Hire in Finland through our Employer of Record (EOR)

An Employer of Record (EOR) is a third-party organization that takes on the legal and administrative responsibilities of employing workers on behalf of another company. This arrangement allows businesses to hire employees in countries where they don't have a legal entity, effectively expanding their global reach without the need to establish a local subsidiary or branch office.

In the context of Finland, an EOR can be particularly useful for international companies looking to tap into the country's highly skilled workforce, innovative tech sector, and robust economy. By partnering with an EOR, businesses can navigate Finland's complex labor laws, tax regulations, and social security systems with greater ease and compliance.

How Does EOR Work?

The EOR model operates through a series of interconnected steps:

1. Client Agreement: The company (client) partners with an EOR provider to hire employees in Finland.

2. Employment Contract: The EOR legally employs the worker on behalf of the client company, handling all contractual obligations under Finnish law.

3. Payroll and Benefits: The EOR manages payroll, tax withholdings, and benefits administration in accordance with Finnish regulations.

4. Compliance: The EOR ensures ongoing compliance with local labor laws, tax requirements, and other legal obligations.

5. HR Support: The EOR provides HR-related services, such as onboarding, leave management, and performance reviews.

6. Client Direction: While the EOR is the legal employer, the client company maintains control over the employee's day-to-day work and responsibilities.

Benefits of Using an EOR

Employing an EOR in Finland offers several advantages:

1. Rapid Market Entry: Companies can quickly establish a presence in Finland without the need to set up a legal entity, saving time and resources.

2. Compliance Assurance: EORs have in-depth knowledge of Finnish labor laws and regulations, ensuring full compliance and mitigating legal risks.

3. Cost-Effective: Using an EOR can be more cost-effective than establishing and maintaining a local subsidiary, especially for smaller operations or short-term projects.

4. Flexibility: EORs offer scalability, allowing companies to easily adjust their workforce in Finland as needed.

5. Local Expertise: EORs provide valuable insights into Finnish business culture, employment practices, and market conditions.

6. Simplified Administration: By outsourcing HR, payroll, and compliance tasks, companies can focus on their core business activities.

7. Risk Mitigation: EORs assume much of the employment-related liability, reducing the client company's exposure to potential legal issues.

8. Access to Talent: EORs can help companies tap into Finland's highly educated workforce and specialized skill sets, particularly in technology and innovation sectors.

By leveraging an EOR's services, companies can effectively navigate Finland's unique business landscape, from its strong emphasis on work-life balance to its comprehensive social security system, while reaping the benefits of the country's thriving economy and skilled labor market.

Finland's employment landscape is characterized by a highly educated and skilled workforce, with a strong emphasis on work-life balance and employee well-being. The country's labor market is known for its progressive policies, high union membership, and a commitment to equality and fairness in the workplace. Finland's economy is diverse, with a strong focus on technology, innovation, and sustainable practices across various sectors.

Overview of Labor Laws

Finland's labor laws are comprehensive and designed to protect workers' rights while promoting a fair and productive work environment. Key aspects include:

• Strict regulations on working hours, typically 40 hours per week
• Generous annual leave entitlements, with a minimum of 4 weeks paid vacation
• Strong protections against unfair dismissal and discrimination
• Extensive parental leave policies for both mothers and fathers
• Collective bargaining agreements that cover a large portion of the workforce

Cultural Considerations

When engaging with the Finnish workforce, it's important to understand and respect local cultural norms:

• Direct communication is valued, with an emphasis on honesty and clarity
• Punctuality and efficiency are highly regarded in the workplace
• Hierarchies tend to be flat, with open dialogue between management and employees
• Work-life balance is prioritized, with flexible working arrangements common
• Silence is often viewed positively and not seen as awkward or unproductive

Challenges of Direct Hiring

While Finland offers a talented workforce, direct hiring can present several challenges:

1. Complex labor laws and regulations that require in-depth local knowledge
2. Strong unions and collective agreements that influence employment terms
3. High labor costs, including substantial employer contributions to social security
4. Language barriers, as Finnish and Swedish are the official languages
5. Cultural nuances that may impact recruitment and management practices
6. Strict data protection and privacy laws that affect HR processes
7. Competitive job market for highly skilled professionals in certain sectors

Navigating these challenges requires a thorough understanding of the local context and often benefits from expert guidance or partnership with a local entity familiar with Finnish employment practices.

