Finland Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in Finland and employment contracts.

Global Expansion Made Easy for You

Expanding into Finland generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.

Visas

Expanding into a country or hiring a workforce abroad can lead your business to great profits, but unfamiliar laws and regulations can counteract your company’s goals and plans. At Bradford Jacobs, we want to eliminate this complicated part. By using our PEO service we can arrange all needed visas and permits including the entire application process without your physical presence.

Finnish visa, residency and permit regulations require expert guidance as they vary according to the country foreign nationals live in – the European Union, the European Economic Area and other foreign nationals are all affected by these complex regulations.

Our team is trained to research the latest information on Finland visas and work permits and therefore, we created a guide to introduce you to the rules and requirements. By reading this guide you will get familiar with all the requirements so you or your employees can start working in Finland in no time.

What are the types of Finland Work Visas?

When individuals want to live, visit, or work abroad, they often require travel documentation such as entry visas, work visas, work permits or residence permits. Due to agreements between countries, some foreign nationals may be exempt from this documentation, so it is important to be aware of what these requirements are.

For instance, citizens of Finland, Norway, Sweden and Iceland, and other Nordic countries, have the right to visit, live or work in Finland with no need for visas or residence permits.

However, for stays of more than 90 days, they should contact the Digital and Population Data Services Agency. If individuals wish to stay for longer than one year, they should register at a Finnish Population Register Centre (Väestörekisterikeskus, VRK).

Citizens of the European Union (EU), European Economic Area (EEA), as well as Liechtenstein and Switzerland, due to their freedom of movement agreement, do not require a visa to holiday, visit family or friends, find employment, or acquire residency in Finland. They only need their national ID or passport. Nevertheless, if the stay is for longer than three months, they require an EU registration with a personal identity code to be considered legal in Finland.

Third Country nationals, who are not on the visa-exempt list, require travel documentation. The following can apply to most employees:

  • For visits of up to 90 days, a short-term Schengen Visa is available
  • To live and work for longer periods, a First Residence Permit is required
  • A Business Visa allows stays up to 90 days for business purposes, such as attending conferences, signing contracts or networking

Foreign nationals wanting to work must determine which type of residence permit is required. The process should begin outside Finland and in person – and can begin online through the Enter Finland Service. The main categories for employees are:

  1. Employed Person (TTOL) – wanting to work with a Finnish employer with a signed employment contract. However, this Residence Permit is tied to Labor Market Testing (LMT) and opportunity is given to Finnish citizens, EU, and EEA nationals first before the employer can look to third-country employees.
  2. Specialist – citizens should have special skills and higher qualifications with a signed contract worth around €3,000 (US$3,548) per month.
  3. EU Blue Card – citizens from third countries who are highly qualified, with a degree looking for top-line employment. A signed contract is required. EU Card is valid for two years. Also, the annual salary should be more than the average gross salary by approximately 1.5 times. https://ec.europa.eu/immigration/blue-card/finland_en

Other categories include Entrepreneur, Start-up, Research, Intra-corporate transfer and more. For application forms and further details regarding the appropriate residence permit: https://migri.fi/en/working-in-finland/applications

How to obtain a Finland Visa / Residence Permit to Work?

Nordic country citizens, EU, EEA, and Switzerland nationals do not require a Residence Permit or Visa to work in Finland.

For Third Country nationals who do not already reside in Finland and are seeking a job as an Employed Person (TTOL) which has already been through Labor Market Testing (LMT), the process for a First Residence Permit starts with:

  • Finding a job, agreeing, and finalizing a contract
  • The employee can then apply for the appropriate Residence Permit (in cooperation with their employer) which must be started from outside Finland and in person. The procedure can begin online through the Enter Finland Service (EFS).This service also allows employers to track the employee’s permit process, and submit any documentation required such as the TEM 054 form (regarding Labor Market Testing) with any information required about the job and the company. Employers may also pay any fees. They cannot apply for the permit on behalf of their employee, so paperwork has to be processed through the EFS.
  • Next, the employee must make an appointment at a Finnish Embassy so their identity can be verified, original documents checked, and fingerprints taken. The appointment must be within three months from the online application.
  • The work permit will be sent to the local Embassy for collection and processing.

Note: Applicants cannot go to Finland before receiving their residence permit. Work cannot be undertaken without a residence permit unless there is the right to stay e.g., in EU and Nordic countries.

However, those nationals applying through the Specialist application route are allowed to enter Finland without a residence permit but must obtain an entry visa or be on the visa exempt list or have the right to stay in Finland for 90 days without a visa. A job and signed contract that meets the conditions for the Specialist position is required. https://www.infofinland.fi/en/moving-to-finland/non-eu-citizens/coming-to-work-in-finland

To work for longer than 90-days, a residence permit must be applied for through the EFS or with the Immigration Service for persons in Finland.

To obtain an EU Blue Card, the applicant requires a secure job offer or signed contract for one year at least with a minimum annual salary of €59,148 (US$70,000) per annum. Proof that the employee is well qualified to do the job and has all the necessary qualifications and has a relevant visa/permit if appropriate and sickness insurance.

How to apply for Visa / Residence Permit in Finland

Nationals who are not on a visa-exempt list or do not have the right to stay in Finland without a visa, need to obtain a Schengen visa for stays up to 90 days and for those working for longer than 90 days, a residence permit is required.

The first step is to decide which First Residence Permit application is relevant. There are a number of options from study to entrepreneurial purposes. For work purposes, a contract is needed from a Finnish company to apply for residence permits.

Once decided, this can be done either via Enter Finland Service (EFS) online or by completing the appropriate form. To use EFS applicants must open an account to log on and send applications.

Residence Permit as an Employed Person: This is tied to the Labor Marketing Testing (LMT) program and the employer must show his effort to place a Finnish, EU/EEA national in the position before offering the job to a Third Country national. Basic documents required include:

  • Valid passport
  • Completed application form
  •  Passport photo following guidelines
  • Coloured photocopied pages containing relevant information
  • Paperwork showing legal residence in the country where the application is submitted
  • Proof the salary is enough to support the employee during their stay in Finland

PLUS – Documents required from the employer as appendices to the application form:

  • Form TEM 054 completed by the employer regarding the employment
  • Taxes paid certificate for previous three months
  • Document showing company paid statutory insurance premiums and unemployment insurance for previous three months
  • Declaration of number of employees working full and part-time

For the Specialist/Expert Residence Permit application, the basic documentation required from the applicant is the same as for Employed Person. However, there are other documents specific to the Specialist application:

  • Certificate confirming terms and conditions of employment
  • Certificate concerning any extra benefits
  • Job description
  • Degree or diploma

For an EU Blue Card. Again, the basic documents from the applicant as the Employed Person are the same – plus, there is other required paperwork:

  • Employment contract with full details of job, duties, and salary
  • Diploma or degree proving higher education for a minimum of three years

Some of the documents mentioned above may need to be translated and notarized. Fees need to be submitted with all applications.

