Finland

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Hire in Finland at a glance

Here ares some key facts regarding hiring in Finland

Capital: Helsinki
Currency: Euro
Language: Finnish
Population: 5,540,720
GDP growth: 2.63%
GDP world share: 0.31%
Payroll frequency: Monthly
Working hours: 37.5 hours/week

Overview in Finland

Finland is a Nordic country in northeastern Europe, bordered by Sweden, Norway, Russia, and the Baltic Sea. It is known for its dense forests, numerous lakes, and part of its territory lying within the Arctic Circle, which influences its severe climate with long winters and short summers. Historically, Finland was under Swedish rule, then became an autonomous grand duchy under Russia in 1809, and declared independence in 1917. It has a history of conflict with the Soviet Union during World War II but has since developed a neutral foreign policy and joined the European Union in 1995.

The Finnish economy blends free-market capitalism with significant government interventions to promote social welfare, making it a highly developed nation noted for its technological innovation, particularly in telecommunications and software. Forestry is a significant industry, and the country is also recognized for its high-quality design and manufacturing.

Culturally, saunas are an essential part of Finnish life, reflecting the values of cleanliness, social bonding, and resilience. Finland values education highly, resulting in a skilled workforce proficient in STEM fields and known for problem-solving and adaptability. The service sector dominates the economy, with significant contributions from technology, forestry, and metal industries. Finland emphasizes work-life balance, straightforward communication, and flat organizational hierarchies in the workplace.

The country is also a leader in sustainable practices, focusing on the bioeconomy and circular economy, and has a growing sector in healthcare and digital health solutions due to its aging population. The gaming and entertainment industry, including companies like Rovio and Supercell, is a vibrant part of the Finnish economy.

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Employer of Record in Finland

Rivermate is a global Employer of Record company that helps you hire employees in Finland without the need to set up a legal entity. We act as the Employer of Record for your employees in Finland, taking care of all the legal and compliance aspects of employment, so you can focus on growing your business.

How does it work?

When you hire employees in Finland through Rivermate, we become the legal employer of your staff. This means that we take on all the responsibilities of an employer, while you retain the day-to-day management of your employees.

You as the company maintain the direct relationship with the employee, you allocate them the work and manage their performance. Rivermate takes care of the local payrolling of the employee, the contracts, HR, benefits, and compliance.

Responsibilities of an Employer of Record

As an Employer of Record in Finland, Rivermate is responsible for:

Creating and managing the employment contracts
Running the monthly payroll
Providing local and global benefits
Ensuring 100% local compliance
Providing local HR support

Responsibilities of the company that hires the employee

As the company that hires the employee through the Employer of Record, you are responsible for:

Day-to-day management of the employee
Work assignments
Performance management
Training and development

Taxes in Finland

Summary of Employer Responsibilities and Tax Regulations in Finland

Social Security Contributions: Employers in Finland are responsible for making contributions towards pension (TyEL), unemployment insurance, and accident insurance, with rates varying by factors like age, industry, and workplace risk.
Occupational Healthcare: Employers must also provide and partially fund occupational healthcare services.
Contribution Limits: There are caps on how much can be contributed to these social security funds.
Reporting and Payment: Employers need to register with authorities, withhold contributions from employee salaries, and remit payments, typically on a monthly basis.
Employee Contributions: Employees contribute to pension, unemployment, and sickness insurance schemes.
Income Tax: Employers withhold income tax, which includes municipal, state, and potentially church tax components, based on a progressive scale.
VAT Regulations: The standard VAT rate is 24%, with reduced rates for certain goods and services. VAT obligations for services depend on the place of supply and customer type (B2B or B2C), with specific rules for digital and property-related services.
VAT Registration and Reporting: Businesses exceeding a revenue threshold must register for VAT and file periodic returns.
Tax Incentives: Various incentives are available for R&D, innovation, startups, and investments in less-developed regions, aimed at reducing tax liabilities and supporting business growth.
Eligibility and Application: Businesses must meet specific criteria and sometimes undergo formal application processes to qualify for tax incentives.

Leave in Finland

In Finland, employee vacation rights are outlined in the Annual Holidays Act, where employees accrue 2 days of vacation per month, increasing to 2.5 days after 15 years with the same employer. The vacation year runs from April 1st to March 31st. Employees must accumulate 14 days of vacation to take winter leave and 24 days for summer leave. During vacation, employees receive their regular salary or average earnings.

Finland also recognizes several public holidays, including New Year's Day, Epiphany, Good Friday, Easter, May Day, Ascension Day, Whitsunday, Midsummer Eve and Day, All Saints' Day, Independence Day, Christmas Eve, Christmas Day, and St Stephen's Day.

