Hire in Finland
Here’s where you get started with human resources best practices and hiring in Finland.
Key Country Facts
Finland is a northern European country, a member of the Baltic group of countries and one of the world’s most northern nations. It has a population of 5.5 million, of which 1.5 million are in the capital Helsinki. Finland consistently ranks highly on global metrics such as quality of life, stability and Gender Gap reports.
Finland is bordered to the north by Norway, to the east by Russia, and to the northwest by Sweden. It is surrounded to the south and west by areas of the Baltic Sea. It has a landmass of approximately 338,000 km2 which includes areas of dense forest and over 180,000 recorded lakes.
Northern areas, within the Artic Circle, suffer extremely long and severe winters. The rest of the country is relatively warm for its latitude, with quite warm summers but freezing winters.
Finnish culture remains quite homogeneous despite historical influences particularly from it’s near neighbors Sweden and Russia. Many Finns maintain a traditional lifestyle, however the concept of social equality is prioritized. Finns are also famous for their love of saunas.
Approximately two thirds of the population are members of the Evangelical church. Most of the remainder declare no religious affiliation.
Finnish and Swedish are the official languages, however Finnish is by far the most widely spoken with Swedish belong spoken natively by just 5% of the population in the southern and western coastal areas.
Finland HR at a Glance
The Employment Contracts Act (55/2001) is the main source of employment legislation in Finland. Additional influences include; Working Hours Act 2019, Annual Holidays Act 2005, Co-operation Act 2007, Equality and non Discriminations acts, collective bargaining agreements and EU legislation.
Finnish employment legislation is strict and detailed. The penalties for non-compliance can be significant.
It is recommended and customary in Finland to conclude employment contracts in writing. The contract (or if there is no contract, a written statement of the key employment terms) must at least state:
The employer’s and the employee’s municipality of residence or place of business.
The employee’s main duties.
The location of where the work is to be carried out.
The duration of a fixed-term employment contract and a justified reason for it (if applicable).
Probationary period (if applicable).
Applicable collective agreement.
Salary and related pay terms.
Regular working hours and annual holiday.
Fixed Term Contracts
There is no statutory limit to the duration of a fixed-term employment contract. However, a contract may only be concluded for a fixed term for a justified reason. The justified reason must also be the basis for renewing or prolonging the contract for a fixed term. Contracts made for a fixed term on the employer’s initiative without a justified reason, or consecutive fixed-term contracts concluded without a justified reason, are considered valid as an indefinite contract.
The probationary period in a fixed-term employment contract must not be for more than either:
Half the length of the employment relationship.
A fixed-term employment contract generally cannot be terminated, but expires either:
Automatically at the end of the fixed period.
On completion of the agreed work.
Probation Period / Trial Period
The maximum duration of a trial period is six months.
Generally, under the Working Hours Act, normal working hours must not exceed eight hours a day or 40 hours a week. Collective bargaining agreements typically include detailed working time provisions which may also deviate from the Working Hours Act.
The Working Hours Act also instructs statutory rest periods. The general principles are as follows:
The employee must be granted at least a one-hour break a day if his or her daily working time exceeds six hours.
The employer and employee may agree on a shorter rest period of no less than 30 minutes.
If the daily working time exceeds 10 hours, the employee is entitled to an additional rest period of up to 30 minutes following eight hours of work.
The employee must be given a daily rest period of 11 consecutive hours.
The employee must be allowed at least 35 hours of uninterrupted rest per week, preferably including Sunday.
The Working Hours Act does not generally apply to management or employees working at home.
The maximum amount of overtime worked measured over a four-month reference period is 138 hours, and the aggregate hours of overtime work may not exceed 250 hours in a calendar year. An employer can agree additional overtime with employee representatives, employees or an employee group.
As a general rule, the payment for daily overtime work in addition to normal pay is 50% for the first two hours and 100% for the following hours. For weekly overtime work, the surcharge is 50%. If agreed by both parties, overtime may be partly or completely converted into corresponding time off work.
Collective agreements often provide for a holiday bonus amounting to 50% of the total annual holiday pay. Generally, employers will pay this bonus either before or after the annual holiday is taken. Holiday bonus is based entirely on collective agreements, there is no statutory right to such a bonus.
Employee performance related bonus plans are also commonly practised in Finland.
An employment contract is usually terminated by either the employer or employee giving notice to terminate. The employee does not need to give any particular grounds for termination, but he/she is required to observe the period of notice. The employer, on the other hand, may not terminate an employment relationship without proper and weighty reason (either related to the employee or related to the business). The employer must provide notice of termination to employees before dismissal, regardless of the grounds for the termination. Notice should be given in writing and given to the employee personally.