Applicants can also apply for a Personal Identity Code (Suomalainen henkilötunnus) at the same time as the Residence Permit by requesting to be registered in the Finnish Population System at their home country’s Embassy. This is needed to work, open a bank account and deal with the tax office and for renting property.

How much is a Finland Residence Permit / Visa?

  • The Schengen Visa: €80 (US$95)
  • First Residence Permit (Employed Person): €690 (US$813); Electronically through EFS: €490 (US$577)
  • First Resident Permit (Specialist and EU Blue Card): €610 (US$718); Electronically through EFS: €410 (US$483)

Working Visa / Permit for Finland

Citizens of the European Union (EU), the European Economic Area (EEA) and the Nordic countries benefit from freedom of movement, so they do not require an entry visa or residence permit.

Also, there is a visa-exempt list so these people can visit for 90 days but then require a residence permit. Third Country nationals needing an entry visa can apply for a Schengen visa.

There are a number of different residence permits for students, entrepreneurs, employment, and family, so it is important the correct application is completed, and these can all be accessed on Finland’s Immigration Website.

People wanting to work in Finland for the first time, must apply for the First Residence Permit from their home country and not enter Finland until the paperwork is completed and the permit granted. There are a number of permits available, but the most common ones are:

  • Employed Person Permit (TTOL)
  • Specialist Permit
  • EU Blue Card Permit

The employee may choose to apply in-person or online to supply the relevant documentation, and the employer also has to cooperate with information through the Enter Finland Service online. Some documents may need to be translated and notarized.

After applying online or going the paper route, an appointment must be made at a local Finnish Embassy or Mission to verify documents, confirm identity, and have the biometrics recorded.

A Personal Identity Code may be applied for at the same time as the residence permit from the embassy/mission, as they will also register applicants on the Finnish Population System.

Tax Laws

Global Expansion is a great way to grow your business and Finland offers many appealing opportunities. However, the tax laws can be complex and require time-consuming research. By using our PEO service we will take care of the complicated legwork so that you can focus on your business goals in Finland. Dealing with tax for your staff from overseas is a tricky process. Finland is no exception, with fines, sanctions and other penalties applying for not complying with the complex and many-layered aspects of taxation. We have made it our goal to keep track of the latest changes in the tax policies to always ensure complete compliance. To keep you informed and updated too, we created this guide which includes the basic facts regarding tax regulations in Finland.

Overview of Finland Taxes

Bradford Jacobs ensures our clients comply with every level of tax and employment law worldwide. This ‘know-how’ is vital for foreign companies expanding into Finland.

  • Individual Income Tax: 6% – 31.25% depending on income
  • Foreign Expert Tax Regime: 35%
  • VAT: 24%
  • Corporate Income Tax: 20%
  • Capital Investment Tax: 30% or 34%
  • Employer Social Security Contributions – 20.3% (average)

Finland residents are taxed on their worldwide income at various rates, plus flat rates for church taxes (where applicable) and municipal taxes. Individuals are considered tax residents if they have a home in Finland or have stayed there for more than six months.

Non-residents are taxed only on their Finnish income at 35% unless tax treaties apply.

Taxable Income

  • EUR 18,600 – 27,900: 6%
  • EUR 27,901 – 45,900: 17.25%
  • EUR 45,901 – 80,500: 21.25%
  • EUR 80,501 & above: 31.25%

Taxable income includes all the employees’ remuneration or compensation, including sums directly or indirectly arising from their employment. Taxable earned income categories include:

  • Basic salary, bonuses, fringe benefits
  • Cost of living and housing allowances
  • Reimbursed expenses for travel, accommodation, meals
  • Entertainment expenses
  • Profit-sharing schemes

Taxable investment income includes:

  • Income from property
  • Capital gains
  • Any income earned from assets

Finland Individual Tax Rules

Liability to pay Finnish income taxes generally depends on residence qualifications. Individuals are considered tax residents if they own a home in Finland or have lived in the country for six months.

Finnish individuals are taxed on their worldwide income, while foreigners are taxed only on income earned in Finland, usually at a flat rate of 35%. Foreigners can apply to pay progressive taxes in Finland if they pay tax on their worldwide income and provide the Tax Administration with relevant accounts and information.

There are no joint tax returns in Finland. Spouses file separately usually by pre-completed assessment forms.

Tax returns are due April 2 (if they have received a pre-completed tax assessment) or May 5, 12 or 19, with the due date printed on the pre-completed assessment form. Individuals receive the pre-completed tax return in March or April of the previous year to check and make amendments, with the final assessment made at the end of the following tax year.

The first instalment is generally due in August, but extra instalments must be paid in February or July if insufficient tax has been withheld or paid in advance.

Employers withhold taxes due on employees’ salaries and any fringe benefits. They must report employees’ earnings to the Incomes Register of the Tax Administration within five days of payment, via the ‘real time’ e-Register with the amount deposited in the tax office’s account no later than the 12th of the following month.

Foreign employees in Finland must register in person with their local tax office to receive a tax card and a Finnish ID to be able to deal with the authorities.

VAT & Other Taxes

The general rate for Value Added Tax (VAT) is 24%, with reductions for certain areas. A rate of 14% applies to food, animal feed, restaurant, and catering services with 10% applying to books, newspapers, and magazines.

Excise duties on such as alcohol, tobacco, electricity, natural gas, and coal or in line with the European Union directives.

Inheritance, gift, and estate taxes also apply in Finland to both Finnish nationals and non-residents. Municipalities collect property tax at rates of up to 2% on the assessed value of a property in a calendar year, while transfer tax is applied to income earned from the transfer of property (4%) or shares (2%).

Social Security and Statutory contributions

Finland’s Social Insurance Institution (Kela) manages a world-leading mix of services and financial support for its citizens and foreigners who work in the country. The benefits and entitlements cover the inability to work through illness or injury, unemployment, and maternity leave, while employers are compensated for entitlements such as sick leave, maternity benefits, and occupational health care.

The system is put into action by a combination of Kela, the municipalities, unemployment funds, pension companies and insurance providers. It is financed by taxes and insurance contributions from employers and their employees.

Finnish social Insurance laws stipulate local and foreign employers must make various social insurance contributions on behalf of their employees. Withheld health insurance deductions are paid to the Central Tax Administration and other contributions to the Employment Fund and insurance providers.

Employer’s Contributions

  • Health Insurance:  1.53% (no cap)
  • Pension Insurance: 16.95% (average, no cap)
  • Unemployment Insurance: 0.50% up to EUR 2.17million (USD 2.55m) of gross salaries; 1.9% above
  • Group Life Insurance: 0.07% (average, no cap)
  • Accident Insurance: 0.8% (average, no cap)

Employee’s Contributions

  • Pension Insurance: 7.15% (under 53 years old) – 8.65% (53 – 63 years old) – 7.15% (over 63)
  • Unemployment Insurance: 1.40% (between 17 and 67 years old)

To be covered by the social insurance system foreigners planning to live in Finland for more than one year must register with the Population Information System, giving the same personal details as Finns must supply. After receiving their personal identity code, they can apply for a Kela card online.