Additional types of leave include sick leave, maternity leave (105 weekdays), paternity leave (up to 54 weekdays), and parental leave (158 weekdays). Other leaves such as study leave and family leave are also available, with specific conditions often determined by collective agreements or individual contracts.

Benefits in Finland

Finland offers a robust social safety net and employee benefits system, ensuring financial security and well-being for its workforce. Key mandatory benefits include:

Income Security and Leave: Employers provide statutory earnings-related pension contributions (TyEL) for employees aged 17-67, complemented by a national pension system funded through taxation. Unemployment insurance is also mandatory, with benefits available for up to 300 weekdays.
Paid Time Off: Employees accrue a minimum of 2.5 days of paid annual leave per month, with additional sick and parental leave provisions.
Health and Safety: Mandatory occupational healthcare and statutory accident insurance are provided by employers, covering work-related health issues and accidents.

Optional benefits often offered by employers include:

Health and Wellness: Voluntary health insurance, travel and group life insurance, and subsidized gym memberships.
Financial and Work-Life Balance: Profit sharing, voluntary pension plans, subsidized meal benefits, flexible work hours, and extra vacation time.
Additional Perks: Staff discounts, company phones, and tax-exempt vouchers for cultural or sporting activities.

The Finnish healthcare system combines occupational healthcare services, mandatory for all employers, with a public health insurance system managed by Kela, covering essential medical treatments with a minor client fee.

The retirement system in Finland includes a national pension for basic income security and an earnings-related pension for income replacement based on salary and career duration, with flexible retirement age options between 63 and 68.

Workers Rights in Finland

In Finland, employment law ensures a balance between employer flexibility and employee protection, particularly regarding termination. Employees can resign with appropriate notice without justification, while employers must have "valid and weighty" reasons related to personal conduct, capability, or economic factors. Notice periods vary by employment duration, ranging from 14 days to 6 months. Severance pay is typically reserved for dismissals due to financial or production-related reasons.

The Non-Discrimination Act (1325/2014) reinforces equality, prohibiting discrimination on various grounds including age, gender, and disability. Victims of discrimination can seek redress through mechanisms like the Ombudsman for Equality or the Non-Discrimination Tribunal. Employers are required to actively promote equality and prevent discrimination, including developing Equal Treatment Plans for workplaces with at least 30 employees.

Work conditions are strictly regulated, with laws dictating a maximum of 40 hours per week, mandatory rest periods, and ergonomic requirements to ensure employee well-being. Employers bear the primary responsibility for workplace safety, required to manage risks, provide training, and ensure a safe work environment under the Occupational Safety and Health Act. Employees have rights to a safe workplace, can report hazards, refuse unsafe work, and participate in safety matters. Enforcement of these regulations is overseen by the Finnish Work Environment Administration and supported by the Finnish Institute of Occupational Health.

Agreements in Finland

In Finland, employment agreements are categorized by duration and purpose, with the most common types being indefinite contracts, fixed-term contracts, apprenticeship agreements, and temporary agency work. Indefinite contracts are the standard, continuing until terminated by either party with a notice period, while fixed-term contracts end automatically at the term's expiration unless extended. Apprenticeship agreements combine vocational training with work, and temporary agency work involves assignments from an agency to various companies.

Collective agreements significantly influence employment conditions, including wages and working hours. Employment contracts, though not mandatory to be in writing, are beneficial when detailed, covering aspects such as job duties, working hours, compensation, and termination clauses. Special clauses like confidentiality and non-compete are regulated under Finnish law, with non-compete clauses requiring justifiable reasons and compensation for the employee.

Probationary periods are also a feature of Finnish employment, allowing both parties to assess suitability with a maximum duration that varies depending on the contract length and specific training provided. During this period, contracts can be terminated immediately without a specific reason, although some collective agreements might require notice.

Remote Work in Finland

Finland does not have specific legislation for remote work; instead, it relies on general labor laws like The Employment Contracts Act, The Working Hours Act, and The Occupational Safety and Health Act to govern such arrangements. These laws help in formalizing remote work agreements that cover aspects like work schedules, equipment, and expenses. Finland's robust technological infrastructure supports remote work, but employers need to focus on cybersecurity and the use of cloud-based tools for effective management.

Employers are responsible for creating a productive remote work environment, which includes clear communication, performance metrics, and ergonomic home office setups. They should also consider virtual or occasional in-person gatherings to maintain team cohesion and provide training on remote work tools.

Flexitime and job sharing are options under Finnish law, allowing flexible work hours and shared responsibilities among employees. Employers generally provide necessary equipment and may cover additional expenses incurred due to these arrangements.

Regarding data protection, Finnish employers must comply with GDPR and national privacy laws, ensuring lawful processing, data minimization, and security measures like encryption and access controls. Employees have rights to access, rectify, or erase their data to maintain control and ensure accuracy.