Reasons related to the individual employee – the employer may terminate the employee’s employment if the employee seriously breaches or neglects the employee’s obligation to the employer or the employee is no longer able to cope with their work duties. In most circumstances the employee should be given prior notice and opportunity to modify their behavior.
Business related reasons – the employer may terminate the employee’s employment if the work has diminished significantly and permanently for financial or production reasons. Consideration should however be given to re-training and/or placement in other roles where possible.
If a party to the employment relationship commits a fundamental breach of the employment contract, the other party is entitled to terminate the employment with immediate effect (i.e., without observing the notice period).
Finnish employees enjoy high protection against dismissal. In addition, certain groups of employee enjoy particular protection against dismissals. Such employees include shop stewards, industrial safety delegates, pregnant employees and employees on family leave. If an employee is dismissed without legal grounds, he or she is entitled to compensation for unfair dismissal corresponding to three to 24 months’ salary
Periods of notice that apply to an employer
|Uninterrrupted duration of the employment relationship||Period of notice|
|Up to 1 year||14 days|
|1-4 years||1 month|
|4-8 years||2 months|
|8-12 years||4 months|
|More than 12 years||6 months|
Periods of notice that apply to an employee
|Uninterrrupted duration of the employment relationship||Period of notice|
|Up to 5 years||14 days|
|More than 5 years||1 month|
A non-compete agreement can be concluded only for a particularly weighty reason related to the employer’s business and operations. A non-compete agreement concluded without such reason is considered invalid. Generally, a non-compete agreement may restrict the employee’s right to engage in competing activities for a maximum of six months after expiry of the employment. However, if the employee receives reasonable compensation the restricted period may be extended to a maximum of one year. An employee is released from non-compete obligations if the employment relationship is terminated on grounds originating from the employer, for example redundancy.
There are no legal provisions governing the non-solicitation of customers and employees. Depending on the circumstances, such provisions may be deemed comparable to a non-compete undertaking. In such case, the statutory limitations regarding the use of non-compete undertakings apply.
Employees generally have no statutory entitlement to a severance payment.
In 2019, the European Court of Justice stated that companies must set up a system to record the working time of their employees. Thus, employers are obliged to implement an objective, reliable and accessible system that allows recording of the daily workday performed by each employee.
Both Finnish employees and employers are highly unionised. More than 70% of Finnish employees are members of a trade union.
Tax and Social Security
Personal Income Tax
Residents of Finland pay tax on their worldwide income. Earned income received by residents is taxed at progressive tax rates for national tax purposes and at a flat tax rate for municipal tax purposes.
|Taxable income bracket (EUR)||Total tax on income in lower range (EUR)||Tax rate on excess (%)|
Municipal tax rates are also levied against taxable income. Currently the rate varies between 16.50% and 23.50%, depending on the municipality. Church tax are levied on church members at a rate of between 1% and 2.2%.
Social security contributions on wages are required from both employer and employee. The exact rate will vary on specific circumstances (employee age for pension contributions for example).
|Contributions||Employer (%)||Employee (%)|
|Pension||17.40 (approximate)||7.15-8.65 (depending on age group)|
|Unemployment||0.50 or 2.05||1.50|
|Worker’s Compensation||0.05-5.0 (0.70 on average)||–|
|Group Life Insurance||0.06||–|
The above rates serve as a broad guideline. Actual rates charged will differ.
Wages must be paid on the last day of each pay period, unless otherwise agreed in the employment contract or collective agreement. The due date for wage payment will be brought forward to the previous weekday if the due date is a weekend or holiday. Wages must be paid into a bank account designated by the employee. Wages must be available to the employee on the due date.
The employer must provide the employee with a payslip (in paper form or electronically) in connection with each wage payment.
Common practice standard stipulates that a pay slip should include:
the employee’s name, occupation and date of birth
the employer’s name and location of the unit
start date of the employment relationship and, if relevant, the end date
cumulative pay subject to withholding tax for the previous calendar year, the current calendar year and the most recent pay period
the pay period
tax withheld for the most recent pay period
increments paid for shift work and period-based work for the most recent pay period, and
holiday pay and annual holiday compensation paid in connection with wage payment
The provisions concerning annual holiday can be found in the Annual Holiday Act. Collective agreements may contain further provisions on the determination of annual holiday and the wages or compensation payable for its duration.
The accrual of holiday days is calculated on the basis of the holiday credit year, which is from 1 April to 31 March. For an employment relationship that has lasted less than a year on 31 March, the employee is entitled to two weekdays of holiday for each full holiday credit month. For an employment relationship that has continued uninterrupted for a year on 31 March, the employee is entitled to two and a half days of holiday for each full holiday credit month. For example, if an employment relationship has started on 1 April or the first working day in April, the employee will accrue two and a half days of holiday for each full holiday credit month already during his or her first employment year.