Once registered they can apply for benefits including:

  • Family, maternity, and sickness allowance
  • Parents’ cash benefits and childcare support
  • Reimbursed medical costs
  • Unemployment benefit

Entity Set Up

Foreign companies entering the Finnish market will benefit from the country’s prominent position in leading global economic groupings – such as the European Union (EU), European Economic Area (EEA), Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO) and the Nordic Council. Finland also offers EU-funded incentives for companies setting up in certain sectors or locations, while small and medium enterprises (SMEs) are a robust part of the economy. However, incoming companies will find these attractions balanced by the complexities of employment, tax, payroll, and corporate legislation while ensuring their employees are working productively and efficiently.

There are speedier and cost-effective alternatives, with Bradford Jacobs opening the door to a hassle-free route into the French economy for your company. Work alongside our Professional Employer Organization (PEO) recruitment specialists, and then our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of Finland, its work culture and business practices. Here we have set out some basic summaries of what you need to make the transition into the Finland market, whichever sector you operate in.

Starting a Business in Finland

Finland has borders with Russia and Scandinavian neighbours Sweden and Norway, and a third of the country is inside the Arctic Circle. Economically, it is a hotbed for small and medium businesses, with a predicted Gross Domestic Product for 2021 of 300 million US dollars, ranking it 44th in the world. Metals, chemicals, electronics, machinery, shipbuilding, pulp, and paper are among its major sectors. Encouragingly, the World Bank ranks Finland 20th out of 190 nations in its Ease of Doing Business report.

Foreign companies who wish to expand into or start their business in Finland usually prefer the option of a Private Limited Liability Company, known as an osakeyhtiӧ. All companies, foreign-owned or local, come under the Finnish Companies Act and must register with the Trade Register, as well as enroll on various registers with the Tax Administration, including the VAT Register, Pre-Payment Register, Employer Register, and the Social Insurance Institution (Kela).

Other procedural requirements include:

  • Choose a unique company name with the suffix ‘oy’ for a private limited liability company
  • Open a local business account if the company has share capital (but this is optional).
  • Incorporation documents including Memorandum of Association, Articles of Association and Trade Register notification
  • Obtain a 12-digit tax number for employees and a tax card
  • Obtain the Business Identity Code (YTJ)
  • Documents filed to the Central Tax Administration and Trade Register must be in Finnish or Swedish

Expanding Business into Finland

Foreign companies moving into Finland are entering a robust economy, ranked an impressive 41st in Gross Domestic Product for a relatively small nation with a population of just 5.5 million. Finland is a multi-sector economy with services taking the major proportion, while manufacturing and refining are also key factors. Leading business opportunities feature electronics; motor manufacturing concentrating on tractors, trucks, buses, and military vehicles; chemicals; forestry producing pulp and paper to account for 20% of exports; energy and metals mining.

Finland welcomes foreign investment, but the employment market is complicated by its mix of laws, and collective and trade union agreements affecting employee benefits and entitlements. There are other questions too: where will you find distributors, manufacturers, and offices? Possible expansion locations for businesses include Helsinki, Espoo, Tampere, Vantaa and Oulu.

Finland Business Facts

  • Capital city – Helsinki
  • Population – 5.5 million
  • Major cities – Helsinki; Espoo; Tampere; Vantaa; Oulu
  • Official languages – Finnish and Swedish
  • Economy/GDP (2020) – $US278.86 billion, 41st
  • World ranking: Ease of Doing Business – 20th out of 190 countries (World Bank, 2020)
  • Leading sectors – service sector (60% GDP); industry sector (24.2% GDP); agriculture sector (2.3% GDP). Largest industries: Machinery, vehicles, and metal products; forest and timber products; IT, communications, and biotechnology; chemicals
  • Main exports – include telecommunications equipment; machinery including computers; trucks, tractors, and buses; forestry and timber, paper, and paper products; mineral fuels and oil
  • Main imports – include foodstuffs, crude petroleum; cars and transport equipment; chemicals, iron, and steel
  • Main trading partners – Germany, Russia, Sweden, Netherlands, USA, China
  • Government – Parliamentary system, federacy, and republic
  • Currency – Euro
  • Advantages and Challenges of the Finland Economy

Advantages of expanding into the Finnish economy include:

  • Corporate Tax: Finland has the lowest rate among Nordic countries and is below the European Union average
  • Politics: Finland is politically stable
  • Economic Attitude: Globally minded, welcomes foreign investment with incentive opportunities
  • Language: English is usually the language of business
  • Logistics: High-class Road and rail links, international airports, ports opening onto the Baltic Sea, easy access to the rest of Europe
  • Ease of Business: The World Bank ranks Finland 31st out of 190 nations for ease of starting a business, 10th for paying taxes and No. 1 for resolving insolvency
  • Trade: Member of the European Union with whom it has around 50 preferential trade agreements

Challenges facing Finland include:

  • Reducing labour cost
  • Improving demand for its exports
  • Ageing population
  • Limited Company / Subsidiary or Branch in Finland

A subsidiary established in Finland is a totally separate legal entity from the parent company, with independent management and can have a different company name and follow its own business activities. The subsidiary can use this freedom to explore markets and build credibility.

A branch, however, is an extension of the parent company and is not considered a separate legal entity.

Main characteristics of a subsidiary:

  • It is an entirely independent legal entity from the parent company
  • A shareholder’s liability is only limited to the value of their shares
  • Incorporation documents include Memorandum and Articles of Association and Trade Register notification
  • Subsidiaries require a board of directors and a managing director
  • Subsidiaries are subject to Corporation Tax on both Finnish and worldwide profits

Main characteristics of a branch:

  • A branch has no separate legal identity from the parent company
  • The parent company has complete liability for the actions and activities of the branch
  • Documentation includes a resolution to establish a branch, Trade Register Notification, and extract from the parent company’s register
  • A branch must have a local representative from the parent company
  • Branches do not require Finnish directors
  • Branches in Finland are included in the tax liability of the parent company
  • Legal Structures for Finland Market Entry

All companies in Finland are regulated by the Companies Act and must comply with certain legal requirements.

Legal Structures for a Private Limited Liability Company:

A private limited liability company (osakeyhtiӧ) is the usual choice for foreign companies expanding into Finland. Board members do not need to be Finnish citizens and if at least one is a European Economic Area (EEA) resident, no extra permit is needed. The managing director must be an EEA resident. If not, however, a separate permit is required.

There is no minimum requirement for share capital. The company does not need to appoint an auditor if only one of the following conditions applies: the balance sheet does not exceed €100,000 (US$118,000) or the net sales or comparable revenue does not exceed €200,000 (US$236,000). The company can have between one and five directors, but if there are only two, a deputy must be named.

Legal Requirements for a Branch:

Legally, the branch must follow the same business as the parent company. If the parent company is located outside the European Economic Area (EEA) the branch will need a permit from Finland’s Patent and Registration Office. The branch must have a registered office and a named representative to deal with local authorities on the branch’s behalf.

