- Overview: Finland
- Global HR Compliance
- Global PEO and Payroll
- Work permit for hiring expats via PEO
- Expand without a company set up
- Contractor vs. employee: which is better?
Global HR Compliance in Finland
If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Finland Guide below will help you understand the nuances of labor legislation in the country.
Companies hire international workforce for various reasons but in most cases they are:
- entering the foreign markets to sell company products. To do so, the company hires sales representatives who would represent their product and sell it to their local client base.
- hiring a global talent with unique skills that is unavailable in the local market or costs the company less than the talent with similar skills hired in the home country.
Before entering a certain foreign market or engaging a global talent, it is crucial for the company to understand how it can make local hires and reward its workers on a monthly basis. Growing companies often face a challenge of paying benefits and bonuses to the commission-based independent sales representatives they are working with.
If you intend to hire and pay your foreign workforce in full compliance with labor laws and regulations of Finland, then the Global Employer of Record service from Acumen International may be the best way for you to go. We are an International PEO company and we specialize in global employment, meaning we can employ your employees in Finland and act as their legal employer on your behalf. We will payroll your foreign workforce monthly and provide benefits to them through our global network so you don’t have to set up your own legal entities there.
We are experts in global workforce employment in , and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.
Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.
With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Finland.
See the guide below for a general overview of labor rules and regulations in Finland or contact us if you need to employ workers in Finland or would like to get more details.
Hiring and Firing Workforce in Finland Guide
# Employment contracts
Permanent Employment Contract
Employment contracts are usually valid indefinitely. The information in the employment contract must include at least the following principle terms of employment:
- The date of commencement of the work
- The duration of the employment contract and the justification for a fixed-term employment relationship
- The trial period
- The place where the work is to be performed
- The employee’s principle duties
- The grounds for the determination of pay or other remuneration, and the pay period
- The regular working hours
- The manner of determining annual holiday and the period of notice
- The collective agreement applicable to the work
Fixed-term Employment Contract
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.
Collective agreements, negotiated between trade unions and employers’ organizations for a particular trade or industry, play a central role in the Finnish labor market system. The main distinguishing feature of employment law is therefore the prevalence of collectively agreed terms and conditions of employment.
An employer that is a member of an employer organization party to a collective agreement must apply the provisions of the collective agreement to the employment relationships of all of its employees.
# Employment Termination and Severance Pay (Dismissal)
On employee will
An indefinitely valid employment contract can be terminated by 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.
A foreigner directly employed by a Finnish company has the same status as a Finnish citizen while he/she is working in Finland. Therefore, the same terms of employment in force in Finland shall be applied to both foreign and Finnish employees.
The employer may terminate the employee’s employment contract for reasons relating to the employee’s person on the condition that there is a proper and weighty reason for doing so. The bar for termination has been set relatively high in legal praxis. An example of what could constitute proper and weighty reason is the employee’s repeated unauthorized absence from work. However, before proceeding to the termination of employment, the employer needs to issue the employee with a warning and give the employee a possibility to improve his/her performance.
Pursuant to the Employment Contracts Act, grounds that are not acceptable termination grounds include:
- Illness, disability, or an accident of the employee that has not caused a substantial and permanent reduction of working capacity rendering it unreasonable to require the employer to continue the employment relationship.
- Participation by the employee in a strike or other industrial action arranged by an employee organization.
- Political, religious, or other views of the employee, or his or her participation in public activities or in the activities of an association
- Resorting by the employee to means of legal protection available to employees.
In addition, the employer may also cancel, i.e. terminate without any notice period, the employee’s employment contract if the employee commits a very serious breach against the employment contract or the law. This action must also have an essential impact on the employment relationship in such a serious manner as to render it unreasonable to expect that the employer should continue the contractual relationship even for the period of notice.
An employment can be terminated based on a mutual understanding at any time and the terms can be agreed by the parties.
# Notice period
The maximum length of the notice period to be observed by the employer is six months and the shortest 14 days. In addition, the notice period applicable for the employer must not be shorter than the one applicable for the employee.
If the period of notice is not agreed or set out by a collective agreement, the employer must apply the following statutory notice periods based on the employee’s length of service:
- Up to one year’s employment: 14 days
- One to four years’ employment: one month
- Four to eight years’ employment: two months
- Eight to 12 years’ employment: four months
- Over 12 years’ employment: six months
If the employee terminates the employment relationship, the following notice periods are applicable provided that no provisions concerning notice periods are included in the employee’s employment contract or in the applicable collective agreement (if any):
- Up to five years’ employment: 14 days
- Over five years’ employment: one month.
# Severance payments
There are no statutory provisions in Finland regarding severance pay.
# Employee Benefits and Contributions
Annual leave, holiday entitlement, sick leave, maternity, paternity and parental leave.
# Probationary period
Employer and employee may agree on a trial period at the beginning of the employment relationship. In agreeing this, it must be ensured that both employer and employee are clearly aware of the terms of the trial period and its length. Both the employer and the employee have the right to terminate the employment contract during the trial period. However, termination cannot be based on discriminatory grounds or on grounds that defeat the purpose of the trial period.
The maximum length of a trial period is six months. If an employee takes sick leave or family leave during their trial period, the employer can nevertheless extend the trial period by one month for every 30 calendar days that the employee had off due to sickness or child-care obligations. The employee must be told about the longer trial period before their original trial period ends.
In the case of fixed-term contracts, the length of the trial period, including any extensions, cannot exceed half the length of the contract, and the maximum length is always six months.
Overtime work can only be performed on the employer’s initiative and with the employee’s consent which, must usually be obtained separately each time overtime work is performed. The maximum amount of work including the overtime work is on average of 48 hours a week during a four-month period. However, the reference period can be lengthened up to six months with a collective agreement, and for a further 12 months due to technical or organisational reasons.
# Work hours
Regular working hours must generally not exceed eight hours a day and 40 hours a week. However, the regular working hours for white-collar employees specified in collective agreements are typically 7.5 hours a day and 37.5 hours per week.
# Annual Leave
The Annual Holidays Act establishes the employees’ right to paid annual holiday. The holiday credit year runs from 1 April to 31 March. During the first holiday credit year, employees accrue two days of paid holiday per month, and two and a half days thereafter. The total number of paid holidays is 30 days per year corresponding to five weeks of annual holiday.
# Sick Leave
Employees who are prevented from performing their work by an illness or accident are entitled to pay during illness. However, an employee is not entitled to pay during illness if they have caused their disability willfully or by gross negligence.
If the employment relationship has lasted for at least one month, an employee is entitled to:
- Full pay from the employer for the period of disability for up to nine days following the date of falling ill.
- Sickness allowance from the state under the Sickness Insurance Act after ten days.
The amount of the sickness allowance is based on the employee’s earned income and is paid for weekdays and Saturdays for a maximum period of 300 days.
A mother is entitled to:
- Maternity leave of 105 days (excluding Sundays), which typically begins 50 to 30 days before the expected date of birth.
The employer is not generally obliged to pay a salary during maternity leave. However, this obligation is often imposed in the applicable collective agreement.
Paternity leave can last up to 54 weekdays (including Saturdays). Fathers can take up to 18 weekdays as paternity leave during the mother’s maternity leave. The rest of the paternity leave or the whole 54 working days can be taken after the maternity and parental leave allowance. Paternity leave can also be divided into shorter periods. An earnings-related paternity allowance will be paid during the paternity leave. The entire paternity leave must be taken before the child turns two years of age and it cannot be assigned to the other parent.
Acumen International can help you fast-track your possibilities of entering and expanding your business in Finland by providing you with our Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without any need to set up a legal entity first or afterwards.