Employer Contributions in Finland

The employer is obliged to pay the following contributions in addition to the salaries: (1) pension insurance, (2) health insurance, (3) accident insurance, (4) unemployment insurance, and (5) group life insurance. These contributions are compulsory. In general, the contribution amount may be affected by the employee's age, the employment relationship’s duration, and the salary.

Health insurance

The employer’s health insurance contribution is paid to the Tax Administration and other self-assessed taxes.

The health insurance rate is laid down annually — e.g., the 2023 rate is 1.34% for employees between 16 and 67 years of age. The health insurance rate applies to the salaries to be paid in 2023.

Pension insurance

The employer must set up and pay pension provisions for its employees if they are between 17 and 67 years old and if their monthly earnings exceed the lower limit for compulsory insurance. In 2023, the earnings must be at least EUR 62.88 per month. In addition, employees are obligated to participate in their pension provision by paying the employee pension contribution.

As of 2024, the average pension contribution is 25.12%.

To manage the pension insurance, the employer must inform without delay one of the pension insurance companies — Elo, Ilmarinen, Varma, and Veritas — of the employee’s employment agreements that have begun and ended.

Pension insurance covers a pension in proportion to the earnings during the period of employment if the conditions for the pension are met. The pension is paid due to disability or old age.

Accident insurance

Employers must take accident insurance for their employees against accidents at work and occupational diseases. However, if the salary doesn’t exceed EUR 1,300 in a calendar year, the employer is exempt from the obligation to take accident insurance.

The obligation applies to all employees in an employment relationship regardless of their salary, age, or duration. Statutory accident insurance applies to remote work as well.

The amount of accident insurance varies in relation to how much danger the work and the sector in which it’s performed present, with the average contribution being 0.7% in 2023.

Statutory accident insurance covers accidents at work, and while travelling to and from work, certain injuries considered accidents at work and occupational diseases caused by work.

The employer can take accident insurance from any insurance company providing accident insurance.

Unemployment insurance

Both the employee and the employer have to pay unemployment insurance contributions. The employer is, however, responsible for paying the contributions.

The employee’s unemployment insurance contribution is calculated based on the salary amount paid by the employer. In 2023, the contribution is 0.5% if the salary is up to EUR 2,169 and 2.05% if the salary is above that amount.

The unemployment insurance contribution is levied on employees between 18 and 64.

Unemployment insurance contributions finance unemployment security, adult education, and pension benefits.

Group life insurance

Generally, applicable collective agreements may impose an obligation on employers to take group life insurance.

The group life insurance contribution varies among insurance companies and is charged together with the accident insurance contribution.

Group life insurance covers compensation paid to the employee’s heirs in the event of the employee’s death.

Employee Contributions in Finland

Tax residency

In general, residents of Finland are subject to tax on their worldwide income, whereas non-residents are subject to tax on the income generated only within the country. To be considered a resident, the person must (1) have their home, and main place of abode in Finland, (2) have their home and main place of adobe abroad but stay for more than six months in Finland, or (3) be a Finnish citizen who left Finland to live abroad less than three years ago (so-called three-year rule).

Income tax

Earned income is taxed at state, municipal, and church levels. Earned income includes salary, comparable income (such as fringe benefits, employee issues and options based on the employment relationship), and pension. Certain tax deductions can also be made from earned income — e.g., trade union dues and home-work-home trip expenses. Earned income is taxed according to a progressive scale at the state level. A separate regulation regarding state-level income taxation is enacted each autumn for the following year.

Income tax rates
Over	Not over	Tax on Column 1	Tax on Excess (%)
0	19900	0	12.64
19900	29700	2515	19
29700	49000	4377	30.25
49000	85000	10215	34
85800		22727	44

In addition, earned income is taxed at the municipal level (municipal tax) and at the church level (church tax). Municipal tax varies annually and among municipalities, and church tax must be paid if the person belongs to a church. Depending on the municipality, the rate varies between 4.36% and 10.86%. Church tax is payable by Evangelic Lutheran, Orthodox, and Finnish German church members in Finland at flat rates on the same taxable income used for municipal taxation. Rates vary between 1% and 2.10%, depending on the parish.

Pension insurance

Pension insurance is part of statutory social security. Pension insurance covers a pension in proportion to the earnings during the period of employment if the pension conditions are met. The pension is paid due to disability or old age.

The employer pays the full pension insurance contribution but withholds the employee’s contribution from the salary.

The employee’s contribution depends on the employee’s age as follows:

7.15% (17–52 years old)
8.65% (53–62 years old)
7.15% (63–67 years old)

Unemployment insurance

Both the employee and the employer have to pay unemployment insurance contributions. The employer is, however, responsible for paying the contributions.

As of 2023, the employee’s unemployment contribution is 1.5% of the salary.

Unemployment insurance contributions finance unemployment security, adult education, and pension benefits.

Voluntary employee contributions

Trade union dues

An employee can belong to a trade union, and trade union dues are usually levied on the employee’s salary. The dues are also tax deductible.

Voluntary unemployment fund contributions

An employee can also belong to a voluntary unemployment fund, and the contribution is usually levied on the employee’s salary. The contribution is also tax deductible.

General Employee Pay Regulations in Finland

Minimum wage

There is no minimum salary in Finland. The Employer and the employee may agree in the employment agreement on how the work is to be compensated. However, this freedom may be restricted by the salary provisions in the applicable collective agreement. If there is no collective agreement with which the employer must comply, the employer and the employee may agree on the pay. If no agreement is reached, the regulation stipulates that the employer must pay the employee a salary considered usual and reasonable for the work in question. Published statistics — such as wages, salaries, and labour costs (Statistics Finland) — can be used as a reference in determining an appropriate level of pay.

Payment requirements

Salaries must be paid into a bank account designated by the employee and be available to the employee on the due date.

Salaries may be paid in cash but for compelling reasons only — for instance, if the employee doesn’t have a bank account or the employer doesn’t have the employee’s bank details. The employer must obtain a receipt signed by the employee or some other means of verifying payment if salaries are paid in cash.

Payday

Salaries must be paid on the last day of each pay period — a payday — unless otherwise agreed in the employment/collective agreement. That typically happens to be the last day of the month.

The due date for salary payment is brought to the preceding weekday if the due date is one of the following:

Sunday
church holiday
Independence Day
May Day
Christmas Eve
Midsummer Eve
Saturday

Working from Home Policy in Finland

Remote work is carried out fully or partially outside the company’s premises, either from home or otherwise remotely.

Finnish employment law doesn’t expressly recognize the concept of remote work. In general, employment law regulation also applies to remote work if it fulfils the characteristics of the employment relationship. This means the same obligations must be followed in a standard employment relationship.

Remote work is optional for both the employer and the employee. This means that (1) the employee doesn’t have an absolute right to demand access to remote work, and (2) the employer cannot force the employee to remote work unless, for example, exceptional circumstances temporarily dictate otherwise.

The employer can enable remote work through unilateral instructions. However, remote work arrangements are usually agreed in writing or follow ground rules mutually agreed upon with the company’s employees. Clear guidelines and rules regarding remote work should be created at the workplace. If the company employs 20 or more people, remote work policies should be discussed, like all other matters that fall under cooperation within the business regulations. It should also be noted that if remote work is to be done on a regular and full-time basis, a written remote work agreement between the employer and the individual employee should be made as an annexe to an employment agreement.

Working time

Employers must keep records of employees’ working hours. This also applies to remote work.

The employer must supervise and ensure employees’ working conditions are healthy and safe. The need to enforce limits on working hours isn’t suspended when the work is performed outside the employer’s premises.

The employer must consider remote employees’ workday duration to prevent harmful stress and strain. However, employees must also be personally responsible for work arrangements and adequate breaks while working remotely.

Occupational health and safety

By law, the employer must ensure that work is performed under safe and healthy conditions, regardless of location, which includes remote work. Assessing hazards and harms is an essential part of this obligation.

Remote work is often performed at home or in conditions where the employer’s obligation to ensure safety is difficult to determine and assess. The constitutional right to domestic peace must also be considered in these cases. Employers together with employees must ensure that remote work is safe, ergonomic, and free from interruption.

Employers must also systematically monitor factors that cause harmful occupational stress and strain. Good planning increases employees’ well-being as well as productivity since no sick leaves happen due to physical or psychological strain.

However, employees must also be personally responsible for their well-being while working remotely. They must be able to self-direct their work, separate work and time off, and critically evaluate their work methods to identify potential risks. Occupational health care provides expert assistance in risk management through advice and instructions for various forms of work.

The employer’s statutory accident insurance is also valid in remote work. Occupational accidents refer to accidents that occur during work or while commuting. However, there may be insurance coverage limitations in the case of remote work. It is advisable to check the insurance policy terms and conditions beforehand.

Agreement on remote work

Compared to the usual way of working, remote work involves benefits and risks. Both should be considered when considering the workplace’s remote working practices and agreeing on remote working.