Opening a Business Bank Account in Finland

Companies starting a business in Finland need a corporate bank account to keep business transactions separate from personal finances, as part of the company’s accounting system. The corporate bank account for a foreign, private limited liability company needs to register before opening the account and there are no requirements regarding minimum investment or share capital.

  • The next step is to gather all relevant documents for the preferred bank according to their services, fees, language spoken and the number of branches perhaps. Documents required for the bank, bearing in mind that each bank will have its own policies with regards to Know Your Customer and money laundering checks, are:
  • A document with reasons as to why the company is opening a corporate account
  • Information about owners or shareholders
  • Paperwork from the Trade Register (90 days old or less)
  • Articles of Association or Memorandum
  • Authority to open the account from officers of the company and signatories of those signing on the account (board minutes)
  • Reference from the bank where the company has an account in the country of residence (no more than 90 days old)
  • Details of company’s financial dealings / transactions / budget
  • Business plan or details of business operations
  • Details of bank account operators including signatures and passport copies
  • Personal details and ID of the responsible manager opening the account

These documents may need to be translated into Finnish, Swedish or English, so check when choosing your bank. Remember to ask for relevant tools to operate the account for your business e.g., online banking IDs, debit / ATM cards.

A limited partnership must have a local bank account. However, it is not mandatory for foreign companies to have a Finnish account from which to pay employees’ salaries, but the payees must have a local bank account.

The Market

Global Expansion into Finland generally means that you need to set up an in-country entity. However, by partnering with us you create the possibility to bypass this process and utilize our Finnish entity. By using our PEO service we take care of the complicated paperwork. Expanding into a new country is always an adventure, but we believe this adventure should be exciting instead of just frustrating and time-consuming. Therefore, we have been supporting companies in over a hundred countries with their expansion plans. In this guide, we will share which documents you need to establish an entity in Finland, but also where you will need to register your business address and company name. We will also break down the advantages and disadvantages of setting up an entity in Finland.

Set up an entity in Finland

Launching a subsidiary overseas takes time and eats up funds – and the venture has no guarantee of success. Foreign companies moving into the Finnish economy typically choose a limited liability subsidiary known as an osakeyhtiӧ, although another option is to set up a branch office (sivuliike). A subsidiary in Finland is a legal entity and it is entirely independent of the foreign parent company. It is incorporated as a local company and regulated by the Companies Act. Once the subsidiary is legally established, other crucial factors must be dealt with. Tax processing, filing accounts, legal compliance, workforce management, payroll and recruitment add up to a hefty workload.

You can lighten the burden by teaming up with Bradford Jacobs. Our Professional Employer Organization (PEO) and Employer of Record (EOR) networks locate the finest local talent and administer your payroll in Finland – speedily and risk-free. Your company will be up-and-running in days rather than weeks or even months. Instead of the costs, delays, and complications of going solo, use our services and be up-and-running with a presence in your new territory within days, rather than months.

How to set up a Finland Subsidiary

  • Decide on the company type that suits the nature of your business and your goals. The most common choice for a foreign business to establish a subsidiary is the Private Limited Liability Company (osakeyhtiӧ). Other choices are a Public Limited Liability Company (julkinen osakeyhtiö-Oyj), General Partnership (avoinn yhtiӧ), Limited Partnership (kommandiittiyhtiӧ) or a Branch Office (sivuliike).
  • Choose a company name, unique to Finland, which must include the suffix ‘oy’ for a private limited liability company.
  • There is no requirement for minimum share capital. If there is share capital, it must be paid before registration.
  • Prepare incorporation documents, which include a Memorandum of Association, Articles of Association and Trade Register Notification. Fees for basic statutory documentation range between €2,500 and €4,500 (US$2,950 and US$5,300). The Trade Register registration fee is €380 (US$450) or €275 (US$325).
  • File documents to the Trade Register and Central Tax Administration, which must be in Finnish or Swedish.
  • In addition to the Trade Register, companies must also enroll on various registers with the Tax Administration, including the VAT Register, Pre-Payment Register, Employer Register, and the Social Insurance Institution (Kela).
  • Obtain a 12-digit tax number for employees and a tax card.

Application and Fees

A company is legally established when it is enrolled on the Trade Register and the process usually takes around 14 days. As most services are digitized, companies need to apply for a Suomi.fi e-Authorization or give authorization to an accounting firm. It is not mandatory to have an in-country bank account. Salaries can be paid from outside Finland, provided the client has a Finnish bank account. A bank account is required for companies issuing share capital.

What you need to set up a Finland Subsidiary

Foreign companies setting up a subsidiary in Finland must meet certain requirements under the Companies Act. These include:

  • Agreement on association from the parent company, with board members’ details and shareholders’ initial contributions
  • Minutes of the parent company’s meeting confirming the decision to open a subsidiary
  • Open a bank account; only mandatory if there is share capital
  • Articles of Association, which must include company name and area of business
  • Trade Register notification and receipt of payment
  • The above documents can be filed electronically.

Additional requirements for registration include:

One board member needs a Finnish internet bank account to facilitate Know Your Customer checks. Company name for a private limited liability company must include the suffix ‘oy’ or (osakeyhtiӧ), meaning limited company. All companies in Finland must register with the Trade Register before incorporation. Companies must also enroll on various registers with the Tax Administration including the VAT Register, Pre-Payment Register, Employer Register and the Social Insurance Institution (Kela). Board members do not need to be Finnish citizens and if at least one is a European Economic Area (EEA) resident no extra permit is needed. The managing director must be an EEA resident, if not a separate permit is required.

Benefits of setting up a Finland Subsidiary

Finland offers many attractions for companies looking to set up a subsidiary, including a robust private sector backed by a well-educated and skilled workforce. The business-friendly administration has created one of the world’s most accessible and welcoming economies for foreign investment. By establishing a subsidiary, the parent company can explore the potential of the Scandinavian and wider European markets, while boosting the credibility of its own international profile. Finland enjoys a high international profile as a member of the European Union, the European Economic Area, the Organization for Economic Cooperation and Development, the World Trade Organization, and the Nordic Council.

Benefits include:

  • The subsidiary is a separate legal entity from the parent company, able to operate under its own business name and pursue independent business activities.
  • As of January 2021, the parent company can deduct the losses of a subsidiary from its own tax liabilities, if it owns at least 90% of the subsidiary.
  • Foreign companies operating in certain locations may be eligible for EU-financed incentives focused on small and medium business enterprises (SMEs) and information and communication tech companies.
  • Generally, the parent company has no responsibility for the debts or liabilities of its subsidiary beyond the investment of their shareholding.

The parent company’s financial statements and accounts are not required to be filed with the Finnish tax authorities.

Employment Contracts

A successful business largely depends on its employees. By creating working contracts that include the right terms and benefits there will be no misconception and the perfect work-life balance can be created. At Bradford Jacobs, this is our aim, and we support companies in over a hundred countries by creating compliant and balanced labour contracts. Our team in Finland keeps track of the Finnish laws and regulations on a daily basis to be duly aware of updates that can be implemented in working contracts. By using our PEO and EOR service we can provide compliant labour contracts for employees in Finland including local benefits.

