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
According to the Finnish Employment Contracts Act (2001), the employment contract may be oral, written or electronic.
The employment contract is valid indefinitely unless it has, for a justified reason, been made for a specific fixed term. Contracts made for a fixed term on the employer’s initiative without a justified reason shall be considered valid indefinitely. It is prohibited to use consecutive fixed-term contracts when the amount or total duration of fixed-term contracts or the totality of such contracts indicates a permanent need of labour.
The employers may conclude a fixed-term contract without a justified business-related reason with a job seeker who has been unemployed for more than 12 months (long-term unemployed). The maximum duration of a fixed-term employment contract with a long-term unemployed job seeker is one year and it may, during one year from the beginning of the first fixed-term employment contract, be renewed twice. However, the total duration of fixed-term contracts cannot exceed two years. There is no maximum duration for fixed-term contracts concluded with others than long-term unemployed job seekers. Nevertheless, a fixed-term employment contract may always be terminated by notice after five years from the commencement of the employment relationship.
If an employer and an employee have concluded a number of consecutive fixed-term employment contracts, under which the employment relationship has continued without interruptions or only with short interruptions, the employment relationship is regarded as having been valid continuously when granting employment-based benefits.
# Minimum (Statutory) Employment Rules and Regulations in Finland
# Hours of work:
In Finland, regular working hours total a maximum of eight hours a day and 40 hours a week.
# Probation period:
The employer and the employee may agree on a probation period of a maximum of six months starting from the beginning of the work. If, during the probation period, the employee has been absent due to incapacity for work or family leave, the employer is entitled to extend the probation period by one month for every 30 calendar days included in the periods of incapacity for work or family leave. The employer should notify the employee of the probation period extension before the end of the probation period.
In a fixed-term employment relationship, the probation period together with any extensions to it may comprise no more than half of the duration of the employment contract, and in any event may not exceed six months.
During the probation period, the employment contract may be cancelled by either party. The employment contract may not, however, be cancelled on discriminatory or otherwise inappropriate grounds with regard to the purpose of the probation period.
# Annual leave:
The Annual Holidays Act (2005) establishes the employee’s right to a 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 holiday for each full month worked. A full month is typically a month during which the employee works at least 14 days. In the second holiday credit year and thereafter, the holiday entitlement increases to two-and-a-half days for each full month worked. Six holidays constitute one full week of annual holiday.
When the total number of holidays is calculated, a fraction of a day is rounded up to constitute one full day of holiday. The Annual Holidays Act also sets out the right for an employee to receive regular or average pay during the holiday.
# Parental leave:
Expectant mothers can start maternity leave no earlier than 50 and no later than 30 working days before they are due to give birth. The duration of maternity leave is 105 working days. Expectant mothers in hazardous occupations are entitled to a longer maternity leave and a special maternity allowance unless their employer is able to offer them alternative work. The special maternity allowance is paid until the regular maternity allowance period begins.
Hazardous occupations include working with chemicals, radiation or infectious diseases that could jeopardies the health of the mother or the baby. A parental allowance enables either the mother or the father to stay at home with the child. Either parent can take parental leave after the maternity leave period. The parents can also split the parental leave period.
Parental leave begins immediately after maternity leave. The duration of parental leave is 158 working days with an extension of 60 working days for each child in the case of multiple births. The opportunity to take parental leave is still rarely used by fathers. As of the legislative reform implemented at the beginning of 2013, fathers can take up to 18 working days of paternity leave while the mother is on maternity leave once the child is born.
The total duration of paternity leave is 54 working days, and the remaining 36 days need to be taken when the mother is not on leave. Paternity leave no longer reduces the length of parental leave that the parents can split.
Fathers can also take the entire 54 working days of paternity leave when the mother is not on maternity or parental leave. In both cases, the whole leave must be taken before the child’s second birthday. Paternity leave cannot be transferred to the other parent.