Best practices for secure remote work include data security training, strong access controls, data encryption, clear data protection policies, and remote wiping capabilities for company devices to safeguard sensitive information.

Working Hours in Finland

Finnish law, particularly through the Working Hours Act (Act No. 870/2004), regulates standard working hours to ensure a balance between work and personal life. The Act sets a standard of 8 hours per day and 40 hours per week, with provisions allowing for the averaging of hours over extended periods under certain conditions. Overtime is permitted with employee consent and is compensated at higher rates, with the first two hours at a 50% increase and subsequent hours at double the regular wage.

The law also mandates minimum rest periods, including an 11-hour daily rest and 35 uninterrupted hours weekly, with provisions for shorter rest periods in exceptional circumstances with employee consent. Meal and rest breaks are also regulated, ensuring breaks for shifts longer than six hours.

Night and weekend work are subject to specific regulations to protect workers' health, with night shifts restricted in terms of duration and eligibility, and weekend work compensated at double time. Collective agreements play a significant role in detailing work hours and compensation specifics, varying by industry.

Salary in Finland

Understanding market competitive salaries in Finland is essential for ensuring fair compensation, attracting, and retaining top talent. Here are the key points:

Factors Influencing Salaries: Salaries in Finland vary by industry, experience, education, location, and company size. For example, IT specialists and pharmacists generally earn more than bartenders or bank tellers.
Researching Salaries: Useful resources include Statistics Finland for official wage data, salary surveys from recruitment agencies, and salary ranges in job postings. Finland does not have a national minimum wage; instead, it relies on collective agreements for minimum wage standards.
Collective Agreements: These agreements between labor unions and employers dictate minimum wages, working hours, and other conditions. If no agreement exists, employers must pay a "usual and reasonable" wage based on industry standards, employee qualifications, and geographic location.
Additional Compensation: Finnish companies may offer performance bonuses, holiday bonuses, tax-exempt allowances (such as meal vouchers and wellness allowances), and other benefits like company cars and stock options.
Payroll Practices: The typical payroll cycle in Finland is monthly, with salaries paid on the last day of the month. There are regulations for overtime pay and a 13th-month salary is commonly paid during summer.
Tax and Reporting Obligations: Employers must withhold income tax and submit detailed earnings reports to the Finnish Tax Administration. Employees receive a detailed payslip each pay cycle showing gross pay, deductions, and net pay.

Overall, Finland's compensation system is comprehensive, with a strong emphasis on fair wages and benefits, supported by collective bargaining and legal frameworks.

Termination in Finland

In Finland, the Employment Contracts Act of 2001 dictates the notice periods required for terminating employment contracts, which vary based on the duration of employment:

Less than 1 year: No minimum notice period.
1 to 4 years: 1 month's notice.
4 to 8 years: 2 months' notice.
8 to 12 years: 4 months' notice.
Over 12 years: 6 months' notice.

Exceptions to these notice periods include mutual agreement to alter the period, or immediate termination by the employer due to serious misconduct or breach of contract by the employee. During layoffs, employees can terminate their contracts without notice, except in the last seven days of the layoff.

Severance pay is mandated only when termination is due to economic, production-related, or financial reasons, with the amount based on the length of service:

5 years: At least 1 month's salary.
10 years: At least 2 months' salary.
15 years: At least 3 months' salary.
20 years: At least 4 months' salary.

Employment can end through resignation, employer termination with valid grounds, mutual agreement, or expiry of a fixed-term contract. The termination process includes a written notice, a consultation phase, and potentially a written statement of grounds if requested by the employee.

Special protections are in place for certain groups such as pregnant employees and union representatives, and wrongful termination can lead to compensation for the affected employee.

Freelancing in Finland

In Finland, distinguishing between employees and independent contractors is essential due to differences in worker rights, tax obligations, and social security contributions. Employees are under the employer's control, integrated into the business, and financially dependent on their employer, receiving regular salaries with benefits. In contrast, independent contractors maintain autonomy over their work methods and schedules, handle multiple clients, and manage their own taxes and social security.

Contractors use various contract structures such as fixed-price, time-based, or performance-based contracts, and must carefully negotiate terms like scope of work, payment, and termination clauses. Independent contracting is common in sectors like IT, marketing, construction, and consulting.

Intellectual property rights are also a critical consideration; default rules grant ownership to creators unless otherwise stipulated by contract. Freelancers are advised to use written contracts to clarify IP ownership and protect their rights. They must also manage their own taxes, including national and municipal income taxes, VAT, and pension contributions, and may opt into unemployment insurance. Additional private insurance options are available to cover health, accidents, liability, and supplementary pension needs.