To support your plans, we made this guide including the basics of employment contracts in Finland. After reading this guide you will know everything about social security, notice periods, and the average working hours.

How Do You Hire Finland Employees?

Foreign companies hiring employees as part of their expansion plans for Finland must comply with tax and social security regulations. The framework of legislation relies on laws, statutes, and collective agreements to provide safeguards and entitlements for the workforce. In Finland, the employer-employee relationship is mainly governed by the Employment Contracts Act and the Working Hours Act. Other Acts regulate Annual Holidays, Non-discrimination, Protection of Privacy in Working Life, Collective Agreements, Pay Security and Study Leave. When hiring and drawing up employee contracts, all of these must be considered as well as any collective bargaining agreements that also set down minimum guarantees and entitlements.

Contracts in Finland are usually open-ended and can be presented in a more informal way than in some other territories. For example, they can be oral, written, or electronic and need not be in writing unless requested by either party. Contracts are typically exchanged by email with scanned documents and electronic signatures. There is no legal requirement to exchange hard copies of documentation or regarding the language used. However, they must detail essential points covering business location, employee’s place of work, the termination date of any fixed-term contract, any trial period, employee’s duties, any collective agreement, salary and payment schedule, annual holiday, notice periods and sick pay.

Employment Contracts in Finland

There are a variety of contract types in Finland, governed by the Act on Employment Contracts. The main types are:

  • Open-ended/Indefinite employment contract: The most common type of contract. Under Finnish employment law, all contracts are considered open-ended and valid until further notice.
  • Fixed-term employment contract: Employers must have justifiable reasons for offering a fixed-term contract. These include temporarily replacing a member of staff, a fixed-term project or seasonal work. If the employer cannot give a reason the contract is deemed indefinite. It is illegal to use consecutive fixed-term contracts which indicate there should have been permanent employment.
  • Trial period employment contract: This must not exceed six months from the start of work. In a fixed-term contract, the trial period cannot exceed half the term of the contract. The trial period contract can be cancelled by either party but not on grounds prohibited by legislation.
  • Regardless of contract type and whether delivered orally, written or electronically the employee should receive basic information within one month. Written details should cover such as business location, employee’s place of work, the termination date of any fixed-term contract, any trial period, employee’s duties, any collective agreement, salary and payment schedule, annual holiday, notice periods and sick pay.

Collective Agreements:

Individual employers, employer federations, trade unions and employer organizations create collective agreements to lay the framework of employment terms and conditions for employees. They generally cover specific sectors or industries.

Collective agreements are binding on employers, regardless of the employer being a member of the organization that drew up the agreement or whether the employee is a union member. However, collective agreements can provide extra benefits not covered by employment law, such as salary increases, extra holiday benefits, paid sick leave and minimum wages, as Finland has no national minimum wage.

There are countless such agreements in Finland, where collective collaboration plays a large part in the employment market. They guarantee that within a specific sector or industry all workers receive identical benefits and entitlements. There are 160 universally-binding collective agreements in Finland confirmed by the Board for the Ratification of Validity of Collective Agreements. These are binding on all employers in the relevant sector, including employers who are not members of the employers’ organization.

Additionally, central labour organizations may also introduce elements to be included in the collective agreement.

What Employment Laws exist in Finland?

The Employment Contracts Act and the Working Hours Act are the main factors governing employment in Finland, supplemented by a raft of other measures covering such areas as paid leave, sick pay, non-discrimination, and data protection. Individual sectors will also apply minimum rates for pay as there is no national minimum wage in Finland.

Collective bargaining agreements can introduce additional benefits and entitlements, but certain statutory minimums must apply to any contract. These include:

Working Hours: Under the Working Time Act, hours should be eight per day or 40 per week or an average of 40 a week over 52 weeks. Certain sectors and collective agreements allow flexible ‘period working time’ not exceeding 80 hours over two weeks or 120 hours over three weeks. Employers and employees can agree to flexi-work arrangements, but hours cannot exceed an average of 40 hours over four months.

Working breaks: These are also covered by the Working Time Act. Employers are entitled to one hour’s break after working six hours; shorter breaks must be agreed upon by both parties. There must be a minimum of 11 hours of rest between working days and an unbroken 35-hour break every seven days.

Overtime: Rates are set at 50% above basic salary for the first two hours and 100% extra for each subsequent hour.

Annual Leave: Paid annual leave is calculated between April 1 and March 31 as the credit year. Under the Annual Holidays Act, leave is two days per month for employment of fewer than 12 months. Employees who have worked for more than 12 months receive two-and-a-half days per month. Employees unable to take their full allowance due to illness or medical rehabilitation can claim additional days to a maximum of 75. There are generally 11 paid public holidays and individuals who have to work receive twice their normal pay, while collective agreements may provide further holiday and salary entitlements in lieu.

Sick Leave: This is governed by the Employment Contracts Act. Employees incapacitated through illness or injury receive their salary as sick pay from their employer for the first 10 days. Those who have worked less than one month receive 50% of their salary. After nine days the Social Insurance Institution (Kela) pays sickness benefits for up to 300 days and compensates the employer if they paid the salary.

Maternity Benefit: The Social Insurance Institution (Kela) pays an allowance for 105 working days (Monday to Saturday) from when the leave begins. Mothers are entitled to a tax-free lump sum of €170 (US$200). Maternity leave begins at the earliest 50 days before the due date or 30 days at the latest.

Paternity Leave: Leave of up to 54 days can include between one and 18 days taken simultaneously with the mother’s leave while she receives maternity or parental allowance. The balance of parental leave can be in two separate periods. The Social Insurance Institution (Kela) also pays paternity allowance.

Parental Leave: Can be taken by either parent for the full term or be shared. The Social Insurance Institution (Kela) pays an allowance for 158 days, during which parents can work part-time and receive a partial allowance accordingly.

Termination and Notice: Termination notice depends on the length of the employee’s service and can be contractually agreed upon if not already governed by collective agreements. If the employee’s contract is terminated without fault on their part, notice periods are: Up to one year’s employment – 14 days; up to four years – one month; up to eight years – two months; up to 12 years – four months; over 12 years – six months. Employees terminating employment must give 14 days’ notice if they have been working up to five years and one month for over five years.

Severance Payments: There is no statutory requirement for severance payments unless covered by collective agreements in the case of mass redundancies or the employer chooses to pay them.

Probation: Trial periods must not exceed six months from the start of work. In a fixed-term agreement, the trial period cannot exceed half the term of the fixed-term contract. The trial period contract can be cancelled by either party but not on prohibited grounds.

Employee Benefits

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Finland might not all be familiar to you yet. By using our PEO and EOR service, we can provide compliant labour contracts for employees in Finland including local benefits. When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Finland, benefits can be guaranteed by labour law and national legislation, as well as collective agreements with trade unions or workers’ councils.

Our guide will explain what benefits and employee compensation are guaranteed, and what can be modified, for any employer who wishes to expand their business into Finland.

What Finland Compensation Laws Exist?