The current system of paternity leave has replaced an earlier system where paternity leave overlapped with the maternity allowance and parental allowance period and where fathers were entitled to a so-called daddy month after the end of the parental leave period. The maximum combined length of the earlier form of paternity leave and the daddy month also came to 54 working days. Approximately three out of four fathers took paternity leave during the mother’s maternity leave period in 2011.
# Sick leave:
According to the Employment Contracts Act (2001), an employee who has been employed by an employer for over a month and becomes temporarily incapable to work is entitled to full sick pay up to the ninth day following the first day of disability. If the employment relationship has lasted less than one month, the employee is correspondingly entitled to 50 per cent of his or her pay. Collective agreements, however, typically include provisions on sick pay entitling employees to full pay even up to the first six months of their sick leave.
Employees typically have a right to sickness allowance, which is paid by the Social Insurance Institution (Kela). Sickness allowance is paid after the nine-day period specified above. According to the Sickness Insurance Act (2004), the sickness allowance is paid for up to 300 days including other weekdays except for Sundays. The amount of the allowance varies, depending, for example, on the employee’s taxable earnings.
In addition to regular working hours, employees may conduct additional or overtime work. Additional work refers to work done on top of the regular working hours on the employer’s initiative but not exceeding eight hours per day and 40 hours per week. Overtime work, on the other hand, is carried out on the employer’s initiative in addition to both the regular and additional working hours.
Additional work requires the employee’s separate consent, unless such work has been agreed upon in the employment contract. Overtime work can be performed only with employee consent, which must be given separately for each time concerned. The employee can, however, consent to overtime work for a short period of time, if the nature of the work arrangements so requires. The maximum amount of overtime work during a four-month period is 138 hours, and the aggregate hours of overtime work may not exceed 250 hours in a calendar year. An employer may agree with employees or their representatives on additional overtime work exceeding the above-mentioned statutory limits. Such additional overtime work is limited to 80 hours per year, provided, however, that the maximum of 138 hours’ overtime within a four-month period is not exceeded. The above-mentioned limitations cannot be deviated from by agreement.
# State minimum salary:
There is no national minimum wage in Finland; but the law requires all employers, including nonunionized ones, to pay minimum wages agreed to in collective bargaining agreements, and almost all workers are covered under such arrangements. Finland’s minimum wage was last changed in January 01, 2015.
# Employee dismissal:
An employer may terminate the employment contract of a regular employee either on substantial and pressing grounds arising from the individual employee or for reasons of redundancy. An employee is free to terminate the employment contract without giving any reason. The most common reason for dismissal is some deterioration in business profitability or reorganization of production and work so that the employer can no longer provide the previous or other work to the employee. In such cases the reduction in work must be substantial and permanent. If other work is nevertheless available, either in the enterprise concerned or in some other enterprise in which the employer exercises a controlling interest in matters of staffing, then this work must be offered to employees who are otherwise threatened with redundancy.
Employment may be terminated on grounds arising from the individual employee. Employees who neglect their duties or infringe their obligations may nevertheless not be dismissed before they have been cautioned and given an opportunity to rectify their misconduct.
At least the following and similar reasons may not be regarded as proper and pressing individual grounds for dismissal:
- illness of the employee,
- participation in industrial action that complies with the Collective Agreements Act,
- the employee’s political, religious or other views.
Unless otherwise stipulated in a collective agreement or individual employment contract, the employer must observe the following periods of notice when dismissing an employee:
- 14 days if the employment has continued for no longer than one year,
- one month if the employment has continued for between one and four years,
- two months if the employment has continued for between four and eight years,
- four months if the employment has continued for between eight and twelve years, and
- six months if the employment has continued for longer than twelve years.
Unless otherwise stipulated in a collective agreement or individual employment contract, the employee must observe the following periods of notice when resigning from employment:
- 14 days if the employment has continued for no longer than five years, and
- one month if the employment has continued for longer than five years.