Employer of Record in Finland

Businesses can only operate smoothly in Finland if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Finland below, to avoid any compliance issues.

Employment Contract Requirements

While oral and electronic employment contracts are legally binding in Finland, written contracts are considered best practice. The contract should outline the basic terms of employment which includes:

• Identification of both parties
• Date of commencement (and employment duration for temporary contracts)
• Workplace
• Job description, duties and responsibilities
• Salary, compensation and benefits
• Working hours
• Leave and holidays
• Notice periods for employment termination
• Probation period
• Reference to collective agreements
• Terms applying for work conducted abroad

Onboarding Process

We can help you get a new employee started in Finland quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Finland

The typical workweek for employees consists of between 37.5 to 40 hours a week, depending on employee position and collective bargaining agreements.

Overtime in Finland

Employers are obligated to seek the employees consent every time overtime work is deemed necessary. An employees weekly working time should never exceed 48 hours. Overtime pay is 150% of the employees normal wages for the first two hours worked overtime in one day. Every following hour must be paid at a rate of 200%.

Probation Period in Finland

Probationary periods are common in Finland. However, trial periods should not exceed six months.

Fiscal Year in Finland

1 January - 31 December is the 12-month accounting period that businesses in Finland use for financial and tax reporting purposes.

Payroll Cycle in Finland

The payroll cycle in Finland is usually monthly, with employees being paid by the last day of the month..

Minimum Wage in Finland

There is no statutory minimum wage in Finland; however, most employees are covered by collective agreements specifying minimum pay rates.

Bonus Payments in Finland

13th-month salary payments are customary in Finland and are usually paid before the employees holiday.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 19.6% on top of the employee salary in Finland.

Employee Payroll Tax Contributions

In Finland , the typical estimation for employee payroll contributions cost is around 10.61% - 12.11%%.

Individual Income Tax Contributions

The individual national income tax ranges from 12.64% to 44%. Income tax is calculated according to progressive rates. Employees also pay an additional flat rate for municipality taxes (up to 10.86%). Multiple additional factors may impact overall rates such as Church Tax, number of children, among others.

Pension in Finland

In Finland, both employers and employees contribute to TyEL which is an insurance taken out by employers. The statutory retirement age is 65.

Mandatory Leave Entitlement in Finland

The annual leave entitlement in Finland is 30 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Finland

The Finnish calendar has 20 flag days. The calendar for the Swedish-speaking population has three additional official flag days for the Åland Islands. The Sámi have 12 of their own official flag days. Midsummer Eve (23 June), and Christmas Eve (24 December) are not public holidays but are holidays for most people, including bank employees.

Paid Time Off in Finland

Employees who have worked for more than 1 year are entitled to 24 working days of leave, while employees who have worked for more than 1 year are entitled to 30 working days. Saturday is considered a working day in Finland, even if not worked. Thus, a full week of vacation equals the use of 6 days of annual leave entitlement.

Maternity Leave In Finland

In Finland maternity leave is made up of pregnancy leave & parental leave:

• Pregnancy leave usually starts 30 working days before the estimated due date of the baby and ends 75 days after the due date.
• When pregnancy leave starts the employee is entitled to 105 working days from Kela.
• Mothers can claim a special maternity allowance if, during pregnancy they have had to be absent from work before the actual maternity allowance period
• The employee can extend leave using parental leave.

Paternity Leave In Finland

Finland no longer has a separate "paternity leave" policy distinct from parental leave. Finland introduced a fully gender-neutral family leave system, giving both parents equal access to parental leave instead of separate maternity or paternity leave. Under the new structure, each parent is entitled to 160 days of parental leave, and parents can transfer up to 63 days to each other or another caregiver if desired.

Sick Leave In Finland

Employees are entitled to paid sick leave, though the duration of sick leave depends on the collective bargaining agreement in placed. Sick leave in Finland is paid depending on the following:

• For the first ten days the employer pays 100% of the salary if the employee worked for more than a month or 50% if the working period was less than a month long.
• The amount of sickness allowance is 70% of income, divided by 300, up to an annual income of 35 769 EUR.
• For annual income exceeding this, the sickness allowance is 20% of income, divided by 300.

Parental Leave In Finland

Parental leave amounts to 320 working days and is paid by Kela. If a child has 2 parents the days are divided equally between them, and can be used as paternity leave. The following details are applicable:

• The parents are able to transfer some of the parental allowance from one parent to the other.
• The leave can be taken once the baby is born
• The parents can work part time and apply for partial parental allowance

Termination Process in Finland

The termination process varies according to the employment agreement and whether or not collective agreements are applicable. Aside from by mutual agreement, employment may only be terminated for "fair" and "weighty" reasons related to both employee and employer.

Notice Period in Finland

The amount of notice is dependent on the length of service and reason for termination. If the employer terminates the contract, the notice period is as follows:

• Up to one year employment: 14 days notice
• One to four years of employment: one months notice
• Four to eight years of employment: two months notice
• Eight to 12 years of employment: four months notice
• Over 12 years of employment: six months notice

Severance in Finland

There is no statutory severance pay in Finland, although severance may be agreed upon in the employment contract.