Employer of Record (EOR) in Finland

G-P’s employer of record (EOR) model allows your company to start hiring talent in minutes via our global entity infrastructure. Unlike a Professional Employer Organization (PEO), G-P allows your company to expand your global footprint without the hassle of entity setup and management.

Our global employment products, including G-P Meridian Prime™ and G-P Meridian Core™, are backed by the largest team of HR and legal experts in the industry. We handle the growing complexities of compliant global expansion — so you can focus on opportunities ahead.

As a global EOR expert, we manage payroll, employment contract best practices, statutory and market norm benefits, employee expenses, as well as severance and termination. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. G-P allows you to harness the talent of the brightest people in 180+ countries around the world, quickly and easily.

Hiring in Finland

In Finland, there are currently around 80 trade unions belonging to 3 different central organizations. Most employees in Finland belong to a trade union. The main purpose of the trade union is to negotiate Collective Bargaining Agreements (CBAs) for their members, including salaries, annual leave, working hours, etc. If any party violates the CBA, the dispute can be taken to labor court for resolution.

Employment contracts in Finland

It is best practice to put a strong employment contract in place in Finland that spells out all the essential employment terms, including compensation, benefits, and termination requirements. Employers are obligated to provide employees with written information about certain terms and conditions of employment by the end of the first pay period. An employment contract in Finland must state the salary and any compensation amounts in euros rather than an alternative international currency.

Working hours in Finland

The standard workweek in Finland is 40 hours, and the workday cannot exceed 8 hours. However, CBAs may provide for shorter hours of work.

If work time limits are exceeded, compensation of overtime is compulsory, but keep in mind that there are specific limits on overtime work:

• Overtime is paid at an increased rate of 50% for the first 2 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.
• Employees are entitled to refuse overtime work and it must be separately agreed upon between both parties on each occasion.
• If a CBA is applicable, it may provide different terms regarding overtime work for specific industries.
• The maximum weekly working hours, including overtime, is restricted to 48 hours over a 4 month reference period.

Holidays in Finland

All holidays in Finland are established by acts of Parliament and can be divided into Christian and non-Christian holidays. The official public holidays are as follows:

1. New Year’s Day
2. Epiphany
3. Good Friday
4. Easter Sunday
5. Easter Monday
6. May Day
7. Ascension Day
8. Pentecost
9. Midsummer Day
10. All Saints’ Day
11. Independence Day
12. Christmas
13. Boxing Day

Note that although Christmas Eve and Midsummer Eve are not official public holidays, they are considered important holidays. For most people, these are non-working days. Most employment contracts include these days as holidays.

Vacation days in Finland

Annual leave in Finland is earned according to the time spent working during “leave-earning” months. A leave-earning month is any month an employee works for at least 14 days or 35 hours.

• Employees earn 2 days of holiday for each leave-earning month worked if employment has continued for less than 1 year at the end of the leave-earning year (March 31).
• After working for a full year (April 1 – March 31), this number increases to 2 and a half days per leave-earning month worked. The maximum length of annual leave is 30 days.
• CBAs often provide longer annual leave or different terms regarding the holiday bonus.

Employers may decide when the annual leave is taken but must confer with the employees as well. Employees must be advised of the time of the annual holiday at least 1 month, but no later than 2 weeks, before the annual holiday begins. Saturdays are generally included in the annual leave days.

Employees typically take their holiday during the annual leave time, between the beginning of May and the end of September. Both parties may agree that employees take a portion of the holiday that exceeds 12 weekdays in 1 or more segments. Moreover, the employer and employees may agree that the portion of the holiday that exceeds 18 days will be taken during the following holiday season or thereafter.

Employees also have a right to carry over any portion of their holiday exceeding 24 days. Employers must grant the carried-over holiday to employees in the calendar year that they decide.

Regular wages are paid to employees for the annual holiday time before the commencement of the holidays and include all non-temporary (regularly paid) bonuses.

A holiday bonus is typically stipulated in the CBA, generally amounting to 50% of the pay for the annual holiday and can be paid before or after the annual holiday.

Finland sick leave

Employers are obligated to pay salary during employees’ sick leave, which is based on the employment contract and CBA stipulations. The length of the employment relationship influences the amount of pay during illness.