The summer holiday season is considered as being from 2 May to 30 September. Employees will usually take summer holiday of at least two consecutive weeks during this time period.
Employees in Finland are entitled to an annual vacation bonus payable in May. It is the equivalent of two weeks of base salary.
Entitlement to sickness allowance from the state social insurance fund (Kela) commences nine working days after the illness begins (not counting the day of onset). Generally, the employer will pay the employee’s wages during this waiting period. Dependent on bargaining agreements many employers may also pay the full salary during the first one to two months. The social insurance will pay sickness allowance for a maximum of one year (300 working days). If the employee receives pay during the period of illness, Kela will pay the compensation the employer. A doctor’s certificate is required for the period of illness.
Compassionate & Bereavement Leave
In the event of a serious illness or accident suffered by a family member, employees are entitled to temporary absence (unpaid) from work should their presence be necessary.
Typically, leave for other reasons is mandated by the applicable bargaining agreement. Commonly the following paid leave is provided for:
day of wedding celebration or civil partnership registration may be considered a paid day off if it takes place on a working day.
the employee’s 50th and 60th birthday is a paid day off if the birthday coincides with a working day.
A short absence (typically 3 days) in the event of a death of an immediate family member. (Spouse (married or civil law), parents, grandparents, parents-in-law, child, sibling)
Maternity & Parental Leave
A female employee is entitled to maternity leave of 105 working days, which corresponds to approximately four months. Employers are not obliged to pay salary during maternity leave. However, many collective bargaining agreements require the employer to pay full salary for the first three months.
The father of a new-born child is entitled to take paternity leave of a total of 54 working days. A maximum of 18 workdays may be taken whilst the mother is on maternity or parental leave.
In addition to maternity and paternity leave, employees are entitled to parental leave of 158 working days immediately following the end of the maternity leave. As a result, the aggregate length of maternity and parental leave corresponds to approximately nine months. Parental leave can be taken by the mother or father.
In addition, an employee is entitled to childcare leave from the day parental leave ends until the child turns three. Only one of the parents may take the same time but they may share the leave between them.
Benefits to the Employee in Finland
According to Finnish law, an employer is obligated to provide statutory Social Security coverage for its employees in Finland. Contributions are paid by the employer and the employee’s share is deducted when paying the salary. Part of social security in Finland is provided through statutory insurance. The statutory social insurance contributions in Finland are:
the earnings-related pension insurance contribution
the workers’ compensation insurance contribution
the employee’s group life insurance contribution
the unemployment insurance contribution
the social and health insurance contribution
the National pension and guarantee pension
The following benefits are often granted to Finnish employees:
collective bonus such as profit sharing
company car for higher grade or relevant workers
Visas and Foreign Workers
Citizens of EU Member States, a Nordic country, Liechtenstein or Switzerland, do not require a residence permit to stay in Finland. If staying and working in Finland for up to three months no registration is required. However, should the stay in Finland be for longer than three months registration of right of residence at the Finnish Immigration Service is required.
Citizens of other countries will require a residence permit. This should be applied for before arrival in Finland and online via the Enter Finland service. In most cases, a “Residents Permit for an Employed Person” or some other residence permit entitling you to work will be required. The type of permit will depend on what kind of role the person will be doing. In most cases a job must be obtained before the application is made.
Additionally, special rules apply to highly-skilled and highly-paid non-EEA nationals who may be considered under the EU’s Blue Card system
Getting a Tax Number
When an individual has moved to Finland, they must visit the nearest service location of the Digital and Population Data Services Agency to register as a resident. Once registered in the Population Information System, they will be given a Finnish personal identity code. This will be sent by the Immigration Service following the granting of a residence permit or when the right of residence is registered. A Finnish personal identity code (henkilötunnus) is a number sequence with 11 characters, formed on the basis of date of birth and gender.
The Finnish personal identity code is required to be able to obtain an Individual Tax Number (TN) from the Tax Administration. The TN is a 12-character string of numbers that does not reveal the individual’s age, sex or date of birth.
Public Holidays in 2022
|1||New Year’s Day||January 1st|
|3||Good Friday||April 15th|
|4||Easter Monday||April 18th|
|5||May Day||May 1st|
|6||Ascension Day||May 26th|
|7||Midsummer Eve||June 24th|
|9||All Saints Day||November 5th|
|10||Independence Day||December 6th|
|11||Christmas Eve||December 24th|
|12||Christmas Day||December 25th|
|13||Boxing Day||December 26th|