Employer of Record in Finland

What is an Employer of Record in Finland?

An Employer of Record (EOR) in Finland is a strategic partner that acts as the legal employer for your employees residing in Finland. The EOR takes on all employment responsibilities and liabilities on your behalf, handling payroll, benefits, taxes, and regulatory compliance.

By partnering with an EOR, you can hire employees in Finland without the need to establish a local entity or navigate complex labor laws.

General Information

• Currency: Euro (EUR)
• Employer Taxes: 27.69% – 29.24%
• Payroll Frequency: Monthly
• Employee Costs: 23.67%
• Capital: Helsinki
• Fiscal Year: 1 January – 31 December

Main Aspects of the Labour Code

Minimum Wage

General: Finland does not have a statutory minimum wage. Instead, most employees are covered by collective agreements that outline minimum pay rates.

Payroll

Payroll Cycle: In Finland, the payroll frequency is monthly, typically paid on the last day of the month.

13th Salary

13th-month salary payments are customary in Finland and are usually paid before the employee’s holiday.

Working Hours

General: Working hours between 37.5-40 per week depending on the position and CBA.

Overtime: All hours worked beyond the standard weekly hours are considered overtime and must be regulated by the employment contract or collective agreements. Overtime must be mutually agreed upon before starting.

Generally, the maximum overtime limits are 138 hours over a four-month period and 250 hours annually. Overtime is paid at 150% of the regular salary rate for the first two hours, and 200% for any additional hours. Overtime work performed on weekends, rest days, or Sundays is compensated at 200% of the regular salary rate.

Leave

Annual Leave (Vacation):

Annual leave in Finland is calculated from April 1 to March 31, with vacation typically taken between May 2 and September 30. Employees accrue two vacation days per month, or 2.5 days per month for continuous employment up to one year. After one year of service, the entitlement increases to four weeks of leave per year. After 15 years of service, the annual leave entitlement rises to three days per month.

Vacation is earned and taken on working days, including Saturdays, even if the employee did not work on those days. Thus, a full week of vacation equates to six days of annual leave. At least two weeks of annual leave must be taken in one uninterrupted period, although employers and employees can agree on taking vacations outside the peak seasons or converting part of the leave into shorter working hours.

Holiday pay calculation depends on the pay system and accrual rules applicable to the employee. Holiday pay must be provided before the start of the holiday, though for vacations of six days or less, it can be paid on the employee’s regular payday.

Public Holidays

Public holidays that fall on the weekend are usually lost.

Sick Days

Employers are required to pay for sick leave, with the duration typically defined by the Collective Bargaining Agreement (CBA) in place. For most CBAs, employees are entitled to 4 weeks of paid sick leave if they have been employed for less than 3 years. For those employed for more than 3 years, the sick leave entitlement may extend up to 5 years, depending on the specific CBA. If an employee is sick for more than ten days, their salary payment may be reduced by 50% as they become eligible for sickness allowance (sairauspäiväraha) from KELA.

Maternity Leave

In Finland, maternity leave is part of a broader category known as family leave, which includes maternity leave, paternity leave, parental leave, and childcare leave. Generally, family leave is unpaid unless specified otherwise in the employment contract or collective agreement. Certain aspects of family leave, such as parental and home care leave, receive allowances paid by Kela.

A pregnant employee is entitled to 105 days of maternity leave. During this period, working is permitted if it does not compromise the safety of the mother, fetus, or child. However, the mother is prohibited from working during the two weeks before the due date and the two weeks immediately following the birth.

Paternity Leave

In Finland, paternity leave can extend up to 54 days. Fathers have the option to take up to 18 days of leave concurrently with the child’s mother and then use the remaining 36 days at a later time. Paternity leave can be taken after maternity and parental leave. However, it must be utilized before the child turns two years old. New reforms regarding paternity leave were anticipated to be introduced in the summer of 2022.

Parental Leave

Parental leave in Finland lasts for 158 days. Both parents are entitled to take full-time parental leave in up to two separate periods, each with a minimum duration of 12 working days. Additionally, parental leave can be taken part-time, with each parent able to negotiate with their employer to reduce their working hours and salary accordingly for a period of at least two months.

Other Leave

Depending on the terms of the Collective Agreement or Employment Contract, employees may be granted additional types of leave with the employer’s approval. For instance, employees may be entitled to unpaid childcare leave for full-time care of a child under the age of 3, or for an adoptive child for up to two years following adoption. This leave must be taken before the child starts school.

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