Definitive Guide to Hiring in Finland

Hiring in Finland

Hiring employees compliantly in Finland means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Finland so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Finland; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Finland

Employment laws in Finland are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Finland employment laws and Finland policies here.

Employee Probation Period

• Probationary period is 4 months
• Maximum 6 months (in case of work related training)

Annual Leave in Finland

• An employee is entitled to two and a half (2,5) weekdays of leave per each full holiday credit month if the employment relationship has lasted for at least one year by the end of the holiday credit year. 
• If the duration of the employment relationship has been less than one year, the employee is entitled to two (2) weekdays of leave per each holiday credit month. 
• Hence, the maximum length of statutory annual leave is either 24 or 30 days per year. 
• It is noteworthy that Saturdays qualify as weekdays even if the employee does not work on Saturdays, so in practice the usual 30 days would equal to five (5) weeks of holiday. 

Holidays in Finland

Finland celebrates eleven national public holidays as well as additional public holidays that vary by state:

Maternity Leave Finland

• Under the current system in Finland, maternity leave is 4.2 months.
• Another 6 months' parental leave can be shared.

Paternity Leave Finland

• Fathers can, after the birth of the child, take paternity leave for a maximum of 54 work days.
• Of this, the father can be at home at the same time as the mother for a maximum of 18 work days, i.e. approximately 3 weeks.

Sick Leave in Finland

• The entitlement to sickness allowance commences nine working days after the illness begins (not counting the day of onset).
• The employer generally pays the employee's wages during this waiting period.
• Kela will pay sickness allowance for a maximum of one year (300 working days).

Work Hours in Finland

• The standard workweek in Finland is 40 hours, and the work day cannot exceed 8 hours. 
• Regular working hours may be arranged as an average of 40 hours over a period, not exceeding 1 year. 
• Collective bargaining agreements typically provide for shorter hours of work.

Overtime in Finland

• If work time limits are passed, compensation of overtime is compulsory.
  • Overtime is paid at an increased rate of 50% for the first two hours of overtime, and an increase of 100% for any hours beyond that.
  • An agreement may be made to exchange the overtime wages for extended time off in lieu.
  • It should be noted that an employee is entitled to refuse to work overtime and overtime work must be separately agreed between employee and employer on each occasion.

Termination of Employment in Finland

• An employment contract valid until further notice can be terminated by the employer by giving notice to the employee. Unless otherwise provided in the applicable collective agreement, the parties to an employment relationship can agree on the notice period in the employment contract. The maximum length of the notice period to be observed by the employer is six months and the shortest 14 days. In addition, the notice period applicable for the employer must not be shorter than the one applicable for the employee.
• An employer must have relevant and substantial reasons for giving an employee notice.
• The grounds for terminating an employment contract are divided into two categories:
  • Individual grounds that relate to the conduct and performance of an individual employee.
  • Collective grounds that relate to financial and production-related reasons or to the company's restructuring.
  • The termination procedure depends on the grounds for dismissal. For a termination on collective grounds, the procedure to be followed is determined by the:
    • Size of the employer
    • Number of employees being dismissed.

Notice Period in Finland

• The maximum length of the notice period to be observed by the employer is six months and the shortest 14 days.
• If the period of notice is not agreed or set out by a collective agreement, the employer must apply the following statutory notice periods based on the employee's length of service:
  • Up to one year's employment: 14 days.
  • One to four years' employment: one month.
  • Four to eight years' employment: two months.
  • Eight to 12 years' employment: four months.
  • Over 12 years' employment: six months.

Severance in Finland

Finland Salary and Wages

13th/14 Month Salary in Finland

• Yes 
• There is no statutory requirement to pay the 13th or 14th month salary.
• However, it is customary for holiday bonuses to be paid.
• When they are paid they are generally 50% of the holiday pay.

• The social security contributions are imposed on employers, employees and self-employed individuals.

Immigration in Finland

• If you plan to work or be an entrepreneur in Finland, you will usually need a residence permit. If you work without a residence permit, you may be punished by a fine.
• If you are applying for a residence permit on the basis of employment, the residence permit application you should use depends on the kind of work you do or the kind of business you own. If you have completed a degree in Finland and you have a valid residence permit for studies, you may apply for a residence permit for seeking work.
• If you have already been granted a residence permit on other grounds, it may include a right to work. If your residence permit includes the right to work, you will usually not need a separate permit for work. Look at your residence permit decision to find out whether you have the right to work. 
• If you are a citizen of an EU Member State, Iceland, Liechtenstein, Norway or Switzerland, you do not need a residence permit for Finland.
• If you apply for a residence permit in order to work in Finland, you must get an appropriate salary for your work. This salary must be enough to support you for the entire time your residence permit is valid.
• If your residence permit is based on work, it may only give you the right to work for a certain employer or in a certain field of work. 
• If you have been granted a residence permit for a certain field of work, you are usually permitted to change jobs freely if your residence permit has not expired and your new job is in the same field.
•  If you have been granted a residence permit for a specific task, you are free to perform this task in the service of another employer.
• If your residence permit only allows you to work for a certain employer or if you wish to change your field of work, you need to apply for a new residence permit.
• If you have been granted a residence permit for work, your family may usually apply for a residence permit on the basis of family ties.
• Some of the main work permits are outlined below.

Value Added Tax (VAT) in Finland

• The general VAT rate is 24%. 
• A reduced rate of 14% is applied to food and animal feed. 
• The reduced VAT rate of 14% also applies to restaurant and catering services. 
• A reduced VAT rate of 10% is applied to certain goods and services (e.g. books, subscriptions of newspapers and magazines lasting one month or longer, accommodation, passenger transport).
• A zero rate applies in certain instances (e.g. intra-Community supplies of goods and exports of goods). Additionally, certain services (e.g. financial services, insurance services, and certain educational services) are exempted from VAT.

Payments And Invoicing 

• The tax year in Finland is the calendar year. 
• Married persons are taxed separately on all types of income. 
• Pre-filled tax returns are sent to all individuals in April of the year following the tax year. 
• The individuals must review the pre-filled tax return and submit any corrections to the tax authorities within the specified time limit.
• The final tax should be assessed at the latest by the end of October.
• An employer must withhold tax from an employee’s salary for national, municipal and church tax purposes.

Payroll Accrual in Finland

Country Accruals Additional Information

Payroll Accruals Additional Information

Accrued Benefits in Finland

Why use Global Expansion to hire in Finland

Establishing a branch office or subsidiary in Finland can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Finland labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Finland law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Finland. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Finland Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.