Health & Safety in Finland

Health and safety in Finland are regulated by key legislations including the Occupational Safety and Health Act (738/2002) and the Occupational Health Care Act (1383/2001), which delineate responsibilities for both employers and employees to ensure safe working conditions.

Employer Responsibilities: Employers are mandated to identify and mitigate hazards, provide safety training and equipment, and arrange occupational healthcare. They must also report workplace accidents and illnesses to authorities and ensure regular health checks for employees exposed to specific risks.

Employee Responsibilities: Employees are expected to adhere to safety protocols, use protective equipment properly, report unsafe conditions, and participate in safety training and risk assessments.

Enforcement and Role of Authorities: The Finnish Occupational Safety and Health Administration oversees compliance, conducts inspections, and can issue sanctions for non-compliance. Workplaces with 20 or more employees must establish safety and health committees to monitor and improve workplace safety.

Additional Legislation: Other relevant laws include the Working Hours Act, Young Workers' Act, and the Chemicals Act, which provide specific protections and regulations based on the nature of the work and the workforce involved.

Risk Assessment and Prevention: Employers must conduct thorough risk assessments and prioritize hazard elimination and control measures following a specific hierarchy to prevent accidents and health issues.

Workplace Safety and Health: Stringent standards are maintained for equipment safety, chemical handling, and ergonomics to prevent accidents and occupational diseases. Employers must also focus on mental health and creating a supportive work environment.

Training and Information: Proper job-specific safety training and clear communication regarding hazards are crucial for maintaining a safe workplace.

Inspection and Regulatory Framework: Workplace inspections are critical and are carried out based on risk assessments, past records, and specific criteria to ensure compliance with health and safety standards.

Investigation and Compensation for Workplace Accidents: Employers must investigate serious workplace accidents to identify causes and prevent recurrence, and they are required to report these incidents to authorities and insurance providers. Employees injured at work are entitled to compensation through mandatory insurance covering medical expenses and other related costs.

Dispute Resolution in Finland

Finland's Labor Court is dedicated to resolving labor disputes, handling both individual and collective employment issues, including wrongful termination, unpaid wages, and discrimination. The court process involves claim submission, conciliation attempts, formal hearings, and potentially, appeals to the Supreme Court of Finland.

Arbitration is an alternative, outlined by the Arbitration Act, offering a potentially quicker and more private resolution method, though it is less common than court proceedings.

The country also emphasizes labor law compliance through regular inspections conducted by Regional State Administrative Agencies (AVIs), focusing on high-risk industries and responding to worker complaints. These inspections can lead to fines, improvement notices, or more severe penalties for non-compliance.

Whistleblower protections are robust in Finland, safeguarding those who report labor violations. The legal framework includes the Whistleblower Protection Act and specific provisions in the Occupational Safety and Health Act.

Finland adheres to international labor standards, having ratified key ILO conventions that promote rights such as collective bargaining, equal remuneration, and non-discrimination. These conventions are well-integrated into Finnish law, demonstrating the country's commitment to upholding fundamental labor rights and continuously collaborating with the ILO to refine its labor practices.

Cultural Considerations in Finland

Communication Style: Finnish communication is generally indirect, relying on context and non-verbal cues, yet can be direct and factual when necessary. Maintaining harmony and avoiding confrontation are valued, with a preference for consensus and collaborative decision-making.
Formality and Hierarchy: Finnish workplaces are less formal, with a respect for hierarchy but an encouragement for open communication. Initial interactions require formal address by titles, and meetings are agenda-driven and punctual.
Non-Verbal Communication: Non-verbal cues are crucial, with Finns valuing personal space, using silence for reflection, and considering eye contact important but not overly prolonged.
Negotiation Style: Negotiations in Finland emphasize directness, honesty, and fairness. Offers should be realistic, and patience is required through potentially slow and detailed discussions. Collaborative decision-making and consensus are key, with multiple stakeholders often involved.
Business Structure and Leadership: Finnish companies often feature flattened hierarchies, empowering employees with more autonomy and fostering a participative, supportive leadership style. This reflects the cultural values of egalitarianism and consensus-building.
Statutory Holidays and Business Impact: Finland observes several statutory holidays that can affect business operations, with most businesses closing on these days. Understanding these holidays is essential for planning business activities in Finland.

Frequently Asked Questions for Employer of Record services in Finland

Is it possible to hire independent contractors in Finland?