In Finland, compensation laws are largely governed by the Employment Contracts Act, the Working Time Act and supplementary legislation covering such holidays, sick leave, maternity benefits and allowances, privacy in the workplace and more. Additionally, trade unions and collective agreements also set minimums within specific sectors of the economy and for particular benefits, to ensure that employees are treated the same as others in that sector. For example, there is no national minimum wage in Finland, and this is set by collective agreements per sector.

Collective agreements cannot undercut minimum compensation laid down by national laws where they apply. These include:

Social Insurance: Finnish employees are entitled to social security benefits. Both employees and employers must contribute to social insurance funds to cover entitlements such as unemployment, maternity leave, sick leave, and health insurance. Withheld health insurance deductions are paid to the Central Tax Administration and other contributions to the Employment Fund and insurance providers.

Redundancy, Termination and Severance: Termination notice depends on the length of the employee’s service and can be contractually agreed upon if not already governed by collective agreements. If the employee’s contract is terminated without fault on their part, notice periods are: Up to one year’s employment – 14 days; up to four years – one month; up to eight years – two months; up to 12 years – four months; over 12 years – six months.

Employees terminating employment must give 14 days’ notice if they have been working up to five years and one month for over five years. There is no legal requirement for severance payments unless covered by collective agreements in the case of mass redundancies, or the employer chooses to pay them.

Working Hours and Breaks: The Working Time Act restricts working hours to eight per day or 40 each week, or they can average 40 a week over 52 weeks. Where collective agreements allow flexible ‘period working time’ hours should not exceed 80 over two weeks or 120 over three weeks. ‘Flexi-work’ arrangements cannot exceed an average of 40 hours per week over four months.

The Act also covers breaks. Employees are entitled to one hour after six hours of work, 11 hours of rest between working days and 35 hours of continuous break every seven days.

Sick Leave: The Employment Contracts Act stipulates employees receive sick pay from their employer for nine days after the first day of illness. Those employed for less than a month receive 50% of their salary. After 10 days the Social Insurance Institution (Kela) pays sickness benefits for up to 300 days and compensates the employer if they paid the salary.

Holiday / Vacation Leave: This is governed by the Annual Holidays Act and is based on a holiday credit year running from April 1 to March 31. Those employed under 12 months receive two days for each month worked during their first credit year; those having worked more than one year receive two-and-a-half days per month.

The total of paid days is 30 per year. Individuals who have to work on paid public holidays receive twice their normal pay, although collective agreements may provide more salary or entitlements in lieu.

Maternity / Paternity Leave: The Social Insurance Institution (Kela) pays benefits for 105 working days (Monday to Saturday) from the start of the leave. Mothers are also entitled to a tax-free lump sum of €170 (US$200).

Maternity leave begins at the earliest 50 days before the due date or 30 days at the latest. Paternity leave of up to 54 days can include between one and 18 days taken simultaneously with the mother while she receives maternity or parental allowance. The balance of parental leave can be in two separate periods. The Social Insurance Institution (Kela) also pays paternity allowance.

Parental Leave: Can be taken by either parent for the full term or be shared. The Social Insurance Institution (Kela) pays an allowance for 158 days, during which parents can work part-time and receive a partial allowance accordingly.

Social Security in Finland

Employees’ social security in Finland covers benefits and entitlements for being unable to work through illness or injury, unemployment, and maternity leave. The system, which is administered by the Social Insurance Institution (Kela) compensates employers who fund such as sick leave, maternity benefits, and occupational health care. Local municipalities, unemployment funds, pension companies and insurance providers are part of the social security framework, which is also funded by state taxes in addition to employer and employee contributions. Withheld health insurance deductions are paid to the Central Tax Administration and other contributions to the Employment Fund and insurance providers.

Finnish social security laws stipulate foreign employers must make social insurance contributions on behalf of their employees. To be covered by the social insurance system, foreigners planning to live in Finland for more than one year must register with the Population Information System. After receiving their personal identity code, they can apply for a Kela card online. Once registered they are eligible for benefits including family, maternity and sickness allowances, childcare support, reimbursed medical costs and unemployment benefits.

Employer Contributions:

  • Health Insurance: 1.53%, (no cap)
  • Pension Insurance: 16.95%, (average, no cap)
  • Unemployment Insurance:  0.50% up to €2.17million (US$2.55m) of gross salaries; 1.9% above
  • Group Life Insurance: 0.07%, (average, no cap)
  • Accident Insurance: 0.8%, (average, no cap)

Employee Contributions:

  • Pension Insurance: 7.15% (for under 53 years old); 8.65% (between 53 and 63 years); 7.15% (over 63 years)
  • Unemployment Insurance: 1.40% (between ages 17 and 67)
  • Statutory Costs in Finland

Minimum wages: There is no national minimum wage in Finland. Employers’ statutory costs in this regard depend on trade unions and collective agreements as they apply to their sector.

Social security: Statutory social security costs made by the employer cover deductions for health, pensions, unemployment, accident and life insurance and average around 20%.

What Benefits are guaranteed in Finland?

Overtime: Rates are 50% above basic salary for the first two hours and 100% for each subsequent hour.

Health Insurance: All employees paying social security contributions are entitled to health insurance.

Public Holidays: There are 11 paid public holidays. Employees who have to work those days receive twice their normal pay, although collective agreements may provide for extra benefits in lieu.

Vacation Leave: Paid vacation is a statutory benefit, calculated at two days per month for having worked under 12 months, and two-and-a-half days per month after working more than 12 months.

Sick Leave: The Employment Contracts Act stipulates employees receive sick pay from their employer for nine days after the first day of incapacity, then for a maximum of 300 days from the Social Insurance Institution (Kela).

Maternity and Paternity Leave: Expectant mothers receive the benefit for a total of 105 days, which begins at the earliest 50 days before the due date or 30 days at the latest. Paternity leave is for a maximum of 54, with up to 18 days taken simultaneously with the mother.

Recruiting Top Talent

Recruitment can be a tricky business, especially when a company is venturing to unfamiliar countries and exploring new markets. This is where we come in to oversee the process for you – Bradford Jacobs’ expertise and over 20 years of experience in international recruitment services are indispensable for expansion into Finland. Hiring the right talent in Finland to expand your company can result in a thriving business with numerous opportunities. However, the recruitment process can be complicated when you have no physical presence in Finland yet. Our PEO and EOR service can be the solution for your company.

