer up to 63 of the parental allowance days for the benefit of the other parent.

The new family leave provisions came into effect for parents expecting a baby from 4 September 2022, and for parents adopting a child from 31 July 2022.

The existing maternity and paternity leave and parental leave ceased after the law came into play. The Finnish Social Insurance Institution (Kela) now pays an allowance for pregnancy and parental leave.

Pregnancy allowance is paid for 40 working days, and parental allowance for a total of 320 working days.

Employers must confirm any obligations to salary payments during family leave in the collective agreement.

Sick leave

Employees are entitled to sick leave if they are unable to perform their job duties under the employment contract.  If they are only partially unable to work, the employer can offer other types of work in Finland that fit their capabilities without harming their health.

If the employment relationship is at least a month old, the employee is entitled to the following:
Full pay during the disability period for up to nine days following the date they fall ill.

Sickness allowance from the state after ten days under the Sickness Insurance Act 2004. The allowance amount will be based on the employee's salary and paid for weekdays and Saturdays for 300 days.

Sickness allowance from the state under the Sickness Insurance Act 2004 after ten days. The amount of the sickness allowance is based on the employee's earned income and is paid for weekdays and Saturdays for a maximum period of 300 days.
Employees who have worked at the company for less than one month are entitled to 50% of their pay. If the sickness is caused willfully or by gross negligence, the employer has the right to waive sick pay.

During this period, the employer has the right to request that the employee provide a medical certificate as proof. 

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Public holidays in Finland

Finland observes the following public holidays:

• New Year’s Day

• Epiphany

• Good Friday

• Easter Sunday

• Easter Monday

• May Day

• Ascension Day

• Whit Sunday

• Midsummer’s Eve

• Midsummer’s Day

• All Saint’s Day

• Independence Day

• Christmas Eve

• Christmas Day

• 2nd Day of Christmas

 

Are background checks mandatory in Finland?

In Finland, there is no legal obligation to carry out a background check on a job applicant or employee’s criminal record.

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Termination of employment in Finland

In Finland, grounds for terminating an employment contract can occur on either:

• Individual grounds that are related to the employee's performance of conduct within the company

• Collective grounds that are related to either the financial or production reasons or the company's restructuring

Our guide will focus on the former.

 

Protection against dismissal 

An employment contract cannot be terminated without a strong reason. The Employment Contracts Act highlights that an employer cannot terminate a contract without giving a warning to the employee and offering them a chance to amend their conduct. The act covers the majority of blue-collar workers and salaried employees in Finland.

If an employer is found to have terminated an employment contract without any legal grounds, they can be made to pay the employee a compensation fee equivalent to between three to 24 months' salary. 

Notice period

Employers should provide notice of termination. They can remove the employee’s obligation to work during this time, but they must still pay the full salary.

If there is no collective agreement regarding the period of notice, the statutory notice period will follow the employee's length of service.

In the event of an employee leaving the company, the statutory notice period is as follows:

• Up to one year’s continuous employment: two weeks

• Between one and four years of continuous employment: one month

• Between four and eight years of continuous employment: two months

• Between eight to 12 years of continuous employment: four months

• Over 12 years of continuous employment: six months

If the employee terminates the employee contract,  the following notice periods will be applicable, provided no existing provisions related to notice periods are stated in their employment contract or in a collective bargaining agreement.

• Up to five years of employment: 14 days

• Over five years of employment: one month

Probation periods in Finland should not exceed six months. This period should be used for the employee to determine whether the job is a good fit for them and for the employer to assess whether the employee fits the job description.

In a fixed-term employment contract, the probationary period cannot be more than half of the contract duration.

Severance pay 

In Finland, there is no statutory obligation to provide severance pay.

Minimum retirement age in Finland

The retirement age in Finland is flexible (between 64 and 68 years) for an earnings-related pension. For the guaranteed pension scheme, the retirement age is 65.

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Do you need to hire employees in Finland?

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Talk to us

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Contact

Mrs. Emanuela Ferina

Head of Global Payroll

emanuela.ferina@studio-bcs.com

Phone 0039 0 363 360254​​​​​​​​​

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