Yes, it is possible to hire independent contractors in Finland. However, there are several important considerations to keep in mind:

Legal Classification: In Finland, the distinction between an employee and an independent contractor is crucial. Independent contractors are considered self-employed and are responsible for their own taxes, social security contributions, and insurances. Misclassification can lead to legal and financial repercussions, including back taxes and penalties.
Contractual Agreement: When hiring an independent contractor, it is essential to have a clear and detailed contract outlining the scope of work, payment terms, duration, and other relevant conditions. This contract should explicitly state that the individual is an independent contractor and not an employee.
Taxation: Independent contractors in Finland must handle their own tax obligations. They are required to register for VAT if their annual turnover exceeds a certain threshold. Employers do not withhold taxes for independent contractors, but they must ensure that the contractor provides a valid tax number.
Social Security and Benefits: Unlike employees, independent contractors are not entitled to employee benefits such as paid leave, health insurance, or pension contributions. They must arrange their own social security and insurance coverage.
Compliance and Regulations: Employers must ensure that they comply with Finnish labor laws and regulations when engaging independent contractors. This includes respecting working hours, health and safety standards, and other relevant legal requirements.
Risk Management: Using an Employer of Record (EOR) service like Rivermate can help mitigate risks associated with hiring independent contractors. An EOR can ensure compliance with local laws, handle payroll and tax obligations, and provide guidance on contractual agreements.

In summary, while it is possible to hire independent contractors in Finland, it is essential to navigate the legal and regulatory landscape carefully. Utilizing an EOR service can provide peace of mind and ensure compliance with Finnish employment laws.

What options are available for hiring a worker in Finland?

In Finland, employers have several options for hiring workers, each with its own set of legal, administrative, and financial considerations. Here are the primary options available:

Direct Employment:
- Permanent Employment: This is the most common form of employment in Finland. It involves hiring an employee on an indefinite contract. The employer is responsible for all aspects of employment, including payroll, taxes, social security contributions, and compliance with Finnish labor laws.
- Fixed-term Employment: Employers can hire workers on a fixed-term basis for specific projects or seasonal work. These contracts must have a justified reason and cannot be used to circumvent the rights of permanent employees.
Temporary Agency Work:
- Employers can hire workers through temporary work agencies. The agency acts as the employer, handling payroll, taxes, and compliance, while the worker performs tasks for the client company. This option provides flexibility but can be more expensive due to agency fees.
Freelancers and Independent Contractors:
- Hiring freelancers or independent contractors is another option. These workers are not considered employees, so the employer does not have to handle payroll taxes or social security contributions. However, this arrangement must comply with Finnish regulations to ensure that the worker is genuinely independent and not an employee in disguise.
Outsourcing:
- Companies can outsource specific functions or projects to third-party service providers. This can be a cost-effective way to access specialized skills without the complexities of direct employment. However, the company must ensure that the outsourcing arrangement complies with Finnish labor laws.
Employer of Record (EOR) Services:
- Using an Employer of Record (EOR) like Rivermate can simplify the process of hiring in Finland. The EOR becomes the legal employer of the worker, handling all employment-related responsibilities, including payroll, taxes, benefits, and compliance with local labor laws. This allows the hiring company to focus on managing the worker's day-to-day activities without the administrative burden.

Benefits of Using an Employer of Record in Finland:

Compliance: An EOR ensures full compliance with Finnish labor laws, including employment contracts, working hours, minimum wage, and termination procedures. This reduces the risk of legal issues and penalties.
Administrative Efficiency: The EOR handles all administrative tasks related to employment, such as payroll processing, tax filings, and social security contributions. This allows the hiring company to focus on core business activities.
Cost-Effective: While there is a fee for EOR services, it can be more cost-effective than setting up a legal entity in Finland, especially for short-term or small-scale operations.
Speed and Flexibility: An EOR can quickly onboard employees, allowing companies to scale their workforce up or down as needed without the delays associated with establishing a local entity.
Local Expertise: EORs have in-depth knowledge of local labor laws and market conditions, providing valuable insights and support to ensure smooth operations.

In summary, while there are multiple options for hiring workers in Finland, using an Employer of Record like Rivermate offers significant advantages in terms of compliance, administrative efficiency, cost-effectiveness, and flexibility. This makes it an attractive option for companies looking to expand their operations in Finland without the complexities of direct employment.

Who handles the filing and payment of employees' taxes and social insurance contributions when using an Employer of Record in Finland?

When using an Employer of Record (EOR) in Finland, the EOR handles the filing and payment of employees' taxes and social insurance contributions. This includes the following responsibilities:

Income Tax Withholding: The EOR calculates and withholds the appropriate amount of income tax from employees' salaries based on Finnish tax regulations. They ensure that these withholdings are accurately reported and paid to the Finnish Tax Administration (Verohallinto).
Social Insurance Contributions: The EOR is responsible for calculating and remitting social insurance contributions, which include pension insurance, health insurance, unemployment insurance, and other statutory contributions required under Finnish law. These contributions are paid to the relevant Finnish social insurance institutions, such as the Finnish Centre for Pensions (Eläketurvakeskus) and the Social Insurance Institution of Finland (Kela).
Reporting Obligations: The EOR manages all necessary reporting to Finnish authorities, ensuring compliance with local employment laws and regulations. This includes submitting monthly and annual reports related to payroll, taxes, and social insurance contributions.