The Recruitment Process in Finland

A foreign company expanding into Finland need not establish a local entity to hire its employees. However, it is crucial to your recruitment drive to know where to locate the right talent and perfect fit for your company. Additionally, who are the ideal local and international employment organizations to collaborate with to access the best talent pools? The answers do not come easily – and once the right employee is found, the employer must follow strict staffing and registration procedures. These include:

  • The answers do not come easily – and once the right employee is found, the employer must follow strict staffing and registration procedures. These include:
  • Registering with Central Tax Administration to obtain an employee’s 12-digit tax number
  • Registering for a Finnish identity number for foreign workers, if required, before applying for the tax number
  • Registering with the Social Insurance Institution (Kela)
  • Registering the company with the Employer Register of the Central Tax Administration
  • Creating contracts for employees that comply with the Finnish Employment Contracts Act in Finnish, Swedish and English if required
  • Applying for employees’ permits and visas if required
  • Applying for employees’ special expatriation status if applicable
  • Calculating employees’ monthly salaries and providing their pay slips
  • Researching for any available tax-free allowances or benefits
  • Submitting employees’ or employer’s wage tax returns and national insurance forms
  • Corresponding with the applicable national authorities regarding payroll changes and payments
  • Creating a payment schedule for wage tax, national and social insurances, and net wages
  • Creating and submitting your company’s annual accounts and year-end statements

The recruitment process is time-consuming and requires dedication – a difficult task when faced with a host of other complicated tasks involved in Global Expansion. By engaging Bradford Jacobs as your Employer of Record (EOR) we can provide all the answers. We will convert your expansion blueprint for Finland into an action plan with a few simple steps, including:

  • Bradford Jacobs locates the perfect employees for your company, then steps in as EOR to ensure they comply with Finnish employment contracts law, payroll, HR, visa requirements and permits (if required).
  • We manage all work-related registration formalities and ongoing employment issues while you have daily control of your employees.
  • The employees complete their timesheets and any expense claims – and we invoice you, the client. Once paid, we deduct all contributions from the relevant Finnish authorities and transfer the balance into the employees’ accounts.

Within a few days, your company has an international presence in Finland – in a prime position to explore further expansion into Scandinavia and Europe without risking the expense or stress of setting up your own subsidiary or branch office in the country.

Legal Checks You Can Make on Employees in Finland

When starting the recruitment process in a foreign country, employers must consider their legal obligations. In Finland, background checks on employees or candidates are governed by the Act on the Protection of Privacy in Working Life, which stipulates employers should collect personal data only with the employee’s permission. Third parties can only be used to collect information with permission from the employee. Additionally, European Union (EU) laws come into play and protect employees and potential employees against discrimination based on such as race, nationality, gender, sexual orientation, religion, age, disability, family status or membership in political or public organizations.

This includes background checks that should relate directly to the specific role being applied for. In line with the EU’s General Data Protection Regulation (GDPR), personal data is also protected by law and can only be obtained with the individual’s consent and if it is relevant to the position. Essentially, Finnish employees and job seekers have the fullest right to know what information about them is collected and how it is handled and processed.

Importantly, Finland’s law on criminal record checks is due to change in 2022 relating to working with minors. Previously, checks were only possible on employees working in the field for more than three months in a 12-month period, but under new legislation, employers will have the right to conduct criminal record checks for any length of employment.

General regulations on permitted checks include:

  • Eligibility to work: Under the Employment Contract Act employers must ensure non-European Economic Area nationals comply with residency and immigration requirements and risk fines for non-compliance.
  • Reference and education checks: These are commonly made but must be with the individual’s consent.
  • Criminal and credit record checks: If a legal authority discloses an individual’s criminal or credit record to enable an employer to carry out a statutory duty, the employee’s permission is not required but they must be advised the information is being collected.
  • Medical checks: Individuals cannot be asked detailed questions about their health, unless in the context of relevance to the position.

Basic Facts on Hiring in Finland

An employer’s questions during an interview must be directly related to the job in question. The procedure is governed by the Act on Protection of Privacy in Working Life and the European Union’s General Data Protection Regulation.

Terms and conditions of employment in Finland are regulated by several individual Acts. Primarily these are the Working Hours Act and laws on Employment Contracts, Annual Holidays, Non-discrimination, Protection of Privacy in Working Life, Collective Agreements, Pay Security and Study Leave. The employer-employee relationship is governed by the Employment Contracts Act. The contract may be oral, written, or electronic and is not required to be in writing unless requested by either party. It is valid indefinitely unless the employer has a justified reason for making a fixed-term contract.

The contract must include details of the business location, employee’s place of work, the termination date of any fixed-term contract, any trial period, employee’s duties, any collective agreement, salary and payment schedule, annual holiday, notice periods, and sick pay. Contracts are often exchanged by email, with scanned documents and electronic signatures. Originals can be exchanged for documentation purposes, but this is not required legally.

  • Finland’s official languages are Finnish and Swedish, but contracts may be in another language if required.
  • Employees must be registered with the Central Tax Administration to obtain their 12-digit tax number.
  • Registering for a Finnish identity number for foreign workers, if required, before applying for the tax number.
  • Employers must provide documentation to support foreign employees’ applications for a Residence Permit.
  • Employees must be registered with the Social Insurance Institution (Kela).
  • Employers must register the company with the Employer Register of the Central Tax Administration.
  • Working time is generally eight hours per day totalling 40 per week or an average of 40 hours over 52 weeks.
  • Employees receive 50% above normal wage for the first two hours of overtime and 100% extra for additional hours.
  • Employers withhold tax and social security deductions and remit to the Central Tax Administration and Social Insurance Institution.

Notice periods given by employers range from 14 days for up to one year’s employment, to six months for employment over 12 years. Individuals must give 14 days’ notice for up to five years of employment and one month’s notice if employed for more than five years.

Employer and employee may agree to a trial period of up to six months.

Work Culture

To do business in Finland, it is vital to have a good understanding of its business or work culture. Making the right impression with the right people is the key to success in Finland, and it is important to back this up with the right research on the market and potential business associates. As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about the Finnish work culture, we want to support your Global Expansion plans. Therefore, we will address all the aspects of the work culture in Finland to start your expansion well-informed.

Work Culture in Finland

Foreign companies hoping to make their mark in the Finnish economy must have a thorough understanding of the country’s business culture if they want to succeed. Finnish workplace etiquette is largely in line with other Nordic nations, valuing workplace equality with a generally flat hierarchy. Junior managers can be decision-makers and employers generally take employees’ opinions into account when planning projects at office meetings. Finns are straightforward, like to deal with facts, and do not need to conduct business based on personal relationships, but still consider restaurants a suitable location to initiate negotiations.

Family life is key for Finns, so flexibility in achieving the work-life balance is a big factor in employment practices.

Punctuality: Meetings should be scheduled at least two weeks in advance and be sure to arrive on time – it is an indication of efficiency and respect. Exchanging an agenda for the meeting is also recommended. Opportunities for meetings from June to August will be restricted as this is the holiday season in Finland

Languages: The official languages are Finnish and Swedish, but English is generally the ‘business language’. Nevertheless, making the effort to use Finnish and Swedish words and phrases will go down well in meetings

Business Relationships: Finns are direct, straightforward, and used to speaking out in their business relationships. This is not considered rude. Small talk is rarely on the agenda, and they avoid personal questions. First names are used in the workplace and office, whatever the status of the individual.

Introductions and Greetings: A brief, firm handshake and nod with eye contact is the starting point. Finns usually introduce themselves with their first name, then surname and continue to use first names thereafter unless it is a very formal setting or there is a significant difference in status.

