How to hire and pay employees in Finland

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Finland

Before hiring

EMPLOYEES IN
Finland

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

PUBLIC HOLIDAYS

15

(based on region;
see here
)

EMPLOYER TAXES

~22%

of gross salary

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.

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.

Employment contracts

Probationary period

The probationary period in Finland is six months. 

Pensions

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.

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.

Notice period

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.

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