Finland's payroll and tax system is comprehensive and well-structured, designed to support the country's robust social welfare programs. Both employers and employees contribute to various social security funds, ensuring a safety net for workers and maintaining the high standard of living Finland is known for. The system is characterized by its progressive nature, with contributions and deductions varying based on factors such as income level, age, and industry.

Employer Contributions

Employers in Finland bear significant responsibilities when it comes to payroll and taxes. Their contributions play a crucial role in funding the country's social security system and employee benefits.

Pension Contributions (TyEL)

One of the primary contributions employers make is towards the employee's pension, known as TyEL (Työntekijän eläkelaki). The contribution rate varies depending on the employee's age and the company's size. For 2023, the average TyEL contribution is approximately 24.85% of the employee's salary, with the employer typically covering the majority of this amount.

Unemployment Insurance

Employers are required to contribute to unemployment insurance. The rate for 2023 is 0.52% of the total payroll for the first €2,251,500, and 2.06% for any amount exceeding this threshold.

Accident Insurance

Employers must provide accident insurance for their employees. The contribution rate varies based on the industry and the associated workplace risks, typically ranging from 0.1% to 7% of the payroll.

Occupational Healthcare

Finnish law mandates that employers provide occupational healthcare services to their employees. While the cost varies, it's estimated to be around 0.1% to 0.6% of the payroll.

Social Security Contribution

Employers also pay a social security contribution, which for 2023 is set at 1.34% of the total payroll.

Employee Contributions

Employees in Finland also contribute to various social security funds through deductions from their salaries. These contributions, along with income tax, are typically withheld by the employer.

Income Tax

Finland has a progressive income tax system. The tax rate increases as income rises, with rates ranging from 0% to 31.25% for state tax in 2023. Additionally, employees pay municipal tax (typically between 16.5% and 23.5%) and possibly church tax if they're members of certain religious organizations.

Pension Contributions

Employees contribute to their pension fund (TyEL). For 2023, the rate is 7.15% for those aged 17-52 and 63-67, and 8.65% for those aged 53-62.

Unemployment Insurance

The employee's unemployment insurance contribution for 2023 is 1.50% of their salary.

Health Insurance

Employees contribute to health insurance, which includes both medical care insurance and daily allowance insurance. For 2023, the total rate is 1.55% of the salary.

Understanding these contributions and deductions is crucial for both employers and employees in Finland. For employers, it ensures compliance with legal obligations and accurate payroll management. For employees, it provides clarity on their take-home pay and the social benefits they're entitled to. As with any complex system, it's advisable to consult with local experts or the Finnish Tax Administration for the most up-to-date and personalized information.

Finland is renowned for its comprehensive employee benefits system, which provides a strong foundation for workers' well-being and financial security. As an Employer of Record (EOR), Rivermate expertly manages these benefits, ensuring compliance with local regulations while allowing companies to offer attractive compensation packages to their Finnish employees. This article will explore both the mandatory and optional benefits available in Finland, highlighting how an EOR can streamline the process of providing these benefits to a global workforce.

Mandatory Benefits

In Finland, employers are required to provide a range of benefits to their employees, including:

• Statutory earnings-related pension contributions (TyEL) for employees aged 17-67
• Contributions to the national pension (Kela) system through taxation
• Unemployment insurance fund contributions
• Paid annual leave (minimum 2.5 days per month, up to 30 days per year)
• Paid sick leave for a reasonable period
• Generous parental leave policies, including maternity and paternity leave
• Occupational healthcare coverage
• Statutory accident insurance for work-related accidents and illnesses

Optional Benefits

To enhance their compensation packages and attract top talent, employers in Finland can offer various optional benefits:

Health and Wellness

• Voluntary health insurance plans
• Travel and group life insurance policies
• Gym memberships and wellness programs

Financial and Work-Life Balance

• Profit-sharing schemes or performance-based bonuses
• Voluntary pension plans
• Meal benefits through vouchers or prepaid cards
• Flexible work hours
• Additional paid vacation days

Additional Perks

• Staff discounts on company products or services
• Company-provided mobile phones
• Culture and sports vouchers (up to €400 annually, tax-exempt)

By partnering with an Employer of Record like Rivermate, companies can easily navigate the complexities of Finnish employee benefits while offering competitive packages that attract and retain top talent in this highly skilled workforce.

The process of termination and offboarding in Finland is governed by a set of regulations that aim to balance employer flexibility with employee protection. Understanding these rules is essential for both parties to navigate the end of an employment relationship smoothly and legally.

Grounds for Termination

In Finland, employment can be terminated by either the employee or the employer, but the requirements differ for each scenario.

Employee-Initiated Termination

When an employee decides to resign, they simply need to provide appropriate notice. No specific justification is required for this type of termination.

Employer-Initiated Termination

Employers, on the other hand, must have "valid and weighty" reasons to terminate an employment contract. These reasons generally fall into two categories:

1. Personal reasons: These relate to an employee's conduct or capability. Examples include repeated neglect of duties, incompetence, or serious breach of contract.

2. Financial and production-related reasons: These can include significant reduction in work due to economic downturn, company restructuring, or reorganization.

Notice Periods

The duration of notice periods in Finland typically depends on the length of employment or as specified in the employment contract or collective agreement. The Finnish Employment Contracts Act outlines minimum notice periods:

For Employees:

• During probation: 14 days
• After probation: 14 days to 6 months, depending on employment length

For Employers:

• During probation: 14 days
• After probation: 14 days to 6 months, depending on employment length

Severance Pay

Severance pay in Finland is generally applicable only when the employer terminates the contract due to financial or production-related reasons. The amount is based on the employee's length of service and age.

Offboarding Process

While not explicitly regulated, a proper offboarding process is crucial for a smooth transition. This typically includes:

1. Communicating the termination decision
2. Conducting an exit interview
3. Retrieving company property
4. Transferring knowledge and responsibilities
5. Updating internal systems and revoking access
6. Providing necessary documentation (e.g., certificate of employment)

By adhering to these regulations and best practices, both employers and employees can ensure a lawful and respectful end to the employment relationship in Finland.

Finland, with its high quality of life and thriving tech industry, is an attractive destination for foreign workers. However, navigating the visa and work permit requirements can be complex. Here's a concise overview of what foreign workers need to know:

EU/EEA Citizens

Citizens of EU and EEA countries enjoy freedom of movement and don't need a visa or work permit to work in Finland. They can stay and work for up to three months without any registration. For longer stays, they must register their right of residence with the Finnish Immigration Service.

Non-EU/EEA Citizens

Non-EU/EEA citizens typically need both a residence permit and a work permit to legally work in Finland.

Residence Permit for Employed Persons

This is the most common type of permit for foreign workers. It combines both residence and work rights. To apply, you need:

• A job offer from a Finnish employer
• Proof of sufficient income to support yourself
• Valid passport
• Passport photo
• Completed application form

The application can be submitted online or at a Finnish embassy or consulate in your home country.

Processing Time and Validity

Processing times vary but usually take 1-4 months. The initial permit is typically granted for one year and can be renewed.

Specialist Permit

For highly skilled professionals in specific fields, there's a fast-track "Specialist" permit with a shorter processing time.

Important Considerations

• Your employer must ensure that the position cannot be filled by EU/EEA citizens before hiring non-EU/EEA workers.
• Some professions (like healthcare) may require recognition of qualifications or additional permits.
• Family members may be eligible for residence permits based on family ties.

Navigating Finland's work permit system can be challenging, but with the right information and preparation, foreign workers can successfully obtain the necessary permissions to work in this Nordic country.