Gift-giving: Finland does not have a tradition of exchanging gifts between business counterparts, except maybe at Christmas after the relationship has been established. Small items, such as liquor or local souvenirs can be exchanged to celebrate sealing a deal.

Dress Code: This is formal for men and women for meetings – dark business suits for men, while women wear dark-coloured business suits, trouser suits, or dresses.

Meetings: Agendas are strictly adhered to, and Finns expect a clear presentation, detailing all the facts as they may not ask questions. Be prepared for silent interludes of a couple of minutes. Also, do not interrupt or be too talkative – it may signify nervousness.

Business Meals: Finns are happy to discuss deals and negotiate over the lunch table. Who invites, pays the bill. Finns do not share the costs, or ‘Go Dutch’.

Finland Minimum Wage

Finland does not have a national minimum wage. Minimum levels of salary are determined by collective and union agreements and by sectors, which consider workplace responsibilities, workplace location, qualifications, age, skill levels and seniority. These are legally binding and apply to Finnish and foreign workers. The average salary per month is €1190 (US$1,400) at the lower and generally the average nationwide is €4690 (US$5,540) monthly.

Probation Periods in Finland

The probation or trial period is agreed upon between employer and employee, whether or not the contract is open-ended or fixed term before the start of employment. If the probation period is governed by a collective agreement this must be considered. Legally, probation periods can be no longer than six months. Although either party can terminate the employment during this period, it cannot be on discriminatory or unjustifiable grounds.

Also, if an employee has been away from work due to illness, there can be an extension of one month for every 30 days of absence. For fixed-term contracts, the trial period has to be less than 50% of the contract.

Working Hours in Finland

Daily working hours for Finland’s citizens, foreign nationals, contracted and public service employees are governed by the Working Time Act as well as collective agreements and written into the employment contracts. Regular working hours should not exceed eight hours a day, and 40 hours a week; or, they should average 40 hours over four months with a maximum work week of 48 hours. Period-based working time allows for 80 hours per fortnight or 120 hours in three weeks if permitted by law or written into a national collective agreement. Hours may vary depending on collective agreements (of which there are around 160) over different sectors.

Flexi-work terms are generally in a written agreement between the employer and employee and allow the employee to decide when and where they work 50% of the time but must not average more than 40 hours per week over four months.

During a workday of more than six hours, employees are entitled to a minimum of an hour’s break which they can use to leave their place of work. A shorter break can be agreed upon between employer and employee but no less than 30 minutes. Breaks between daily shifts should be 11 hours and each week there should be at least 35 hours of rest.

Overtime in Finland

Overtime is regulated by the Working Hours Act and collective agreements and is defined as hours over the maximum regular working hours – eight hours per day or 40 hours per week. The maximum overtime allowed is 138 hours in a four-month period or 250 hours in a calendar year. An extension of the 250 hours can be agreed upon but only to another 80 hours maximum over the year. Overtime pay is 1.5 times the regular hourly rate for the first two hours and double the time for subsequent hours. This can be given as remuneration or time off in lieu.

Notice Periods in Finland

Notice periods are usually agreed upon mutually and written into the employment contract unless there is a collective agreement in place. Otherwise, statutory notice periods are below and are based on length of employment:

  • Up to 12 months – 14 days’ notice
  • One to four years – one month
  • Four to eight years – two months
  • Eight to 12 years – four months
  • More than 12 years – six months

Similarly, if the employee gives notice and there is no collective agreement or contractual agreement, it is based on the employee’s length of service:

  • Up to five years – 14 days’ notice
  • More than five years – one month

Employees are generally paid their full salary plus benefits even if they are put on garden leave, or they can be paid in lieu of the notice period.

Redundancy, Termination / Severance in Finland

There is no statutory requirement for severance payments unless covered by collective agreements in the case of mass redundancies or the employer chooses to pay them.

Pension Plans in Finland

Finland has a two-tier system where the schemes complement each other.

Tier I: The earnings-related pension is funded by salaries and entrepreneurial activities. Employers must have a pension insurance policy for all employees and pay their premiums as a percentage of earnings. Self-employed pay their own premiums.

Tier II: National and guaranteed pensions are for pensioners without an earnings-related pension.

Public Holidays in Finland

Employees in Finland are entitled to around 11 paid public holidays each year:

  • New Year’s Day – January 1
  • Epiphany – January 6
  • Good Friday – March / April
  • Easter Monday – March / April
  • May Day – May 1
  • Ascension Day – 40th day of Easter
  • Midsummer’s Eve – June, varies
  • Independence Day – December 6
  • Christmas Eve – December 24
  • Christmas Day – December 25
  • Boxing Day – December 26
  • Sick Leave in Finland

If an employee is unable to perform their duties due to illness or injury, they are entitled to paid time off (as long as the incapacity wasn’t self-inflicted or due to negligence). Provided that the employee has been working for one month, they are entitled to their full salary for up to nine days, starting from the date the employee became unfit for work (10 days in total). This is paid by the employer. After this, under the Sickness Insurance Act 2004, the employee is entitled to a national sickness allowance of 100% of the salary for up to 300 days. Employees who have worked for less than one month are entitled to 50% of the basic pay and the employer is also recompensed, for the salary already paid after the initial 10 days, by the Social Insurance Institution (Kela).

Vacations / Holidays in Finland

Holiday entitlement runs from April 1 to March 31 and comes under the Annual Holiday Act. Collective agreements also apply. During the first year, the employee receives two days of paid vacation for every month. In subsequent years, the employee is entitled to two-and-a-half days per month – giving annual paid leave of 30 days or five weeks. Plus, there are around 11 national holidays every year when employees should be given time off in lieu. Of the annual leave, at least 24 days should be taken during the holiday season between May 2 and September 30. Part-time workers who work less than 14 days per month or less than 35 hours a month, do not accrue holiday leave but they are still entitled to paid time off. Also, if a contract is terminated any accrued leave should still be paid.

Maternity / Paternity Leave in Finland

Parents who are covered by health insurance are entitled to the following:

A tax-free Maternity Grant of €170 is paid to the mother or as a childcare package, for instance, clothes or baby products, after the fifth month of pregnancy and on the presentation of a medical certificate.

Maternity Leave: This can begin 50 working days before the baby is due (at the earliest) or 30 days before (at the latest) and lasts 105 working days. Maternity Allowance (äitiysraha) is paid by Kela, which is the Finnish Social Insurance Institution, for all 105 days of Maternity Leave. Under special circumstances, employees can apply for a Special Maternity Allowance, which will extend the leave period.

Paternity Leave: This can be taken by the employee after the child has been born for 54 workdays maximum, which can be used in a maximum of 3 separate periods. The employee is also entitled to use a maximum of 18 days off while the mother is also on maternity leave, in which during this time they are paid a Paternity Allowance (isyysraha).

Parental Leave: This can be taken by either parent and starts after maternity leave finishes. Parental Allowance (vanhempainraha) is paid for 158 days.

If during the Maternity, paternity or parental leave the employer or employers continue to pay salaries, then Kela will reimburse the employer/s.

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