The employer is not obligated to create guidelines and rules regarding remote work or conclude a remote work agreement with the employee, but this is highly recommended. If the company employs 20 or more people, remote work policies should be discussed, like all other matters that fall under cooperation within the business regulations.

The following terms should be agreed upon:

the time when remote work is possible
remote work hours
remote work monitoring
sick leave policy
information security
possible costs and distribution

Workspace Guidelines in Finland

Employers must take all reasonable steps to ensure the employee’s workstation is correctly set up, safe, comfortable and easy to use to reduce potential injuries as indicated in the health and safety measures. In turn, employees must care for their health and safety and follow any reasonable policies or directions their employer gives them. They must inform employers of any work-related incidents or injuries that occur while working at home. An appropriate workstation will include the following:

Right level of illumination, both natural and artificial light sources should not create glare on the computer
Sufficient lighting level for visual tasks to be completed without eye strain
The right level of ventilation and thermal comfort
Unobstructed exit path in case of emergencies, including electrical cords, uneven carpet, clutter
Suitable storage for documents

Working conditions

Employers must ensure employees access their workplace entitlements, including breaks, standard hours and any agreed-to flexible work arrangements. The employer should have general working conditions and work from home policies in place, including a policy aimed at preventing and limiting employment-related psychosocial pressure. When working from home, the employer must avoid the chances of employees experiencing excessive work pressure. Recommendations for employees working from home:

Take appropriate breaks every 30 minutes to ensure repetitive actions are not continued for long periods, and stand up at least once per hour
Stretch and change posture often, and if possible, an alternate activity
Check that you have a comfortable posture
Don’t do any lifting, pushing, or carrying type task beyond the physical capacity
Keep wrists in a neutral (straight) position—not bent up or down
Sitting posture is upright or slightly reclined, maintaining slight hollow in the lower back
Establish boundaries around work hours
Schedule regular meetings and catch-ups with the team
Go outdoors and exercise daily, if possible

Holiday Leave in Finland

Holiday entitlement

Employees accrue paid annual vacations in the course of their employment relationships. The number of days and the salary or compensation payable for that time are calculated based on the regulation and the collective agreement applicable to the employer.

The accrual of vacation days is calculated based on the holiday credit year from April 1 to March 31. If an employment relationship lasts for less than a year as of March 31, the employee is entitled to two vacation days for each full holiday credit month. If an employment relationship continues for a year up until March 31, the employee is entitled to two and a half vacation days for each full holiday credit month.

Most vacations are taken between May 2 and September 30. Remaining vacation days may be taken throughout the year or kept for later, provided both the employer and the employee agree. Employees receive their annual vacation pay when taking their vacations. They have the right to express requests when they want to take their vacations, and the employer must consider such a request. Ultimately, however, the employer has the right to determine the time of an employee’s annual vacation. The employer must treat employees equally when deciding annual vacation times, while employees must announce their desired vacation time at least one month (in exceptional cases, two weeks) in advance.

Generally, vacation pay must be paid before the start of the vacation. However, if a vacation isn’t longer than six days, the pay may be transferred on the company’s regular payday. The employer must give the employee a vacation payslip showing the payment amount and its calculation.

The employer must keep records of the employees’ annual vacations, additional leave days supplementing the annual vacations, carried-over vacation days, and all the remuneration and compensation paid based on the regulation. Such records must show the lengths and timings of annual vacations, the number and timings of additional leave days, the pay and compensation amounts, and the calculation method. Employers must give employees a recorded report of their annual holidays if they request it.

The employer and the employee can agree on the following matters:

time off longer than 12 business days in one or more segments
employee’s allocating an annual vacation in a period at the beginning of the calendar year, which contains the holiday season in question and ends before the start of the holiday season in the following year
employee’s obligation to take time off exceeding 12 business days no later than one year after the end of the holiday season in question
employee’s obligation to take annual vacation accrued before the termination of the employment relationship
employee’s taking the portion of the annual vacation exceeding 24 business days in the form of shorter working hours (only at the employee’s initiative)
employee’s saving up the portion of the annual vacation exceeding 18 business days for later (carried-over vacation).

Collective agreements may contain further provisions on annual vacation periods and the salaries or compensation payable during their duration.

A part-time employee working less than 14 days or less than 35 hours per calendar month doesn’t accrue annual vacation. Such an employee is entitled to free time and to holiday compensation. Holiday compensation is also paid for unused holidays at the end of an employment relationship.

Bank holiday

Finland has 12 public holidays; however, only Independence Day (December 6) is a paid statutory holiday. The salary is equivalent to that of a full working day.

In addition, collective agreements may contain clauses according to which employees are entitled to receive and employers are obliged to pay salary on other public holidays.

Types of Leave in Finland

Sick leave

Employees prevented from performing their work by an illness or accident are entitled to sick pay. By law, sick pay is paid for the day when the employee falls ill when it would have been the employee’s working day and for each working day included in the following nine business days. Holidays aren’t counted as business days.

If the employment relationship lasts for at least one month, employees are entitled to full pay as sick pay. In employment relationships that last for less than one month, employees are entitled to 50% of their pay as sick pay.

Employees who observe variable working hours are entitled to pay during illness if their shift is already allocated. When fixed hours are agreed upon between employer and employee, the pay during illness is similar.

Payment of sick pay requires the following:

The employee is absent from work due to incapacity caused by an accident or illness.
The said incapacity isn’t caused wilfully or by gross negligence.
The cause of absence due to sickness is demonstrated with reliable documentation.
The employer is appropriately notified of the absence due to sickness.
The accident or illness is the cause of incapacity such that the employee is unable to perform the duties specified in the employment agreement.

In addition, collective agreements often contain sick pay provisions that differ from the minimum provisions of the regulation. For instance, the pay period specified for sick pay is generally longer in collective agreements.

Family leave

Employees are entitled to take leave from work when they receive maternity, special maternity, paternity, or parental allowance. The purpose of family leave is almost always to care for the employee’s child. However, family leave is also allowed for compelling family reasons, where the employee’s presence is required.

“Family leave” is a blanket term used when an employee

takes maternity, special maternity, paternity, or parental leave
takes child-care leave
takes part-time child-care leave
takes temporary child-care leave
is absent from work for compelling family reasons
is absent from work to take care of a family member or someone close to the employee

The family leave reform entered into force on August 1, 2022. The reform applies to families whose child’s expected delivery date is on or after September 4, 2022, or whose adopted child was taken into care on or after July 31, 2022.

Parental allowance is paid for a maximum of 320 working days. The 320 days of parental allowance is granted to the biological or adoptive parents who are the child's legal guardians or another person responsible for the children. The leave is divided equally between the parents, i.e., each parent gets a maximum of 160 days of parental allowance. A pregnant parent is also entitled to 40 days of maternity allowance in addition to the days of parental allowance, provided that the pregnancy has lasted at least 154 days. The parents aren’t obligated to use the entire 160 days quota themselves, but a parent may transfer up to 63 days of parental allowance to the child’s other parent or the person who takes care of the child.

Pregnancy leave usually starts 30 working days before the estimated due date, and parental leave usually starts after the baby is born.

The employer and the employee may agree on (1) an employee’s taking parental leave on a part-time basis and (2) the terms of part-time work. If the employer refuses to conclude a part-time parental leave agreement, they must justify this in writing.

Parental allowance may be used until the child turns two or until two years pass from the date when the adopted child is taken into the care of the family. The employee may take parental leave in a maximum of four parts, and each part should be at least 12 working days.

Employees are entitled by law to family leave but must also notify their employer as specified in the regulation. However, the employer may refuse partial child-care leave in certain cases.

Under the Employment Contracts Act, the employer isn’t required to pay wages for the duration of family leave. However, many collective agreements specify that wages must continue to be paid during pregnancy leave and temporary child-care leave. When the child is born, and as the child grows, the parents are entitled to various benefits paid by KELA.

Employees must notify the employer about their intention to take maternity, paternity, parental or child-care leave at least two months in advance.

Special cases for leave notification are as follows:

The notice period is one month if the leave duration is no more than 12 business days.
If the leave is to care for an adopted child, the two-month notice period must be observed whenever possible.
If it isn’t possible to observe the two-month notification period because of the spouse’s employment start date, the employee is entitled to take a parental leave one month from the date of the notification unless this would cause a serious inconvenience to the employer’s operations. In the latter case, the employer must give the employee grounds for refusal.

Unless otherwise agreed by the employer and the employee, family leave may not be interrupted or its time changed except for a justifiable reason. Any interruption usually requires a significant change in the arrangements of caring for a child.

After family leave, the employee can return to their former job. If that isn’t possible, the employee must be offered equivalent work following the employment agreement. The employee must be offered other work following the employment agreement if that isn't possible.

An employee accrues annual vacation during maternity leave, special maternity leave, paternity and parental leave, temporary child-care leave and absence for compelling family reasons. The time equivalent of days at work accruing annual vacation is, at the most, 156 working days – i.e., approximately six months. The time equivalent of days at work is considered per one childbirth or adoption and not per holiday credit year.

