Employer of Record in Finland

An Employer of Record (EOR) in Finland legally employs your workers on your behalf. This means the EOR handles all the local HR tasks like payroll, taxes, benefits, and compliance with Finnish labor laws. You still manage your employee's day-to-day work, but the EOR takes care of the administrative burdens. This lets you hire in Finland without setting up a local entity. Providers like Rivermate can simplify your global expansion.

How an Employer of Record (EOR) Works in Finland

Using an EOR in Finland is a straightforward process. Here’s how it typically works:

• You Find the Talent: You recruit and select the candidate you want to hire in Finland.
• The EOR Hires Them: The EOR provider, which has a legal entity in Finland, hires the employee on your behalf. They draft a locally compliant employment contract.
• Onboarding: The EOR manages the entire onboarding process, including any necessary registrations with Finnish authorities.
• Payroll and Benefits: The EOR processes payroll, withholds taxes, and manages social security contributions according to Finnish law. They also administer employee benefits.
• Ongoing HR: The EOR handles all HR-related administrative tasks, ensuring compliance with Finland's labor regulations.
• You Manage Your Team: You retain control over your employee's daily tasks, projects, and performance.

Why use an Employer of Record in Finland

An EOR can be a smart move for companies looking to hire in Finland without the headache of establishing a legal entity. It saves you time and money, and it ensures you are compliant with local laws from day one.

Here are some key benefits:

• Fast Market Entry: You can hire employees and start operations in Finland in a matter of days, not months.
• Legal Compliance: EORs are experts in Finnish labor law. They make sure your employment contracts, payroll, and benefits are fully compliant with regulations set by authorities like the Finnish Tax Administration (Vero Skatt). You can find more information on their official site: vero.fi.
• Reduced Costs: You avoid the significant costs and complexities associated with setting up and maintaining a legal entity in Finland.
• Simplified HR: The EOR handles all the administrative HR functions, freeing you up to focus on your core business and managing your team.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Finland includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Finland.

Hiring in Finland is a straightforward process when you understand the local labor laws. The Finnish workforce is highly educated and skilled, making it an attractive market for expansion. Generally, employment relationships are governed by the Employment Contracts Act and collective bargaining agreements, which play a significant role in setting terms for various industries.

Employment contracts & must-have clauses

While oral agreements are technically valid, you should always provide a written employment contract. At a minimum, you must give your employee a written statement of the principal terms of employment within the first seven days.

There are two main types of employment contracts in Finland:

• Permanent (indefinite): This is the standard and most common type of contract with no set end date.
• Fixed-term: This contract has a specific end date and requires a justified reason, such as seasonal work, a specific project, or covering for a substitute.

Your employment contracts must include the following key information:

Probation periods

You can include a probation period at the beginning of employment to assess if the employee is a good fit.

• The maximum length of a probation period is six months.
• For fixed-term contracts, the probation period cannot be more than half the contract's duration, and not exceeding six months.
• During this period, either you or the employee can terminate the contract with immediate effect. However, termination cannot be for discriminatory or other improper reasons.
• If an employee is absent due to illness or family leave, the probation period can be extended.

Working hours & overtime

Finland places a strong emphasis on work-life balance.

• Regular working hours are typically 8 hours per day and 40 hours per week.
• Overtime is any work that exceeds these regular hours and requires the employee's consent.
• Overtime pay is regulated. For daily overtime, the first two hours are paid at a 50% premium, and any subsequent hours at a 100% premium.
• Weekly overtime that doesn't exceed daily limits is compensated with a 50% increase.
• There are limits on the amount of overtime an employee can work, generally 250 hours per year, though collective agreements can alter this.

Public & regional holidays

Employees in Finland are entitled to paid public holidays. The main official holidays include:

• New Year's Day
• Epiphany
• Good Friday
• Easter Sunday & Monday
• May Day (Vappu)
• Ascension Day
• Midsummer's Eve & Day
• Independence Day
• Christmas Day
• Second Day of Christmas (St. Stephen's Day)

While Christmas Eve and Midsummer's Eve are not official public holidays, they are treated as such in most employment contracts.

