How to hire and pay employees in Finland
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Before hiring
Before hiring employees in Finland, there are a few important things you’ll need to know. Firstly, fixed-term employment in Finland can’t be terminated. If an employee is performing poorly, employers must give employees a warning as well as an opportunity to improve before being terminated.
In addition to income tax in Finland, employees are also subject to municipal income tax, which varies between 16.5% and 23.5% depending on the employee’s municipality. Some employees may also pay church tax.
We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in Finland below.
At a glance
CURRENCY
EUR
OFFICIAL LANGUAGE
FINNISH, SWEDISH
PAYROLL FREQUENCY
MONTHLY
EMPLOYER TAXES
~22%
13th / 14th SALARY
Not legally required, but an annual holiday bonus is common in most collective agreements. Usually, the bonus is 50% of an employee’s gross pay for the annual holiday.
Good to know
- Collective bargaining agreements are very common in Finland, and approximately 80% of workers are members of a trade union. Collective bargaining is used across industries to provide better terms for employees than what the statutory requirements provide.
- The regular working hours for white-collar employees specified in collective agreements are typically seven and a half hours a day and 37.5 hours per week.
- Vacation is typically taken between May 2nd and September 30th—four weeks in the summer and one week in the winter.
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Labor laws in
Finland
Working hours and overtime
In Finland, employees typically work eight hours a day, 40 hours a week—unless otherwise provided by collective agreement. However, the regular working hours for white-collar employees specified in collective agreements are typically seven and a half hours a day and 37.5 hours per week.
Regular business hours are typically 8:00am to 4:00pm or 9:00am to 5:00pm, from Monday to Friday.
Minimum wage
Employment contracts
The probationary period in Finland is six months.
IP protection and non-compete agreements
Non-compete agreements in Finland must only be used for reasonable grounds. Compensation is not required for a non-compete agreement that lasts up to six months, but is required for agreements lasting longer.
Calculate costs to hire internationally
Benefits and leave in
Finland
Vacation time
Annual leave is calculated from the period of April 1st through March 31st of the following year. During the first holiday credit year, employees accrue two days of paid holiday per month, and two and a half days thereafter. The total number of paid holidays per year is between 24 and 30 days. In Finland, Saturdays are included when taking a full week of vacation.
Employees who have at least 15 years of service receive three vacation days per month.
Vacation is typically taken between May 2nd and September 30th—four weeks in the summer and one week in the winter.
Sick leave
Employees who have been in service for at least a month are entitled to paid sick leave of nine working days.
After these nine days, the employee must provide a medical certificate from a doctor. They are then entitled to sickness allowance from the state (the Kansaneläkelaitos or Kela), the amount of which is based on the employee's earned income and is paid for weekdays and Saturdays for a maximum period of 300 days.
Employees that have been working for less than a month are entitled to 50% of their pay during sick leaves.
Maternity and paternity leave
Parental leave
Employees are entitled to maternity leave of 105 days (excluding Sundays). They can choose to start the leave a maximum of 50 days before the expected due date.
Employees are also given 54 weekdays (including Saturdays) of paternity leave, with a maximum of 18 days to be used at the same time as the mother. The remaining days are to be taken in more than two periods.
Employers are not required to pay a salary during this period, but the state can grant the employee an earnings-related maternity allowance. However, most collective agreements require that salary is paid during maternity leave and temporary child-care leave.
Holidays
View a list of recognized public holidays in Finland here.
Employer tax
An employer can expect to contribute about 22% in social contributions which includes health insurance, pension insurance, unemployment insurance, accident insurance premium, and, if agreed in the collective labour agreement, group life insurance.
Individual tax
Employees in Finland are taxed from 0% to 31.25% depending on their income bracket. Social contributions are between 9.58% and 11.08%.
Employees are also subject to municipal income tax, which varies between 16.5% and 23.5% depending on the municipality. Employees may also pay church tax.
Termination in
Finland
Fixed-term employment in Finland cannot be terminated. Employers must give a warning to an employee performing poorly, as well as an opportunity to improve before being terminated.
Vacation days that remain unused at the end of an employment relationship are compensated for the employee.
There is no statutory severance pay unless the employee’s termination is unjustified, or the employer has decided voluntarily to provide it.
The notice period in Finland depends on the duration of employment.
For dismissals:
- Up to one year employment: 14 days notice
- One year to four years of employment: One month notice
- Four years to eight years: Two months notice
- Eight years to 12 years: Four months notice
- More than 12 years: Six months notice
For resignations:
- Up to 5 years of employment: 14 days’ notice
- More than 5 years of employment: One month's notice
Start hiring employees in
Finland
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.
Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While Oyster strives to provide current and accurate information, Oyster makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.
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