A mother of an adopted child is entitled not to maternity leave but to a parental leave of 233 working days. A mother can receive a parental allowance for an additional 54 working days if the mother has adopted the child alone and has no spouse entitled to paternity allowance at the end of the parental allowance period.

When the employment relationship continues for more than a year, the employee is entitled to two and a half business days of vacation for each full holiday credit month. An employee accrues annual vacation during pregnancy, special pregnancy, parental leave, temporary child-care leave and leaves for compelling family reasons or informal care leave. These accrue a maximum of 160 working days’ equivalent of annual vacation.

An employee doesn’t accrue annual leave while on child-care leave. However, child-care leave doesn’t interrupt the employee’s employment relationship, so the time of the child-care leave is considered when calculating the duration of the employment. In other words, child-care leave doesn’t decrease the number of vacation days accrued when the employee is at work in that holiday credit year. If an employment relationship lasts over a year, the employee continues to accrue 2.5 vacation days per month while at work, even if the employee takes part of the year off for child-care leave.

Study leave

Study leave is designed to allow employees to study.

Employees are entitled to this after a year of employment with the company. The leave is for up to two years in five years. Employees are entitled to five days of study leave if they have worked for the same employer for at least three months.

Study leave can be taken in one or more blocks. Alternatively, employees can work a few hours each day and take the rest of the day off to study.

Study leave is always granted based on the employee’s application. The application must be submitted to the employer before the studies begin: (a) in writing at least 45 days before if applying for more than five working days of study leave or (b) in writing or orally at least 15 days before if applying for no more than five working days of study leave. The employer and the employee can also agree on another method of application.

The employer must inform the applicant about the decision before the studies begin (a) in writing at least 15 calendar days before if the application is for more than five working days of study leave or (b) at the latest seven days before if the application is for no more than five working days.

The employer has the right to reschedule an employee’s study leave if their absence in the period would cause a considerable inconvenience to the business. The study leave can be postponed by up to six months. If the course the employee wants to attend is run at intervals of more than six months, the employer can postpone the leave until the beginning of the next course. The study leave can also be postponed if less than six months have passed since the employee’s previous study leave. However, the employer doesn’t have the right to postpone the study leave if the employee intends to conclude a training course or study began during their last period of study leave. The employer cannot reschedule the employee’s study leave arbitrarily, but only if the leave would significantly impede the employer’s business.

The employee can reschedule study leaves of more than five days if the new schedule doesn’t considerably inconvenience the employer. Employees who wish to reschedule or cancel their study leave must let their employer know in writing at least two weeks before they are due to start their leave.

Employees granted over 50 working days of study leave can end their leave early and return to work anytime. Employees on study leave who wish to return to work early must let their employer know at least four weeks before they intend to return.

The employer doesn’t have to take back the employee going on study leave until the employment agreement of any new employee hired to cover for the one on leave can be terminated by law or on the grounds of a collective agreement.

On the employer’s request, employees must present the employer with a written certificate confirming their studies.

Employees’ employment relationship continues to be valid throughout their study leave. Study leave is unpaid unless otherwise stipulated in the applicable collective agreement or agreed upon between the employer and the employee.

Employees accrue annual vacation during their study leave if they return to work immediately after their study leave ends. However, annual vacation is accrued over no more than 30 days of study leave during a holiday credit year (from April 1 to March 31).

The employer cannot terminate or cancel employees’ employment agreements because they have sought or taken study leave. However, being on study leave doesn’t prevent an employee from being given notice of termination on other legal grounds for dismissal.

Job alternation leave

Job alternation leave allows employees to take an extended period off work for no specific reason. Job alternation leave is an arrangement where employees are released from their work duties for a fixed period. A job alternation agreement is made in writing between the employee and the employer. The job alternation agreement and any other reports must be submitted to The Employment and Economic Development Office before the job alternation leave begins.

Job alternation leave is available for employees:

who have had an employment relationship with the same employer for at least 13 months (This period may include a maximum of 30 calendar days of unpaid absence.)
whose working hours total at least 75% of the working hours of a full-time employee in the relevant sector
who have worked for at least 20 years prior to the beginning of the leave period
who have worked for at least five years since they last took a job alternation leave

Job alternation leave can be at least 100 and at most 180 calendar days long. The job alternation leave granted may be extended if the employer agrees. The extension must be agreed upon two months before the current job alternation leave ends.

Employees taking job alternation leave are paid job alternation allowance for the duration of their leave. The prerequisite for paying job alternation allowance is that an unemployed jobseeker is hired as a substitute for the duration of the leave. The job alternation allowance is 70% of the unemployment allowance the person would be entitled to if unemployed. No annual vacation is accrued during job alternation leave.

Performing other work during the leave isn’t in line with the purpose of the legislation. but it isn’t prohibited. However, earned income and other earnings reduce the job alternation allowance paid.

If employees want to interrupt the granted job alternation, leave before it ends or return temporarily to work, they must agree on it with the employer.

The job alternation leave ends when the employee:

is entitled to maternity, special maternity, paternity, or parental allowance
is granted leave for more than 18 working days owing to pregnancy, childbirth or care for a child, or if the person is entitled to a special care allowance.

The job alternation is interrupted but not ended if either of the above lasts less than 18 working days.

After the job alternation leave, employees are entitled to return to their previous job. If this isn’t possible, the persons returning from leave must be offered equivalent work per their employment agreement or service relationship. Other kinds of work must be agreed upon between the employee and employer.

Independent Contractor Contract & Employment Guidelines in Finland

What makes someone an employee

According to Finnish law, the employment relationship — a legal relationship in which an employee works under an agreement with the employer who directs and supervises the work and in return, pays a salary or some other remuneration — defines the concept of an employee.

The characteristics of the employment relationship are (1) agreement, (2) working on behalf of the employer, (3) remuneration, and (4) the employer’s direction and supervision. In practice, the employer’s direction and supervision are the most important characteristics of the employment relationship, and the existence of the employment relationship is assessed based on whether these characteristics are fulfilled. The employer’s direction and supervision mean that the employee is in a dependent position in relation to the employer. The employer can instruct the employee on how, where, and when the work is to be done, and the employee must follow these instructions.

Independent contractors, on the other hand, carry out their work without the direction and supervision of the employer. This is the main difference between employees and independent contractors. Independent contractors have several distinct characteristics — profit motive; the financial risk associated with the activity; scale, scope, publicity, and autonomy. Another important characteristic of independent contractors is the risk of losing capital.

In assessing what distinguishes an employee from an independent contractor, the Finnish Supreme Court emphasised the circumstances of the work performed.

Employee vs contractor

Employment law regulation applies to work performed by employees only and doesn’t protect independent contractors. This means that if a legal relationship meets the characteristics of the employment relationship, the employee is entitled to the protection provided by the employment law regulation.

The following acts are applicable:

Employment Contracts Act (55/2001)
Working Time Act (872/2019)
Annual Holidays Act (162/2005)
Non-discrimination Act (1325/2014)
Act on the Protection of Privacy in Working Life (759/2004)
Collective Agreements Act (436/1946)
Act on Job Alternation Leave (1305/2002)
Study Leave Act (273/1979)
Pay Security Act (866/1998)
Occupational Safety and Health Act (738/2002)
The legislation on the personnel involvement systems (cooperation within businesses, representation in administrative organs, and personnel funds).

The work performed by an independent contractor is based on an agreement between the independent contractor and the client. As a rule, such an agreement regulates their relationship. In addition, the Finnish Commercial Code (355/1987) and certain special regulations also regulate this kind of relationship. However, employment law regulation doesn’t apply.

Penalties for Misclassification in Finland

Employment law regulation consists of several mandatory provisions. If the characteristics of an employment relationship are met, these provisions must be followed, and any agreement reducing the employee’s rights and benefits contrary to these mandatory provisions shall be null and void. These provisions protect employees, and employers must apply them.

If the employer breaches any of these mandatory provisions in a case of misclassification, several legal remedies may be applicable:

Monetary penalty if the employer hasn’t followed certain provisions of the Occupational Safety and Health Act
Liability for damages if the employer has committed a breach against obligations arising from the Employment Contracts Act.
Compensation is if the employer has discriminated against the employee contrary to the Non-discrimination Act.

Standard hours in Finland

As a rule, regular working hours mustn’t exceed 8 hours a day or 40 hours a week. The main rule doesn’t prevent employers from introducing arrangements based on shorter working hours.

Employees’ working hours can also be agreed upon based on an average. Daily working hours mustn’t exceed eight hours, but weekly hours can be averaged over six days.

Flexible working hours

Employees’ regular working hours can also be flexible. Flexible working hours allow employees to choose, within certain limits, the start and end times of their workdays.

Flexible working hours must always be agreed upon between the employer and the employee, ideally in writing. In addition to the employee’s regular working hours, the employee and the employer must agree on the following:

an uninterrupted period of fixed working hours each day
daily limits to flexibility and the “bandwidth” period within which all required hours must be worked
times of the employee’s rest periods
maximum overtime and minimum number of hours that have to be worked (“the flexible hours' accumulation”)

Maximum Working Hours & Overtime Laws in Finland

The ceiling for total working hours applies to all workers regardless of how working hours are organised. That includes flexible working hours schemes and flexible working time arrangements. The ceiling is calculated based on all hours worked, regardless of whether they are regular, additional, overtime, emergency, or handovers.

