Finland’s talent pool boasts an impressive pool of vocational and technical skills and has highly employable domestic talent. One effective way to tap into this talent pool is by engaging the services of an Employer of Record (EOR) in Finland.

EORs provide employers hiring from Finland the necessary expertise and infrastructure, to overcome the complexities of local employment regulations. An EOR acts as the legal employer and handles payroll, tax compliance, benefits administration for their customers. Relieved from these cross-border hassles, employers can focus on core business activities and ensure compliance with Finnish employment laws.

The best part about partnering with a Finland EOR is the monetary savings employers. Amid a serious talent crunch, employers also get a speed advantage by partnering with an EOR. By offloading heavy and sensitive HR activities to in-market local experts, employers can focus time and resources on screening talent, employment engagement and so on.

Moreover, the Finnish employment landscape involves intricate payroll processes and adherence to various legal requirements. An EOR in Finland possesses the necessary knowledge and resources to efficiently manage payroll activities, including salary calculations, tax deductions, and social security contributions. This ensures accurate and timely payment of employees, minimizing the risk of errors and penalties.

The fee structure of an EOR in Finland may vary depending on the number of employees, the complexity of payroll processes, and additional services required. Employers need to clarify the EOR’ fee structures and ensure transparency regarding the services included. Some EORs in Finland offer fixed pricing models. Under this model, employers pay a predetermined flat fee for their services. With fixed pricing, employers pay a consistent amount regardless of the number of employees or the complexity of payroll processes. 

Certain EORs may employ a percentage-based pricing model - the fee is calculated as a percentage of the total payroll. It can be suitable for businesses with fluctuating or expanding employee numbers or varying salary structures. 

Before partnering with their EORs, employers are advised to talk to the EORs about the fee models. When partnering with Gloroots’ EOR in Finland, employers always have a fixed fee . There are no additional costs involved.

The issue of "employee misclassification" also exists in Finland, referring to the incorrect classification of workers by employers. It occurs when an employer mislabels a worker as an independent contractor, depriving them of the employment rights and benefits entitled to regular employees, even if the worker performs duties similar to those of a permanent employee.

Engaging a PEO/EOR in Finland can help properly distinguish worker classifications and prepare accurate employment agreements. These experts ensure compliance with labor laws, precise classification of employees, accurate payroll processing, and comprehensive benefits administration. By entrusting employment-related responsibilities to knowledgeable professionals, businesses can focus on their core operations while ensuring compliance with Finnish labor regulations.

An important aspect of Finland’s labor laws is the impact of collective bargaining agreements. Like many Nordic countries, Finland’s labor landscape involves a seamless and systematic exchange of employee and employment needs. 

Thus Finland’s employment laws include mandatory laws, collective bargaining agreements, employment contracts and other norms. 

Partner with a Gloroots’ Finland EOR to tackle these challenges and compliantly hire in the nordic nation

Employment Contract

While it is legally permissible to establish oral or electronic employment contracts in Finland, it is considered best practice to have a written agreement in place. 

This employment contract should include essential details, such as:

• Identification of both parties
• Commencement date (and employment duration for temporary contracts)
• Workplace
• Job description, duties, and responsibilities
• Basic salary, compensation, and benefits
• Working hours
• Total number of holidays
• Notice periods for employment termination
• Probation period
• Reference to collective agreements
• Terms applicable to work conducted abroad

Even in the absence of a written contract, it is mandatory for the employer to provide the employee with a written document containing all the aforementioned employment agreement details. While most employment contracts in Finland are of a permanent nature, fixed-term contracts are also commonly utilized.

Working Hours 

The weekly working hours in Finland can range from 37.5 to 40 hours, depending on the specific job and any Collective Bargaining Agreements (CBAs) in place.

Overtime

Any hours worked beyond the standard workweek are considered overtime, and the rules for it are determined by the employment contract or collective agreements. Both the employer and employee must agree before any overtime work starts.