• If the employment relationship has lasted for a minimum of 1 month, employees are entitled to full pay for the time of illness up to 9 days. Employees are also entitled to a sickness allowance from the social insurance institution after the 9-day period. The amount of the allowance varies, depending on, for example, the employee’s taxable income.
• In employment relationships of less than 1 month, employees are entitled to 50% of their pay.
• CBAs, if applicable, may provide different terms regarding sick leave.

Parental leave in Finland

Employees may be entitled to several different types of family-related leave in Finland. Employees are entitled to parental leave for the birth or adoption of a child.

• Leave for pregnant employees is 40 weekdays.
• Each parent receives a quota of 160 days of parental allowance that can be used as leave days, amounting to a total of 320 parental allowance days for a couple.
• A maximum of 63 parental allowance days can be transferred to the spouse, other parent, or another custodian.
• Parental allowance days can be used until the child reaches the age of 2.
• CBAs, if they are applicable, may provide different terms regarding parental leave.

The Social Insurance Institution pays compensation for the leave in proportion to employees’ income. In some CBAs, it is agreed that pregnant employees are paid a full month’s salary for a certain part of the leave.

Health insurance in Finland

Due to the high quality of healthcare within the public sector, approximately only 3% to 4% of care is provided by the private healthcare system. Supplementary insurance benefits are not required.

Finland supplementary benefits and bonuses

Employees in Finland are insured for employment-based benefits, including earnings-related pension, vocational rehabilitation, compensation for injury at work, and occupational illnesses. The Finnish Centre for Pensions, ETK, administers earnings-related pensions. Employers are obligated by law to provide occupational healthcare services for employees.

Generally, we recommend budgeting 25% for benefits on top of the gross salary to allocate the total employer’s expense.

Additionally, employee bonus plans are common in Finland. The parties of the employment relationship are free to agree to specific terms.

Termination and severance in Finland

A probationary period may be put in place for a maximum of 6 months. Regarding fixed-term employment, the probationary period can be a maximum of half of the duration of employment, but no longer than 6 months. During the probationary period, either the employer or employee can terminate the employment contract without any notice.

In Finland, the threshold and prerequisites for terminating an employment relationship are detailed and strictly interpreted. The reasons for termination must be substantial and are generally divided into 2 categories: individual grounds relating to the employee (generally the conduct and performance of the employee) and grounds relating to the financial and production-related matters of the company. The required process for termination depends on the grounds for dismissal and the number of employees at the company. An employee that is terminated without lawful grounds can file a claim for unlawful termination and is entitled to additional compensation. The employer is not required to pay any severance for legally valid terminations.

An employer must give written notice to employees prior to termination, regardless of the grounds. Unless established in the applicable CBA, the employer and employee can agree on the notice period in the employment contract, not to exceed 6 months. If the employment contract does not specify the notice period and a CBA does not apply, the statutory notice periods apply as follows:

• 14 days for an employee who has served up to 1 year
• 1 month for an employee who has served more than 1 year but less than 4 years
• 2 months for an employee who has served more than 4 years but less than 8 years
• 4 months for an employee who has served more than 8 years but less than 12 years
• 6 months for an employee who has served more than 12 years

Paying taxes in Finland

The social insurance system in Finland is divided into residence-based and work-based benefits. The Social Insurance Institution of Finland, Kela, administers residence-based benefits. These benefits include:

• Unemployment security
• Health insurance
• Family benefits
• Financial aid for students
• Others

Employees pay progressive income tax in Finland. In 2023, the income tax rate for an individual is between 12.64% and 44%. The 2023 tax rate table is as follows:

As of 2023, Finland reduced their municipal taxes, which now vary between 4.36% and 10.86%, depending on the municipal authority. Additionally, there is a church tax of 1% to 2.10%.

Why G-P?

At G-P, we help companies unlock the power of the everywhere workforce through our industry-leading Global Growth Platform™. Let us handle the complex and costly tasks involved in finding, hiring, onboarding, and paying your team members, anywhere in the world, with the speed and guaranteed global compliance your business needs.

Contact us today to learn more.