The general rule is that the employee’s total working hours, including any overtime, mustn’t exceed an average of 48 hours per week over four months.

The provision on the maximum number of working hours is mandatory and cannot be exceeded. Working hours are calculated per employee and across adjustment periods.

To comply with the provision of the regulation, the employer must systematically monitor maximum working hours, which can be part of or separate from the record of working hours.

Additional work and overtime

Additional work is performed outside the employee’s regular working hours but without exceeding the statutory maximum number for regular working hours. Overtime is work exceeding the maximum number of regular working hours in the regulation.

Performing additional work and overtime work always requires the employer’s initiative and approval. Similarly, the employer must have the employee’s consent for additional overtime work.

Additional work is compensated based on the pay for regular working hours unless the employee and employer have signed a separate agreement for higher pay. The employer and the employee can agree to convert the compensation for additional work into time off during regular working hours.

Overtime is compensated with a higher salary rate, which depends on the number of overtime hours and whether it’s daily or weekly overtime or overtime in the context of period-based work. Alternatively, employees can be compensated for overtime by receiving paid time off in lieu of the overtime hours worked.

Sunday work

Employees can be asked to work on a Sunday or a religious holiday only with their consent or if this is provided for in their employment agreement.

Night work

Work performed between 11:00 p.m. and 6:00 a.m. shall be regarded as night work. Working nights on a regular basis is permitted in certain cases.

Rest periods and breaks

Daily breaks

Employees who work for more than six hours a day in a job where their physical presence at the workplace isn’t a requisite for the uninterrupted workflow must, as a rule, be given a daily break of at least one hour. The employer can also agree on a shorter break with the employees, albeit no shorter than half an hour.

Daily rest period

Employees are entitled to an uninterrupted period of at least 11 hours off during the 24 hours following the beginning of each shift. An employee’s daily rest period can be temporarily shortened to seven hours for practical reasons with the employee’s consent. In addition, an employee’s daily rest period can be temporarily shortened to five hours for up to three consecutive daily rest periods for practical reasons. An employee whose daily rest period has been temporarily shortened must be given compensatory time off in connection with their subsequent daily rest period.

Weekly free time

Employees must be given at least 35 hours of uninterrupted, free time every seven days, preferably around a Sunday. Any employees who must be called in to work during their weekly time off must be compensated for the loss of their free time. This can be done by shortening their regular working hours to compensate for the time lost or by remunerating them in cash.

Time Tracking Obligations in Finland

Working hours account

Employers can introduce a working hours accounting system to keep track of working hours, holiday allowances, and any accrued time off in lieu of monetary compensation.

Introducing a working hours accounting system should be agreed upon in writing. The agreement must specify at least the following:

· information that can be entered into the system

· accumulation limits

· the way the system is to be dissolved and employees reimbursed for any accumulated entitlements upon the dissolution of the system

· the way holidays can be taken, and the procedures for taking time off in lieu of monetary compensation

The way of taking time off must be agreed upon when the working hours accounting system is set up. Time off is accumulated during working hours, and the account must be taken following the rules and procedures agreed for the system.

Working hours account may also be based on collective agreements, in which case its provisions should be observed. A working hours accounting scheme based on the applicable collective agreement is an alternative to a working hours accounting system based on the regulation. This means that a working hours accounting system based on the regulation can be deployed only once, and any working hours accounting scheme established based on the applicable collective agreement has been discontinued.

Penalties

Employers can be penalized for not recording working hours or abusing the system in any other way:

failing to keep records of working hours
not recording hours properly
altering records
destroying or concealing records
rendering records illegible

Collective agreements

Various provisions on working hours may have been agreed upon in the collective agreement. The salary payable for Sunday work performed during regular working hours is the regular salary with a 100% increment. Sunday work bonuses can be converted to time off in lieu of agreement.

Employment conditions in Finland

Regulating terms and conditions of an employment relationship

Employment law presents several ways to regulate an employment relationship:

Employment law regulation
Collective agreements
- normally applicable collective agreement, which the employer is obliged to follow if the employer is a member of an employer’s organisation
- generally applicable collective agreement, which the employer is obliged to follow if the employer isn’t a member of an employer’s organisation, and if there is a generally applicable collective agreement in force in the sector
Company-specific standards, such as cooperation agreements
Employment agreement
Established practice
Employer’s unilateral instructions

Non-compete

A non-compete agreement is a free-form agreement restricting the employee’s right (1) to conclude, after the termination of an employment relationship, an employment agreement with an employer who carries out a competing activity with the employer with whom the employee was employed at the time the non-compete agreement was concluded, and/or (2) to carry out such an activity for employee’s account.

A non-compete agreement can be concluded for only a particularly weighty reason related to the employer's operations. This means that a non-compete agreement is usually justified if (1) the employee works with product development, research, or similar activities and (2) the employer has knowledge and skills not generally available to competitors.

The employer is obliged to compensate the employee for signing the non-compete agreement. If the non-compete agreement restricts the employee’s right for a maximum of six months, the employer must pay the employee compensation equal to 40% of the employee’s salary for the restriction period. If the non-compete agreement restricts the employee’s right for more than six months, the employer must pay the employee compensation equal to 60% of the employee’s salary for the restriction period.

A non-compete agreement can be in force for a maximum of one year after the end of the employment relationship.

In addition, the employee isn’t bound by the non-compete agreement if the employment relationship has ended for reasons attributable to the employer.

Working time records

Working time adjustment scheme

When (1) working time is organised based on average and flexible working hours, or (2) flexiworking isn’t in use, the employer must prepare in advance a scheme for adjusting working time. The scheme must indicate at least the regular working time in each week. The adjustment scheme must be prepared to cover the period during which regular working time shall be adjusted to the provided or agreed average.

Work schedule

A work schedule indicating the start and the end of employees’ regular working time and the break times must be prepared for each workplace.

Working time register

Employers must record the hours worked and the remuneration paid thereon for each employee

Business transfer

Business transfer is transferring an enterprise, business, corporate body, foundation, or any other operative part to another employer if the business or a part of it remains the same or similar after the transfer.

When a business is transferred, employment relationships continue without interruption. In general, rights and obligations valid during the transfer are also transferred to the new owner or proprietor. The applicable collective agreement, on the other hand, may change if the new employer is organized differently from the transferor-employer. The change may take effect only after the term of the collective bargaining agreement ends.

The transferor may not terminate an employee’s employment agreement merely because of the business transfer.

Employees are entitled to give the notice to terminate their employment agreements on the transfer date regardless of the notice period otherwise applied to the employment relationship or its duration if the employer or the new proprietor informs them of the transfer no less than one month before the transfer date. If employees are informed of the transfer later than that, they’re entitled to give the notice to terminate their employment agreement on or after the transfer date but not later than one month after having been informed of the transfer.

If an employment agreement is terminated because an employee’s working terms are worsened substantially as a result of the business transfer, the employer is deemed to be responsible for the termination of the employment relationship.

Intellectual property

Patents (employee inventions)

If the employee’s work has brought up a patentable invention, the employer may acquire the right in the invention if the use of the invention falls within the field of activity of the employer’s enterprise or of an enterprise belonging to the same consolidated corporation. However, the employee is entitled to reasonable compensation if the employer acquires the right to the invention. In addition, the freedom of contract is the main rule of the system. For example, the employer and the employee can agree with the utilisation of the invention and the amount of compensation to be paid to the employee. However, the legislation also imposes some restrictions on the freedom of contract, such as that the employee shall have the same right in the employee’s inventions as other inventors.

Copyright

The legislation contains an explicit provision for computer software and databases only: If computer software and work directly associated with it has been created in the scope of duties in an employment relation, the copyright in the computer software and the work pass to the employer. As for other works’ copyrights, the so-called normal use presumption is often applied: The employer would have the right to use the work in its activities to the extent necessary for its normal operation, but the copyright would remain with the employee. In addition, according to the legislation, the copyright can be transferred entirely or partially, so the employer and the employee are entitled to make an agreement by which the employee transfers the employment-related copyrights to the employer.

Design copyrights

Generally, design rights transfer to the employer if the employee must create design models during the employment relationship. In addition, according to the legislation, design rights can be transferred to another party, so the employer and the employee are entitled to make an agreement by which the employee transfers the employment-related design rights to the employer.

Cooperation within businesses

If a business regularly employs at least 20 employees, special rules regarding cooperation must be applied. These rules contain, for example, the employer’s obligations to have a regular dialogue with employee representatives and to create a workplace development plan in cooperation with employee representatives.

In addition, employees have the right to participate in the employer’s decision-making, executive, supervisory, or advisory bodies dealing with important issues concerning the employer’s business, finances, and employees (staff representation).