By handling these complex administrative tasks, the EOR allows companies to focus on their core business activities while ensuring full compliance with Finnish employment laws and regulations.

What is HR compliance in Finland, and why is it important?

HR compliance in Finland refers to the adherence to the country's labor laws, regulations, and standards that govern employment practices. This includes a wide range of legal requirements related to employment contracts, working hours, wages, health and safety, employee benefits, termination procedures, and non-discrimination policies. Ensuring HR compliance is crucial for several reasons:

Legal Obligations: Finnish labor laws are comprehensive and cover various aspects of employment. Employers must comply with these laws to avoid legal penalties, fines, and potential lawsuits. Non-compliance can result in significant financial and reputational damage.
Employee Rights and Protections: Finland places a strong emphasis on protecting employee rights. Compliance ensures that employees receive fair treatment, appropriate wages, safe working conditions, and other benefits mandated by law. This helps in maintaining a motivated and productive workforce.
Collective Bargaining Agreements (CBAs): Many industries in Finland are governed by CBAs, which are agreements between employers and trade unions. These agreements often set higher standards than the minimum legal requirements. Compliance with CBAs is mandatory and ensures harmonious industrial relations.
Workplace Safety: Finnish laws mandate strict health and safety regulations to protect employees from workplace hazards. Compliance with these regulations helps in preventing accidents and illnesses, thereby reducing absenteeism and increasing productivity.
Non-Discrimination and Equal Treatment: Finnish law prohibits discrimination based on gender, age, ethnicity, religion, disability, and other protected characteristics. Ensuring compliance with these laws promotes a diverse and inclusive workplace, which can enhance creativity and innovation.
Termination Procedures: Finnish employment laws outline specific procedures for terminating employment, including notice periods and severance pay. Compliance with these procedures helps in avoiding wrongful termination claims and ensures a smooth transition for both the employer and the employee.
Data Protection: With the implementation of the General Data Protection Regulation (GDPR) in the European Union, including Finland, employers must ensure the protection of employees' personal data. Non-compliance can lead to severe penalties and loss of trust.
Reputation Management: Companies that comply with HR regulations are viewed more favorably by employees, customers, and the public. This can enhance the company's reputation and make it an employer of choice, attracting top talent.

Using an Employer of Record (EOR) like Rivermate can significantly simplify HR compliance in Finland. An EOR takes on the responsibility of ensuring that all employment practices adhere to local laws and regulations. This includes managing payroll, benefits, tax filings, and other administrative tasks. By leveraging the expertise of an EOR, companies can focus on their core business activities while minimizing the risk of non-compliance and its associated consequences.

How does Rivermate, as an Employer of Record in Finland, ensure HR compliance?

Rivermate, as an Employer of Record (EOR) in Finland, ensures HR compliance through a comprehensive understanding and application of Finnish labor laws and regulations. Here are the key ways Rivermate achieves this:

Adherence to Finnish Labor Laws: Rivermate ensures that all employment contracts and practices comply with the Finnish Employment Contracts Act, which governs the terms and conditions of employment. This includes regulations on working hours, overtime, rest periods, and termination procedures.
Accurate Payroll Management: Rivermate handles payroll processing in accordance with Finnish tax laws and social security regulations. This includes the correct calculation and timely payment of salaries, taxes, and social security contributions, ensuring compliance with the Finnish Tax Administration (Verohallinto).
Employee Benefits Administration: Rivermate manages statutory employee benefits such as health insurance, pension contributions, and unemployment insurance. They ensure that all benefits are provided in line with Finnish laws and collective bargaining agreements.
Employment Contracts: Rivermate drafts and manages employment contracts that are compliant with Finnish legal requirements. This includes ensuring that contracts are in Finnish or Swedish (the official languages) and contain all necessary terms such as job description, salary, working hours, and notice periods.
Workplace Safety and Health: Rivermate ensures compliance with the Occupational Safety and Health Act, which mandates employers to provide a safe and healthy working environment. They implement necessary measures and provide training to meet these standards.
Handling Terminations and Redundancies: Rivermate manages the termination process in compliance with Finnish laws, which require just cause for termination and adherence to notice periods. They also handle redundancy processes in accordance with the Act on Co-operation within Undertakings, ensuring fair treatment and proper compensation for affected employees.
Data Protection Compliance: Rivermate ensures that all employee data is handled in compliance with the General Data Protection Regulation (GDPR), which is strictly enforced in Finland. This includes secure storage, processing, and transfer of personal data.
Local Expertise and Support: Rivermate employs local HR experts who are well-versed in Finnish employment laws and practices. This local expertise ensures that all HR processes are compliant and culturally appropriate.