Generally, you can't work more than 138 overtime hours in four months or 250 hours in a year.

For the first two hours of overtime, you get paid 150% of your regular salary, and for any additional hours, it's 200%. If you have to work overtime on a weekend or a day off, you get paid 200% of your regular salary for those hours.

Minimum Wage

Finland doesn't have a fixed minimum wage set by law, but many employees are subject to collective agreements that establish minimum wage levels.

Maternity Leave and Paternity Leave

In Finland, family leave encompasses maternity leave, paternity leave, parental leave, and childcare leave. Normally, family leave is unpaid, but this can be outlined in the employment contract or collective agreement.

Certain aspects of family leave are eligible for allowances from Kela, such as parental and home care allowances.

Pregnant employees have a right to 105 days of maternity leave. If it's safe for both the mother and the baby, working is allowed during maternity leave. However, two weeks before the expected due date and two weeks after childbirth, the mother cannot work.

Annual leave

In Finland, annual leave runs from April 1 to March 31, with vacations taken typically between May 2 and September 30. Employees earn two vacation days per month initially, increasing to four weeks per year after one year of continuous employment. After 15 years, it becomes three days per month.

Vacation days are counted based on working days, including Saturdays. Employees must take at least two consecutive weeks off, but flexibility exists for timing and shorter hours.

Holiday pay varies based on employment terms, and it must be provided before the vacation starts, except for vacations lasting less than six days, where it can align with the regular payday.

Sick Leave

Employers have to provide sick leave, but how long you get depends on your work agreement. For most agreements, it's 4 weeks if you've worked for less than 3 years and can go up to 5 years. If someone's sick for over ten days and can get it, their pay will drop by 50% with a sickness payment allowance from KELA.

Income tax

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Other Taxes and Social Security contribution:

Employer Payroll Contribution

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Employee Payroll Contribution

Termination Process

Starting from January 1, 2023, the process of ending employment depends on the employment contract, collective agreement, contract type, and the reason for ending it. Additionally, non-compete compensation clauses will require employers to provide compensation to employees who resign or are dismissed for cause, covering the period when they cannot compete after leaving the job.

Notice Period

The length of the notice period is determined by the Employment Contracts Act. According to this act, the employer and the employee can agree on notice periods, but they can't be longer than six months. Collective agreements may also have their own notice period rules.

If a collective agreement sets different notice periods than the statutory ones, both the employer and the employee must follow the collective agreement.

The specific notice duration depends on how long someone has worked and the reason for ending the employment. If the employer ends the contract:

•  Less than one year of work – 14 days' notice
• One to four years of work – one month's notice
• Four to eight years of work – two months' notice
• Eight to 12 years of work – four months' notice
• Over 12 years of work – six months' notice

If the employee ends the contract:

• Up to 5 years of work – 14 days' notice
• More than five years of work – 1-month notice

Severance Pay

Finland doesn't have a mandatory severance payment requirement, but severance terms can be outlined in the employment agreement.

Probation Periods

In Finland, the trial period cannot go beyond six months.

When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If it is tedious to set up infrastructure and start hiring, monitoring the everchanging compliance landscape is another uphill task. 

Gloroots helps you minimise all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. They do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

Our promise is a stress-free global employment experience for both you and your employee.

Contact our experts today to kickstart your global hiring campaign.

Employers operating in Finland must establish a local legal entity and leverage local resources to ensure compliance with employment regulations, payroll management, tax obligations, and benefits administration. The intricacies of Finnish employment laws require employers to navigate a complex landscape to ensure compliance. By partnering with local experts, businesses can streamline their operations and effectively manage their workforce, ensuring adherence to Finnish employment regulations and optimizing their business operations. With Gloroots' global Employer of Record (EoR) service, you can rely on our expertise to handle payroll, tax, benefits, and compliance, allowing you to focus on your employees and drive company growth.