The European Work Council can represent employees if a business has a total minimum of 1,000 employees within the European Economic Area (EEA), a community-wide business group has at least two businesses located in at least two EEA member states and each business has a minimum of 150 employees, or if a community-wide business has a minimum of 150 employees in each of at least two EEA member states.

Employee Termination Procedures & Guidelines in Finland

Termination procedure

The employee doesn’t need to provide any particular grounds for ending their employment, however, they must observe the notice period.

On the other hand, the employer may not terminate an employment relationship without a proper and weighty reason. The proper and weighty reason can be related to the employee’s person or financial and production-related grounds.

Employer obligations in case of a termination

The employment agreement cannot be terminated on financial and production-related grounds if the employee can be placed in or trained for other duties.

Employees should primarily be offered work equivalent to that defined in their employment agreement. If no such work is available, they shall be offered other work equivalent to their training, professional skill, or experience.

The employer must provide employees with training required by new work duties that can be deemed feasible and reasonable from the point of view of both contracting parties.

Grounds for termination

Termination on grounds related to the employee’s behaviour or circumstances

Acceptable grounds for termination related to the employee include:

serious breaches of the terms and conditions of the employment agreement
serious law violation
serious neglect of integral to the employment relationship duties
any significant change in the employee’s circumstances that prevent them from performing the work

Personal circumstances that cannot be used as grounds for termination include:

illness, disability, or injury, except in cases where those substantially reduce the employee’s ability to work for extended periods, and the employer cannot reasonably be expected to continue the employment agreement
participation in industrial action covered in the Finnish Collective Agreements Act or on their trade union’s orders
political, religious, or other views, as well as participating in social activism or associations
exercising legal remedies.

Financial and production-related grounds for termination

Employers have the right to terminate employment agreements if the amount of work they can offer diminishes substantially and permanently due to financial or production-related reasons or restructuring. Financial grounds for termination include a company’s reduced or inadequate performance and anticipating such circumstances. Production-related grounds for termination and grounds arising from restructuring refer to any changes in the employer’s production process that substantially and permanently impact the amount of work available.

Employment agreements cannot be terminated on financial or production-related grounds if employees can be reassigned or retrained. As a rule, employees who can be reassigned should be offered work that corresponds to their employment agreement. If no such work is available, employers should offer other work that corresponds to their qualifications, expertise, and experience.

Special cases for termination

Right to terminate in connection with a transfer of business

Transfer of business refers to the assignment of an enterprise, business, corporate body, foundation, or an operative part of these to another employer in cases where the transferred business remains unchanged or similar after the transfer. Employees can give notice to terminate their agreements when the employer transfers the business to a third party. They must have been notified of the transfer by the employer or the assignee no later than one month before the transfer date. Employees informed later than that are entitled to give the notice to terminate their employment agreements as of the date of transfer or later, but not later than one month after being informed of the transfer.

Termination in connection with a reorganisation procedure

The employer can give two months’ notice to terminate an employee’s employment agreement. In cases where the notice period applied to the employment agreement is shorter than two months, the employment agreement may be terminated under this notice period. Acceptable grounds include an arrangement or a measure carried out during the reorganization procedure to avoid bankruptcy, which causes the work to cease or decrease substantially and permanently. However, termination notice may not be given if the employer can offer employees other job duties to which employees, considering some professional skills and competence, can be assigned with reasonable retraining.

Deeming an employment agreement cancelled after more than one week's absence without leave

If the employer or the employee is absent from the workplace for a set period without a valid reason, the other party may deem the employment agreement cancelled. However, if notifying the other party of a valid reason was impossible because of an acceptable impediment, the cancellation of the employment agreement is voided.

Unfair Dismissal Guidelines in Finland

Employee termination protection

The employer cannot terminate an employment agreement because an employee is pregnant or because the employee is exercising the family leave right. If the employer terminates the employment agreement of a pregnant employee or an employee on family leave, the termination shall be deemed to have taken place based on the employee’s pregnancy or family leave unless the employer can prove there was some other reason. The employer can terminate an employee's employment agreement on maternity, special maternity, paternity, parental, or childcare leave on financial and production-related grounds only if its operations cease completely.

Cancellation of employment agreement

The employer requires an extremely weighty cause to be able to cancel an employment agreement with immediate effect, regardless of the applicable period of notice or the duration of the employment agreement. Such a cause may be deemed to exist in case the employee commits a breach against or neglects duties based on the employment agreement or the law. This may render it unreasonable to expect the employer to continue the contractual relationship even for the notice period.

Correspondingly, the employee can terminate the employment agreement with immediate effect if the employer commits a breach against or neglects their duties based on the employment agreement or the law. That means they may not even have to keep the notice period if the breach is so severe.

Penalties for unfair dismissal

If the employer has terminated an employment agreement contrary to the termination grounds, it must be ordered to pay compensation for the unjustified termination of the employment agreement.

Other End of Employment Guidelines in Finland

Notice period

Unless otherwise agreed, the notice periods laid down in the regulation apply.

The employer terminates the agreement.


Column 1	Column 2
Length of employment	Period of notice
Up to 1 year	14 days
1 to 4 years	1 month
4 to 8 years	2 months
8 to 12 years	4 months
12+ years	6 months

The employee terminates the agreement.


Column 1	Column 2
Length of employment	Period of notice
Up to 5 years	14 days
5+ years	1 month

The employer and the employee may agree on the periods of notice. However, the notice period may not be longer than six (6) months. Furthermore, the period of notice that the employee must observe may not be longer than the period that the employer must observe.

In addition, collective agreements may contain provisions on periods of notice. If the periods of notice laid down in the collective agreement differ from the statutory periods of notice, the employer and the employee must observe the periods of notice laid down in the collective agreement unless the collective agreement provides for other arrangements concerning the periods of notice.

Non-observance of the notice period

An employer that terminates an employment agreement without observing the notice period must pay the employee full pay for a period equivalent to the notice period as compensation. Employees that leave before their notice period must pay the employer a lump-sum compensation equal to the pay of their notice period.

Unemployment funds

Employees dismissed from their jobs may receive basic unemployment allowance from KELA or earnings-related unemployment allowance from an unemployment fund. The grounds for receiving basic or earnings-related allowance are otherwise the same, but the unemployed person needs to be a member of an unemployment fund to receive the allowance.

General Employee Rights in Finland

Employment contract

An employment agreement creates rights and obligations for its parties. The main obligations are the employee’s obligation to work and the employer’s obligation to pay salary.

An employment agreement may be oral, written, or electronic.

An employment agreement is valid indefinitely unless it has, for a justified reason, been made for a specific fixed term. However, agreements made for a fixed term on the employer’s initiative without a justified reason shall be considered valid indefinitely. It’s prohibited to use consecutive fixed-term agreements when the number or total duration of fixed-term agreements or the totality of such agreements indicates a permanent need of labour.

The employment agreement should contain at least the following terms:

location of the employer and the employee
work start date
date or estimated date of a fixed-term agreement termination and the justification for specifying a fixed term or the notification that the agreement is a fixed-term employment agreement with a long-term unemployed person
trial period
place of work or, in the absence of a primary fixed workplace, an explanation of the principles according to which the employee is to work in various work locations
employee’s principal duties
work-applicable collective agreement
grounds for the pay and other remuneration, and the pay period
working hours (if varying, the employer must submit documents that indicate the circumstances and the extent to which they will need the employee to work.)
annual holidays determination manner
period of notice or the grounds for determining it
duration, remuneration currency, monetary remunerations and fringe benefits applicable abroad, and the employee repatriation terms (if work is to be performed abroad for a minimum period of one month)

In addition, it should be noted that if the above-mentioned terms are not laid down in a written employment agreement, the employer is obliged to present them in written form.

Remote work

In general, employment law regulation also applies to remote work if remote work possesses the characteristics of an employment relationship.

Remote work is optional for both the employer and the employee. This means that the employee doesn’t have an absolute right to demand access to remote work, all the while, the employer cannot force the employee to work remotely unless, for example, exceptional circumstances temporarily dictate doing that.

A workplace should clearly define remote work guidelines and rules since remote work involves both benefits and risks. However, the employer can also enable remote work through unilateral instructions. If the company employs 20 or more people, remote work policies should be discussed, like all other matters that fall under cooperation within the business regulations. In addition, if remote work is to be done regularly and full-time, the employer and employees should make a written remote work agreement as an annexe to an employment agreement.

Health and Safety

Employers are responsible for all occupational safety and health activities at the workplace. Regulations call for extensive responsibility over occupational safety and health from employers. Regulations require employers to monitor the working environment constantly and to identify the hazards and harms typically present. If the employer lacks the required expertise, they must use the services of external experts. Employers must study and prevent all accidents, health hazards, and other incidents. They must also monitor the impact of all actions performed on the health and safety of workers and, if necessary, take additional measures. Furthermore, employers must provide their employees with orientation training on the conditions and correct working methods of the workplace.

Employers are obliged to consider occupational safety and health already in the planning phase. The plans must support the safe and healthy conditions of the working environment and the work itself. Where appropriate, the plans must also consider the employee’s condition (e.g., health status, physique, ability to work under pressure, and physiological changes related to ageing).