By leveraging Rivermate's services, companies can confidently navigate the complexities of Finnish employment laws, reduce the risk of non-compliance, and focus on their core business activities.

What are the costs associated with employing someone in Finland?

Employing someone in Finland involves several costs that employers need to consider. These costs can be broadly categorized into direct compensation, statutory contributions, and additional benefits. Here’s a detailed breakdown:

Gross Salary: The primary cost is the gross salary paid to the employee. Salaries in Finland can vary widely depending on the industry, role, and experience level of the employee.
Employer’s Social Security Contributions: Employers in Finland are required to make several statutory contributions, which include:
- Pension Insurance (TyEL): This is the largest component, typically around 16-18% of the employee’s gross salary.
- Health Insurance: Employers contribute approximately 1.34% of the employee’s gross salary towards health insurance.
- Unemployment Insurance: The employer’s contribution rate is around 0.50-2.05% of the employee’s gross salary, depending on the total payroll amount.
- Accident Insurance: This varies by industry and risk level but generally ranges from 0.1% to 8% of the gross salary.
- Group Life Insurance: This is usually around 0.06% of the gross salary.
Holiday Pay: Employees in Finland are entitled to paid annual leave, which is typically 2.5 days per month worked, amounting to about 30 days per year. Employers must pay holiday pay, which is usually 50% of the employee’s monthly salary in addition to their regular salary during the holiday period.
Sick Leave: Employers are required to pay for the first 9 days of an employee’s sick leave at full salary. After this period, the national health insurance system covers the costs, but the employer may still have some obligations depending on the collective bargaining agreements.
Collective Bargaining Agreements (CBAs): Many industries in Finland are governed by CBAs, which may stipulate additional costs such as bonuses, overtime pay, and other benefits. Employers must comply with these agreements, which can add to the overall employment costs.
Other Benefits: While not mandatory, many employers in Finland offer additional benefits such as meal vouchers, transportation subsidies, health and wellness programs, and professional development opportunities. These benefits can enhance employee satisfaction and retention but also add to the overall employment costs.
Administrative Costs: Managing payroll, compliance, and HR functions can incur additional administrative costs. This includes the cost of HR personnel, payroll software, and legal compliance services.

Using an Employer of Record (EOR) like Rivermate can help manage these costs more efficiently. An EOR handles all the statutory contributions, compliance with local labor laws, and administrative tasks, allowing companies to focus on their core business activities. This can be particularly beneficial for companies looking to expand into Finland without setting up a legal entity, as it simplifies the process and ensures compliance with Finnish employment regulations.

What is the timeline for setting up a company in Finland?

Setting up a company in Finland involves several steps, and the timeline can vary depending on the type of business entity you choose and how well-prepared you are with the necessary documentation. Here is a general timeline for setting up a company in Finland:

Choosing the Business Structure (1-2 days):
- Decide on the type of business entity (e.g., private limited company, public limited company, partnership, sole proprietorship).
- Most foreign businesses opt for a private limited company (Osakeyhtiö, Oy).
Name Reservation (1-2 days):
- Check the availability of your desired company name with the Finnish Trade Register.
- Reserve the name if it is available.
Drafting the Articles of Association (1-3 days):
- Prepare the Articles of Association, which outline the company's structure and operations.
- This document must comply with Finnish law.
Opening a Bank Account (1-2 weeks):
- Open a bank account in Finland to deposit the initial share capital.
- The minimum share capital for a private limited company is €2,500.
Registering the Company (1-2 weeks):
- Submit the registration application to the Finnish Trade Register.
- Include the Articles of Association, proof of share capital deposit, and other required documents.
- The registration process typically takes about 1-2 weeks.
Tax Registration (1-2 weeks):
- Register for VAT, employer contributions, and other relevant taxes with the Finnish Tax Administration.
- This can be done simultaneously with the company registration or shortly after.
Obtaining Necessary Permits and Licenses (Varies):
- Depending on your business activities, you may need specific permits or licenses.
- The timeline for obtaining these permits can vary widely.
Setting Up Operations (Varies):
- Arrange for office space, hire employees, and set up necessary infrastructure.
- This timeline can vary depending on the complexity of your operations.

In total, the process of setting up a company in Finland can take anywhere from 4 to 8 weeks, assuming there are no significant delays. However, this timeline can be shorter or longer depending on various factors such as the efficiency of the bank, the completeness of your documentation, and the need for any special permits.

Using an Employer of Record (EOR) like Rivermate can significantly streamline this process. An EOR can handle many of the administrative and legal requirements on your behalf, allowing you to focus on your core business activities. This can be particularly beneficial if you need to start operations quickly or if you are unfamiliar with Finnish regulations and business practices.