Hiring contractors in Finland

You can also engage independent contractors for specific projects or services. It is crucial to distinguish them correctly from employees.

An independent contractor is a self-employed individual who works autonomously. They control their own working hours, location, and methods, and are not under your direct supervision. They are responsible for their own taxes and social security contributions.

Misclassifying an employee as a contractor can lead to significant penalties, including back payments for social security, taxes, and fines. The authorities will look at the actual nature of the working relationship, not just the contract wording.

An Employer of Record (EOR) can help you mitigate this misclassification risk. An EOR acts as the legal employer for your workers in Finland. They handle all the administrative and legal requirements, including compliant contracts, payroll, taxes, and benefits. This ensures you are fully compliant with Finnish labor laws while you manage the employee's day-to-day work. Using an EOR is a secure way to hire in Finland without establishing a local legal entity.

Paying your team in Finland involves a structured system. You'll find that Collective Bargaining Agreements (CBAs) play a big role in defining pay and working conditions. The payroll process includes calculating gross pay, handling deductions for taxes and social security, and ensuring you follow Finnish regulations. All payments to employees must go directly to their bank account. You are also required to provide a payslip with each payment.

Payroll cycles & wage structure

In Finland, the standard payroll cycle is monthly. You will typically pay employees on the last working day of the month. While there is no national minimum wage set by law, CBAs establish minimum pay rates for most industries. These agreements are crucial for determining the correct wages for your employees. If a CBA does not apply to your sector, you must pay what is considered "reasonable remuneration" for the work performed.

Overtime & minimums

Finland's labor laws regulate overtime work. The standard workweek is 40 hours. You must get an employee's consent before they work overtime. For any hours that exceed the daily standard, you pay a premium. The first two hours of daily overtime are paid at 150% of the regular hourly rate. Any additional hours after that are compensated at 200%.

Employer taxes and contributions

As an employer, you are responsible for several statutory contributions. These are calculated based on your employees' gross salaries.

Employee taxes and deductions

Employees in Finland contribute to social security and pay income tax. You withhold these amounts directly from their salary.

Finland offers a robust system of employee benefits and leave, rooted in a strong social security framework. This system ensures comprehensive support for employees, covering everything from generous parental leave to extensive healthcare. As an employer, understanding these benefits is key to attracting and retaining top talent in the Finnish market. This guide breaks down what you need to know.

Statutory leave

Finnish law provides for several types of paid and unpaid leave.

• Annual Leave: Employees earn paid time off based on their length of service. For the first year of employment, you accrue two days of leave per month. After the first year, this increases to 2.5 days per month, totaling 30 days of paid leave annually.
• Sick Leave: If you've been employed for at least one month, you are entitled to your full salary for the first ten days of sick leave. After that, you can receive benefits from the Social Insurance Institution of Finland (Kela) for up to 300 days.
• Parental Leave: Finland has a generous parental leave system. Each parent is entitled to 160 parental leave days. A pregnant parent receives an additional 40 days of pregnancy allowance days. Parents can transfer up to 63 of their own parental leave days to the other parent.
• Education Leave: If you have worked for the same employer for at least a year, you can take up to two years of unpaid study leave over a five-year period.

Public holidays & regional holidays

Finland observes several public holidays throughout the year. If a public holiday falls on a weekday, it is generally a paid day off.

Typical supplemental benefits

Beyond the legal requirements, many Finnish employers offer additional benefits to attract and retain employees.

How an EOR can help with setting up benefits

Setting up and managing employee benefits in a new country can be complex. An Employer of Record (EOR) simplifies this process for you. An EOR acts as the legal employer for your team in Finland, taking on all the administrative burdens.