In addition to the working environment, work planning and scaling must take employees' general physical and psychological properties into account. Furthermore, employers must make adjustments to support people with partial work abilities. The working environment and the planning and scaling of work are vital if an employee’s health is jeopardised due to work-related stress. In such cases, the employer must investigate the hazard posed by the stress factor and remove or reduce its impact. Actions must be taken immediately when the employer becomes aware of the issue.

If the employer decides to transfer the occupational safety and health responsibility, they must clarify what the transfer involves. At least the employer’s industry, the nature of activities, and the size of the workplace must be considered in the task definition. The employer must ensure that the people responsible for occupational safety and health at the workplace have the following:

adequate qualifications for required tasks
sufficient orientation and instructions for required tasks
appropriate overall conditions for carrying out tasks (e.g., adequate power or rights to make rulings and decisions)

Senior and middle management and supervisors are all responsible for occupational safety and health.

The employer’s responsibilities are more extensive when (1) employees work for different employers or (2) independent contractors work simultaneously or consecutively at a common workplace.

If employers fail to comply with their occupational safety and health obligations, the occupational safety and health authorities have the responsibility to report any violations that are punishable by the occupational safety and health legislation to the police. There are specific criminal proceedings for events where employers fail to fulfil their occupational safety and health obligations.

Payslip

The employer must provide a payslip to employees. The payslip can also be provided in electronic form if the employee can check the accuracy of the payslip also in electronic form.

The payslip must reveal the salary amount to be paid and the grounds for determining it, as well as the following:

employer’s details
employee’s details
time for which the salaries are being paid
payday
basic pay (including the number of hours in the case of an hourly salary)
various bonuses and allowances
Sunday work bonus
remuneration for additional work
overtime remuneration
other potential compensation
fringe benefits
deductions, such as tax withheld in advance, employment pension insurance contributions, unemployment insurance contributions, daily health insurance allowance payments, and other potential deductions.

If the employer doesn’t to give the employee a payslip despite the employee’s request, the employer commits a punishable offence.

Employee Protections in Finland

The right to gender equality and equal treatment

Employees have the right to be treated equally in similar situations, and discrimination is prohibited.

Employers must treat people of different genders similarly and provide them with the same rights and obligations.

Whistleblower protection

Companies with more than 50 employees must (1) set up a whistleblowing procedure and (2) inform employees of the way to follow the procedure with guaranteed anonymity.

Whistleblower protection is based on EU Directive, and Finland is currently ratifying it.

Privacy protection

Both national- and EU-level regulations apply to privacy protection at work.

National-level regulation

The provision on the necessity requirement is the most important one. Employers can process personal data only if their business relationship with employees requires it. No exceptions can be made to the necessity requirement, even with employees’ consent. However, if the regulation contains specific provisions on processing certain data types, employers don’t need to determine whether the data is necessary for the employment relationship.

With the employee’s consent, personal data can be collected from sources other than employee-only. However, this consent isn’t required when a public authority discloses information to enable the employer to fulfil a statutory duty (e.g., distraint on salaries) or when the employer acquires personal credit data to establish the employee’s reliability.

As a rule, employers have no right to acquire information from an employee’s criminal record or request a criminal record extract from an employee. There are separate provisions for checking the criminal background of persons working with children and on their security clearance.

An employer who intends to acquire personal data on an employee to establish the employee’s reliability must notify the employee of the matter before requesting the data. An employer who intends to acquire personal credit data on an employee must notify the employee of the register from which the credit data will be requested. Suppose an employer retrieves personal data on an employee from a source other than the employee. In that case, the employer must notify the employee of this data before it’s used in making decisions concerning the employee.

National-level regulation contains information-processing restrictions concerning employees’ state of health and personal credit data. Employers may request a drug test certificate during recruitment or employment relationships only when the detailed conditions are listed in the regulation. Processing employees’ state-of-health information (including drug test data) must be limited by the protective measures in the regulation.

Employees who give their consent to testing may be tested using personality and aptitude assessments to establish their capacity to perform the work in question or their need of training and other professional development. Employers must ensure that they use reliable assessment methods.

Employers may operate camera surveillance at workplaces for only the following reasons:

ensuring personal security of employees and other persons on the premises
protecting property or supervising production processes and their proper operation
preventing or investigating situations that endanger safety, property, or production processes

Camera surveillance may not be used to monitor a particular employee or a group of particular employees in the workplace. Moreover, camera surveillance may not be used in lavatories, changing rooms or other similar places, other staff facilities, or workrooms designated for employees’ personal use.

The regulation also includes the following provisions:

for certain situations when camera surveillance can focus on a particular workstation
for additional conditions to ensure transparency when implementing camera surveillance and destruction of recordings
for detailed conditions that outline retrieving and opening employees’ electronic mail messages in situations when the consent of the employee cannot be obtained

In addition, the following measures are governed by the cooperative procedure:

collection of personal data during recruitment and employment relationship
purpose of, the introduction of, and methods used in camera surveillance, access control, and other technical monitoring of employees
use of electronic mail and other data networks, and processing of information concerning electronic mail and other electronic communications

EU-level regulation (GDPR)

When employers process personal data, they must take appropriate measures to ensure that the data protection rights of employees are fulfilled. Employers are also required to facilitate the exercise of employees’ rights.

All data related to an identified/identifiable person is personal data. Information such as names, telephone numbers, location data, and data on the congenital diseases of the individual’s grandparents — all is personal data.

Employees have a right to the following:

obtaining information on their data processing
accessing their data
rectifying their data
erasing their data and ensuring it’s forgotten
restricting their data processing
making their data portable
objecting to their data processing
not being subject to a decision based solely on automated processing

Employers, as data controllers, need to follow six data protection principles when collecting, processing, and storing employees’ data:

Ensuring lawfulness, fairness, and transparency of the data-collecting process
Ensuring data use is limited to only the purpose for which data is collected
Minimising the amount of data collected to only that which is necessary
Ensuring data accuracy
Limiting the amount of data stored to only that which is required
Ensuring integrity and confidentiality of data

Employers are responsible for and must be able to demonstrate compliance with these principles on an ongoing basis and at any time. They must implement appropriate technical and organizational measures to ensure security appropriate to the risk.

In general, companies are prohibited from recording and storing the following information on employees:

racial or ethnic origins
political, religious, or philosophical opinions
union membership information
medical information
sexual orientation information

However, the above-mentioned information can be recorded and stored if the processing is necessary for carrying out obligations and exercising specific rights of the controller or of the data subject in the field of employment and social security and social protection law in so far as it’s authorized by Union or Member State law or a collective agreement pursuant to Member State law providing for appropriate safeguards for the data subject’s fundamental rights and interests.

Infringement of GDPR provisions may be subject to administrative fines. In addition, the Finnish criminal code contains provisions on criminal punishment.

Required Employee Benefits in Finland

Overtime pay

The pay plus 50% for the first two hours worked and plus 100% for each subsequent hour should be paid for daily overtime. The pay plus 50% shall be paid for weekly overtime.

Mandatory Benefits in Finland

Medical coverage

Employers are obliged to provide occupational health care for all their employees regardless of the terms and duration of the employment relationship.

Statutory occupational health covers work-related health examinations, workplace surveys, supporting work capacity, and investigation of symptoms and illnesses connected to work. The employer is legally required to organise regular health examinations for its employees in occupational health care if the work involves special health risk factors defined in legislation (e.g., noise, flour dust, or solvents) or is otherwise hazardous. The employee should attend statutory health examinations.

The employee’s occupational health care service must give the employee a health examination when it’s suspected that their work involves a health risk — e.g., because of unbalanced physical loads or psychosocial overload. The employee may request a health examination from occupational health care if there is a justifiable cause to investigate the workload. If the employee struggles with the work capacity, it’s possible to organise an occupational health review to discuss the work capacity and the ability to cope at work. An occupational health review includes the employee, the employer, and representatives from occupational health care.

Occupational health care services must be obtained from a public service provider. However, many employers want to use a private service provider because it’s a good measure for employee engagement.

The employer must sign a written service agreement with the occupational health care provider and draw up a plan detailing how the services will be implemented. The foundation of occupational health care is the workplace survey, which the occupational health care service provider performs and writes up in a report. Matters emerging in the workplace survey must be considered when drafting and updating the occupational health care plan. In addition, the employer and the occupational health care service jointly prepare a written description of procedures for work capacity management, monitoring, and early support.

The employer can get compensation for the costs of statutory preventive occupational health care and non-mandatory health care from the Social Insurance Institution (KELA) if:

The service is provided by personnel qualified for occupational health care (required in the Occupational Health Care Act)
The employer has a valid occupational health care service agreement
The occupational health care service plan is up to date, and the planned functions are being implemented

The occupational safety authority ensures that employers have organized and provided statutory occupational health care services.

Pension

The employer must arrange and pay the pension provision for their employees if they are between 17 and 67 years old and if the employee’s monthly earnings exceed the lower limit for compulsory insurance. As of 2022, the earnings have to be at least EUR 62.88 per month. In addition, employees are obligated to participate in their own pension provisions by paying the employee pension contribution.