What legal responsibilities does a company have when using an Employer of Record service like Rivermate in Finland?

When a company uses an Employer of Record (EOR) service like Rivermate in Finland, the EOR assumes many of the legal responsibilities associated with employment. However, the company still has certain obligations and responsibilities. Here are the key legal responsibilities and considerations:

Compliance with Finnish Employment Laws: The EOR ensures that all employment contracts and practices comply with Finnish labor laws, including working hours, minimum wage, overtime, and termination procedures. The company must ensure that the EOR is adhering to these regulations.
Employee Benefits and Social Security: In Finland, employers are required to provide specific benefits, such as health insurance, pension contributions, and unemployment insurance. The EOR manages these contributions and ensures compliance with Finnish social security regulations.
Tax Withholding and Reporting: The EOR is responsible for withholding the appropriate amount of income tax from employees' salaries and remitting it to the Finnish tax authorities. They also handle the necessary tax reporting and filings. The company should verify that these processes are being correctly managed.
Work Permits and Visas: If the company is hiring foreign employees, the EOR will handle the process of obtaining the necessary work permits and visas. The company must ensure that the EOR is compliant with Finnish immigration laws.
Health and Safety Regulations: Finnish law mandates that employers provide a safe working environment. The EOR will manage compliance with health and safety regulations, but the company should ensure that the EOR is maintaining appropriate standards.
Employee Rights and Protections: Finnish labor laws provide strong protections for employees, including rights to parental leave, sick leave, and vacation. The EOR will manage these rights, but the company should ensure that these entitlements are being honored.
Data Protection and Privacy: Finland adheres to the General Data Protection Regulation (GDPR), which governs the handling of personal data. The EOR must ensure compliance with GDPR, but the company should also ensure that any data shared with the EOR is handled in accordance with these regulations.
Termination and Severance: The EOR will handle the legal aspects of terminating an employee, including providing the appropriate notice and severance pay as required by Finnish law. The company should ensure that these processes are conducted fairly and legally.
Employee Representation and Collective Bargaining: Finnish law allows for employee representation and collective bargaining. The EOR will manage interactions with employee representatives and unions, but the company should be aware of any collective agreements that may affect their employees.
Regular Audits and Compliance Checks: The company should conduct regular audits and compliance checks to ensure that the EOR is fulfilling all legal responsibilities and maintaining high standards of employment practices.

By using an EOR like Rivermate in Finland, companies can significantly reduce the administrative burden and complexity of managing local employment laws. However, it is crucial for the company to maintain oversight and ensure that the EOR is fully compliant with all Finnish legal requirements.

Do employees receive all their rights and benefits when employed through an Employer of Record in Finland?

Yes, employees in Finland receive all their rights and benefits when employed through an Employer of Record (EOR) like Rivermate. An EOR ensures compliance with local labor laws and regulations, which is crucial in a country like Finland where employee rights are strongly protected. Here are some key aspects:

Employment Contracts: Finnish law mandates written employment contracts that outline the terms of employment. An EOR ensures that these contracts comply with local regulations, including job description, salary, working hours, and other essential terms.
Wages and Salaries: Finland has sector-specific collective agreements that often dictate minimum wages and other employment conditions. An EOR ensures that employees are paid according to these agreements, including any applicable bonuses and overtime pay.
Working Hours and Overtime: Finnish law regulates working hours, typically capping them at 40 hours per week. Overtime is also regulated and must be compensated appropriately. An EOR ensures adherence to these regulations, protecting employees from excessive working hours and ensuring they receive due compensation for overtime.
Leave Entitlements: Employees in Finland are entitled to various types of leave, including annual leave, sick leave, parental leave, and public holidays. An EOR ensures that employees receive their full leave entitlements as per Finnish law. For instance, employees are generally entitled to 25 days of paid annual leave.
Social Security and Benefits: Finland has a comprehensive social security system that includes health insurance, unemployment benefits, and pensions. An EOR ensures that all necessary contributions are made to the Finnish social security system, guaranteeing that employees receive their entitled benefits.
Health and Safety: Finnish law requires employers to provide a safe working environment. An EOR ensures compliance with occupational health and safety regulations, conducting necessary risk assessments and implementing safety measures.
Termination and Severance: Finnish employment law provides strong protections against unfair dismissal and mandates specific procedures for termination. An EOR ensures that any termination process complies with these legal requirements, including notice periods and severance pay where applicable.
Non-Discrimination and Equal Treatment: Finnish law prohibits discrimination based on gender, age, ethnicity, religion, disability, and other factors. An EOR ensures that all employment practices adhere to these non-discrimination laws, promoting a fair and inclusive workplace.

By using an EOR like Rivermate, companies can ensure that their employees in Finland receive all their legal rights and benefits, while also simplifying the complexities of international employment compliance.