Here's how an EOR can help:

• Compliance: An EOR ensures your benefits package complies with all Finnish labor laws and collective bargaining agreements.
• Administration: They handle the day-to-day tasks of benefits administration, from enrolling employees to managing leave requests.
• Payroll: An EOR manages payroll and ensures all necessary contributions to social security and pension funds are made correctly and on time.
• Expertise: You get access to local experts who understand the Finnish benefits landscape and can help you create a competitive and compliant benefits package.

When an employment relationship ends in Finland, you need to follow specific rules. The process is guided by the Employment Contracts Act to ensure fairness for both you and your employee. You must have a proper and weighty reason to terminate an employment agreement, which can be related to the employee's conduct or financial and production-related needs. Before making a final decision, you must give the employee a chance to be heard on the grounds for termination. The termination notice has to be in writing and delivered to the employee personally.

Notice periods

The length of the notice period you must provide depends on how long the employee has worked for you. These are the minimum periods required by law.

If you terminate an employment agreement without observing the correct notice period, you must compensate the employee with their full pay for that period.

Employees also have notice periods they must observe if they resign.

Severance pay

Finnish law does not require you to pay severance upon termination. This is true regardless of the reason for dismissal or the employee's length of service. You are, however, required to pay any outstanding vacation pay.

How Rivermate handles compliant exits

Navigating the details of Finnish employment law can be complex. We make sure every step of the offboarding process is handled correctly.

• Documentation: We prepare and deliver all necessary documents, including the written notice of termination.
• Procedural Fairness: We ensure the employee is given the opportunity to be heard before any final decisions are made, a key legal requirement.
• Final Pay: We accurately calculate and process the employee's final wages, including any outstanding holiday pay.
• Compliance: We stay up-to-date on the Employment Contracts Act and any applicable collective agreements to ensure every termination is fully compliant, protecting you from legal risks.

Getting the right visas and work permits in Finland is straightforward when you know the rules. If you are not a citizen of an EU country, you will need a residence permit to work. Finland combines the work permit and residence permit into a single document. This means once you have the correct residence permit, you have the right to work. The process involves having a job offer before you apply. Your employer, or an Employer of Record (EOR), plays a key role in providing the necessary documents for your application. The entire process is managed online through the Finnish Immigration Service, known as Migri.

Employment visas & sponsorship realities

An Employer of Record can sponsor the most common types of work permits in Finland. This makes it easier for you to work for a company that doesn't have its own legal entity in the country.

What an EOR can sponsor:

• Residence Permit for an Employed Person (TTOL): This is the standard permit for employees with a job offer in Finland. It's flexible and covers a wide range of jobs.
• EU Blue Card: This permit is for highly skilled professionals who meet specific salary and education requirements. It offers a path to long-term residency in the EU.
• Specialist Permit: If you are an expert in your field coming to Finland for a specific role, this permit is a fast-track option.

What an EOR typically can't sponsor:

• Entrepreneur Permit: This permit is for individuals who want to start their own business in Finland. It requires a solid business plan and proof of profitability, which falls outside the EOR employment model.
• Seasonal Work Permit: This is for temporary jobs in specific sectors like agriculture or tourism. These permits are tied to the seasonal nature of the work.
• Permits for independent contractors: Freelancers and independent contractors follow a separate process and do not require employer sponsorship.

The key is that an EOR acts as your legal employer. This means they can sponsor permits for roles where you are an employee of the EOR, working for one of their clients.

Business travel compliance

You can visit Finland for short-term business trips without a work permit. A Schengen business visa allows you to stay for up to 90 days within a 180-day period. Citizens of many countries, including the United States, can enter for business purposes for up to 90 days without a visa.

This type of travel is strictly for business-related activities. It does not allow you to work.

What you can do on a business trip:

• Attend internal meetings and trainings
• Meet with business partners
• Go to conferences and seminars
• Negotiate contracts

What you cannot do:

• Engage in productive work that is part of a project or service delivery
• Receive payment from a Finnish company for work performed
• Fill a role that a Finnish resident would normally perform

If your activities go beyond attending meetings and involve hands-on work, you will need a residence permit. Always check the specific rules before you travel to ensure you are compliant.