As of 2023, the average pension contribution is 24.85%

Pension insurance covers a pension in proportion to the earnings during the period of employment if the conditions for the pension are met. The pension is paid due to disability or old age.

Accident insurance

The obligation applies to all employees who are in an employment relationship regardless of their salary, age, or the duration of the employment relationship. Statutory accident insurance applies to remote work as well.

The amount of accident insurance varies in relation to how much danger the work and the sector in which it’s performed present, with the average contribution being 0.7%.

Statutory accident insurance covers accidents at work, and while travelling to and from work, certain injuries considered accidents at work and occupational diseases caused by work.

The employer can take accident insurance from any insurance company providing accident insurance.

Mandatory benefits in collective agreements

Collective agreements may contain benefits that the employer must provide. For example, some collective agreements oblige the employer to provide a nutritional benefit — i.e., a lunch allowance. Employers should always check collective agreements to see whether they contain mandatory benefits that are binding on the employer.

Non-Mandatory Benefits in Finland

Any non-mandatory benefits the employee receives from the employer in addition to the salary are taxed as earned income. The value of these fringe benefits is added to the employee’s earned income. Their value is determined each year by the Tax Administration. If there is no confirmed taxable value for a benefit, the benefit is taxed at its fair market value.

Accommodation

An employer may give an apartment as part of the employment agreement, or the salary may include a room or a board.

Company car or other vehicles

An employer may give as a benefit a car, a commuter ticket, or a bicycle.

Telephone

An employer may give a telephone, which the employee can use for private purposes.

Meals

The meal benefit may consist of the following:

workplace meals subsidised by the employer
canteen meals
meals provided for employees supervising the dining area
meals provided for employees at a hotel, a restaurant, or an aeroplane
lunch vouchers

Sports and culture benefits

Employers can provide their employees with tax-exempt sports and culture benefits payable by vouchers or other means of payment for up to EUR 400 a year. Employees don’t need to pay any tax on the benefit; the employer can deduct the amount from taxation.

Bonuses

A bonus is a cash payment in addition to the basic salary. Payment criteria are defined in advance, generally for one year. The bonus amount may be based, for example, on the result of the work or the achievement of (financial) targets.

Payment indicators for the payment should be clearly defined.

Bonuses are taxed in the same way as salaries.

Stock options

Employee stock options refer to a right presented in an employment agreement to receive or buy shares or stakes in a corporation below the market price, based on an agreement or other commitment. The system consists of two steps: (1) subscription and (2) option use.

Income received from a stock option is taxed as earned income. The option's benefit is taxed when the arrangement is made if the subscription price is below the current fair value. For this reason, the subscription price is almost invariably set at or above the fair value. In this case, taxes are fully assessed in the year options are granted, or shares are subscribed for. If the taxpayer sells options, the taxable income is the sale price since options are usually received free of charge, with no deductible acquisition cost. If, on the other hand, the taxpayer acquires shares under the option, shares are valued at that day’s value, and the earned income is calculated based on that value.

Other

Other fringe benefits may include professional development and learning opportunities, supplementary health insurance, and wellness benefits.

Employee Cost in Finland

Thinking of employing someone in Finland? As with every other country, certain costs are associated with employing a worker that come on top of the gross salary that you are offering. For Finland, those taxes include health insurance, pension insurance, accident insurance and unemployment insurance.

Employee take-home pay in Finland

In Finland, employees pay several taxes, which are deducted from their gross salary by their employers. The income tax is progressive and determined by the salary and location. On top of that Finnish residents pay municipal and church taxes and contribute to pension insurance and unemployment insurance. They also pay public broadcasting tax.

Finland Employee Cost and Take-home Pay Calculator

Use our interactive employment cost calculator to see the total salary costs in Finland outlined in the sections above. You can also get a detailed employee cost breakdown in pdf (like this one but with actual data), which will show the take-home pay that employees will get.

Looking for similar employment cost breakdowns for other countries? We have 22 more employee cost calculators.

Why choose Boundless as your employment partner in Finland

How Boundless employs your workers

Unlike what we do in most other countries, where we either use an Employer of Record model or a temp agency licence, in Finland we directly employ your workers using our local entity. The mechanics involve a two-party arrangement between the worker and Boundless, in which we outline that they will be providing service to you as our client.

We take legal responsibility for the workers, calculating and paying social security and health insurance contributions, running their payroll, filing taxes, etc.

Employing through Boundless is possible for an indefinite period. During that time, the employee has access to full statutory employment rights, including paid time off and other forms of paid leave, access to unemployment benefits, and a host of protections.

In Finland, collective bargaining agreements influence various employment regulations. When employing through a company like Boundless, there is no change to the collective bargaining agreement that regulates the employee’s industry.

What Boundless does for you

We establish and maintain the legal employment relationship with the worker through an employment agreement.

We register the employee to all relevant authorities. We set up The employer's retirement pension insurance (“työnantajan eläkevakuutus” in Finnish), The employment accident insurance (“työtapaturmavakuutus” in Finnish), Health insurance (“sairausvakuutus” in Finnish), The group life insurance (“ryhmähenkivakuutus” in Finnish), and The unemployment insurance (“työttömyysvakuutus” in Finnish).

Every month we calculate the payroll, deduct all mandatory contributions such as the insurance premium, and provide the worker with a payslip.

We file all necessary taxes and pay mandatory contributions to respective authorities.

What you do

You sign our standard commercial agreement that we use for most of the countries we are in, which you can end with one month's notice.

What the Employee does

The employee signs an employment contract with Boundless before the start of the employment.

Throughout the employment the worker will need to provide time tracking sheets.

If an employee wants to end their employment they will need to send us the resignation letter, stating their resignation and last working day.

Hiring in Finland at a glance

CURRENCY

EUR

WORKING HOURS

PUBLIC/BANK HOLIDAYS

CAPITAL

Helsinki

LANGUAGE

Finnish and Swedish

REMOTE WORKERS

42% as of 2021

MINIMUM HOURLY SALARY

No legal minimum

TAX YEAR

January 1st - December 31st

DATE FORMAT

Day/Month/Year

MISCLASSIFICATION PENALTIES

A number of penalties apply

FUN FACT

Taxes

Employer tax:

27.69% - 29.39%

Health Insurance: 1.16%

Pension insurance: 25.12% on average

Accident insurance: 0.7%

Unemployment insurance: 0.5% - 2.05%

Employee tax:

10.05% - 43.98%

Pension insurance: 7.15% - 8.65% determined by age group

Unemployment insurance 1.5%

Municipality tax 4.36% - 10.86%

Church tax 1% - 2.1%

Income tax:

Income tax rates
Over	Not over	Tax on Column 1	Tax on Excess (%)
0	19900	0	12.64
19900	29700	2515	19
29700	49000	4377	30.25
49000	85000	10215	34
85800		22727	44

Finland Employment Cost Calculator

Use our handy calculator to understand what are all the employment costs you have to consider in Finland.

Provide us with some extra details and we will send you a full breakdown of the salary costs.

Employer of Record in Finland

While an Employer of Record is the most typical way for legally employing a worker in a different country where the company doesn't have an entity, in Finland we directly employ your worker. Doing this, we take care of all Finland compliance aspects of employment, including payroll, taxes, statutory benefits, employment contracts and more.

the employer of Record is responsible for:

Ensuring their employment is compliant with local employment laws

Processing local payroll

Filing employment related taxes and returns

Issuing payslips to the employee

Distributing salary payments

How employment in Finland works

COMPANY

Maintains a direct relationship with the employee, allocates them work tasks, and manages their performance.

BOUNDLESS

Takes care of payroll, taxes, benefits, ensuring the employee and the company are compliant with all legal regulations.

EMPLOYEE

Signs an employment contract with Boundless and fulfils all of their obligations as a worker for the company.

Statutory Benefits in Finland

Medical Coverage

Employers are obliged to provide occupational health care for all their employees regardless of the terms and duration of the employment relationship.

Pension

The employer must arrange and pay the pension provision for their employees if they are between 17 and 67 years old.

Accident insurance

Employers must take accident insurance for their employees against accidents at work and occupational diseases.

Common Non-mandatory Benefits in Finland

Accommodation

Company car

Phone

Meals

Sports and culture benefits

Bonuses

Stock options

Supplementary health insurance

Learning & development

Employee Rights and Protections in Finland

Employment agreement

Remote work

Health & Safety

Payslip

Right to equal treatment based on gender

Overtime pay

Whistleblower protection

Privacy protection

Leave

Paid time off: 24-30 days + bank holidays

Paternity leave: In Finland all leaves connected to having children fall under the umbrella of Family Leave. The total parental allowance is 320 days, which is expected to be equally split between both parents.

Sick leave: 1 year

Parental leave: 320 days split equally between both parents

Maternity leave: In Finland all leaves connected to having children fall under the umbrella of Family Leave. The total parental allowance is 320 days, which is expected to be equally split between both parent. The pregnant parent is entitled to 40 extra days on top of that.

Probationary period

According to the Employment Contracts Act, the employee and the employer can agree on a probationary period of up to six months. The only exception that allows a longer length is if the employer provides a special work-related training that lasts more than six continuous months.

Payment Frequency

Salaries must be paid on the last day of each pay period — a payday — unless otherwise agreed in the employment/collective agreement. That typically happens to be the last day of the month.

End of Employment

An indefinitely valid employment agreement can be terminated with a notice to terminate. The notice periods are specified in the regulation or in the applicable collective agreement, and the employment agreement must be observed. The employer may not terminate an employment relationship without a proper and weighty reason. The proper and weighty reason can be related to the employee’s person or financial and production-related grounds.

The employment agreement cannot be terminated on financial and production-related grounds if the employee can be placed in or trained for other duties. If the employer has terminated an employment agreement contrary to the termination grounds, it must be ordered to pay compensation for the unjustified termination of the employment agreement.

Employees dismissed from their jobs may receive basic unemployment allowance from KELA or earnings-related unemployment allowance from an unemployment fund. The grounds for receiving basic or earnings-related allowance are otherwise the same, but the unemployed person needs to be a member of an unemployment fund to receive the allowance.

Frequently Asked Questions

What are my options if I want to hire a worker in Finland?

While there are generally four ways of employing people across borders, not all are legal or sensible. Here is an overview of each way to employ a worker in Finland, outlining the potential cons.

HQ country employment & payroll

While the person is in Finland, they are employed and payrolled directly by the company’s HQ entity.

Cons: This may appear attractive, but it generally isn't legal in the long term. HQ payroll won't be possible if the person is not a tax resident in the HQ country.

Independent contractor agreements

People are locally registered as sole traders or limited liability company owners in Finland and invoice for their work. There is no direct employment relationship.

Cons: In Finland, this is not a compliant or legal way to engage full-time workers who work solely for your company. There will be challenges in attracting and retaining talent.

Direct local employer setup

The company sets up as a fully-compliant local employer. This often involves setting up a local entity and local tax registration.

Cons: Expensive, time-consuming, high-level of complexity. Unknowns around how obligations and costs will evolve over time. There will be a need to stay on top of changes in regulations.

Employment through a local entity established by an Employer of Record for the purposes of employment

Employment is handled by a platform that specialises in employing people on behalf of customer companies. The Employer of Record helps to hire and pay employees.

Cons: The ongoing costs may be higher than direct employment. Some education is needed to inform employees about how the employment relationship will work.

How long does it take to set up a company in Finland?

Setting up a local company in Finland is relatively straightforward. However, the difficult part comes after the initial setup when payroll needs to be calculated and run every month, taxes filed, benefits extended, change of rules and regulations followed. Here is an overview of everything you will find yourself needing to do.

Can I employ people as independent contractors in Finland?

While many employers practice employing remote workers as independent contractors, it's a bad practice. If an individual is giving their full and undivided attention to your company in Finland, treating them as an independent contractor is a likely breach of Finnish employment laws and of those in your country.

Your company could be liable for fines on owed holiday pay, sick pay, social welfare payments, paternity benefit, maternity benefit, or other legal measures. That is because the individuals you are working with do not receive the benefit of local employment laws and protections that are often afforded to people working full-time hours. In Finland there are a number of penalties that are in place for missclassifying employees for contractors.

What does HR compliance mean in Finland, and why does it matter?

When you hire employees in Finland, you have certain obligations as an employer. HR compliance is about ensuring your policies and procedures respect all applicable laws and regulations regarding employment and work practices. Complying with local employment law in Finland is fundamental for the correct running of your business - not only because these laws are in place to protect employees and guarantee their rights are safeguarded, but to minimise your risk of liabilities as an employer. Being compliant means respecting and following all local labour laws, sick leave and illness benefits, annual leave, minimum wage, tax credits, working hours regulations.

How much does it cost to employ someone in Finland?

As with every other country, there are certain costs associated with employing a worker in Finland that come on top of the gross salary you are offering. In Finland those taxes include health insurance, pension insurance, accident insurance and unemployment insurance. To view the exact percentages and amounts given the salary you are planning to offer, you can use our handy calculator tool.

What does Employer of Record mean in Finland?

While an Employer of Record is the most typical way for legally employing a worker in a different country where the company doesn't have an entity, in Finland, the model doesn't exist. Instead, an Employer of Record directly employs a worker through a company specifically established for that purpose. The employee then provides their services to the client company. We are responsible for:

informing you about any pre-employment requirements
ensuring their employment is compliant with Finnish employment law
informing you about the length of the maternity leave, paternity leave, public holidays, illness benefits, medical benefits
providing a locally compliant employment contract
processing local payroll
filing employment-related tax returns
issuing payslips to the employee
distributing salary payments
payments to the local tax authorities

Customers that work with Boundless in Finland are responsible for:

sourcing and recruiting their own workers
managing the employee’s day-to-day work load
contributing to the personal / professional development of the employee through their work
following any guidance we give on employment and HR best practices or legal obligations in Finland, such as the employment contract, public holidays, annual leave, sick leave, maternity and paternity benefits, probationary periods, overtime pay, statutory redundancy payments, liability insurance and many others
ensuring that payroll bills relating to their team are paid to Boundless before the cut-off point in each pay cycle

Who is responsible for filing and paying employees' taxes and social insurance contributions in Finland if employing through an Employer of Record?

Boundless as the Employer of Record Finland that has established an entity specifically for the purposes of employing on behalf of customers, files all pertinent taxes and contributions as they relate to the compliant employment of an individual in Finland.

How does Boundless as a company employing workers in Finland ensure HR compliance?

We carefully choose employment lawyers or advisories to partner with in each country we operate in, including Finland. They ensure the Ireland employment contracts, and any other relevant documents required for new employees comply with the local jurisdiction. We have thorough discussions on specific norms such as payroll services, social protection, data protection, notice period or work-from-home regulations. Whenever a potentially sensitive issue arises in Finland, our internal team contacts the relevant firm to ensure all steps are taken to resolve it promptly.

What are the legal responsibilities of a company when they use an employing company such as Boundless in Finland?

The company remains responsible and informs employees of the day-to-day management of the people and teams that are employed through Boundless, including any disciplinary or performance issues.

Boundless ensures compliance with Finnish-specific procedures, practices and labour laws while employing people and teams on behalf of the company.

Do employees get all their rights and benefits when employed through a separate employing entity in Finland?

Any new employee that is locally employed through an Employer of Record that has set up a company specifically for the purposes of employing on behalf of customers, gets full employment rights and benefits as specified in Finnish employment law. They get a locally compliant employment contract, statutory maternity leave, annual leave, illness benefits, any relevant tax credit, and many more.

What taxes do I need to pay in Finland?

In Finland, both employers and employees have to pay taxes. For employers these include X, Y, Z and for employees they include A, B, C, D, E. To get a clear overview with both employee and employer taxes, use our salary breakdown calculator, submitting any additional data needed and get a downloadable pdf like this one.

Choose Boundless as your employment partner in Finland

Talk to us

Employer Contributions in Finland

Health insurance

Pension insurance

Accident insurance

Unemployment insurance

Group life insurance

Employee Contributions in Finland

Tax residency

Income tax

Income tax rates

Pension insurance

Unemployment insurance

Voluntary employee contributions

Trade union dues

Voluntary unemployment fund contributions

General Employee Pay Regulations in Finland

Minimum wage

Payment requirements

Payday

Working from Home Policy in Finland

Working time

Occupational health and safety

Agreement on remote work

Workspace Guidelines in Finland

Working conditions

Holiday Leave in Finland

Holiday entitlement

Bank holiday

Types of Leave in Finland

Sick leave

Family leave

Study leave

Job alternation leave

Independent Contractor Contract & Employment Guidelines in Finland

What makes someone an employee

Employee vs contractor

Penalties for Misclassification in Finland

Standard hours in Finland

Flexible working hours

Maximum Working Hours & Overtime Laws in Finland

Additional work and overtime

Sunday work

Night work

Rest periods and breaks

Daily breaks

Daily rest period

Weekly free time

Time Tracking Obligations in Finland

Working hours account

Penalties

Collective agreements

Employment conditions in Finland

Regulating terms and conditions of an employment relationship

Non-compete

Working time records

Working time adjustment scheme

Work schedule

Working time register

Business transfer

Intellectual property

Patents (employee inventions)

Copyright

Design copyrights

Cooperation within businesses

Employee Termination Procedures & Guidelines in Finland

Termination procedure

Employer obligations in case of a termination

Grounds for termination

Termination on grounds related to the employee’s behaviour or circumstances

Financial and production-related grounds for termination

Special cases for termination

Right to terminate in connection with a transfer of business

Termination in connection with a reorganisation procedure

Deeming an employment agreement cancelled after more than one week's absence without leave

Unfair Dismissal Guidelines in Finland

Employee termination protection

Cancellation of employment agreement

Penalties for unfair dismissal

Other End of Employment Guidelines in Finland

Notice period