Table of Contents

Finland

Table of Contents

Currency

Euro (EUR)

Payroll Frequency

Monthly

Employer Taxes

20.07% - 21.61%

About Finland

After gaining independence from the Russian Empire in 1917, Finland was a relative latecomer in switching from an agrarian economy to a more modern, industrial economy, doing so only around the 1950s. The country is geographically located in Northern Europe, bordering Sweden and Russia. The nation is now highly industrialized with a free-market economy, based on the Nordic model with an extensive welfare state and one of the highest per capita incomes in the world. Finnish GDP was $251.88 billion in 2017, attributable primarily to the service sector, followed by manufacturing. Largest industries include electronics, machinery, vehicles and forest products. Trade with the EU makes up almost 60% of the country’s total trade.

With a population of 5.5 million, Finland was ranked first as the world’s most stable nation and second in the Global Gender Gap Report. Finnish is the predominant language followed by Swedish and Russian. The majority of the population practice Lutheranism. The Finnish people can boast some of the world’s best statistics in education and health, along with a culture that prides itself on openness, transparency and a free press.

Employment Relationship

• Permanent Employment

In Finland, an employment contract can be either valid indefinitely or for a fixed term. Permanent employment is employment under a contract that is valid indefinitely. Consecutive fixed-term contracts are prohibited where their individual or cumulative total duration indicates a permanent labor need. Contracts made for a fixed term on the employer's initiative without a justified reason (as well as consecutive fixed-term agreements without a justified reason) shall be considered indefinite. Indefinite term contracts must be made in writing.

• Fixed-Term or Specific-Purpose Contracts

In Finland, a fixed-term employment relationship terminates at the end of the agreed period or after the agreed work has been completed. During the employment period, a fixed-term employment contract may only be terminated on cancellation grounds. To conclude a fixed-term contract, the employer must have justified reasons; otherwise, the consecutive fixed-term contracts concluded without a justified reason will be considered as valid indefinitely. A fixed-term employment contract can be based on the following reasons: Nature of the work The employee works as a substitute or a trainee. The need for the work or the operation of the enterprise Another comparable reason

• Temporary Employment Contratcs

There are three parties to a temporary agency work employment relationship: the employee, the temporary agency, and the user company. The Employment Contracts Act of Finland provides minimum terms for temporary contracts. The minimum terms and conditions of employment in temporary agency work are derived from employment legislation and the applicable collective agreement. Even if there is no binding collective agreement, the terms and conditions of employment must be reasonable, and there must be legal grounds for fixed-term employment. The employer is required to give agency workers the terms and conditions of employment in writing regardless of the duration of the employment relationship. Because the agency worker has an employment contract with the temporary agency but works at the user company’s workplace, the agency worker’s terms and conditions of employment may differ from those of others working on the same shift.

Probationary Period

The Employment Contracts Act allows a trial period at the beginning of the employment relationship up to 6 months if agreed to by both parties. For fixed-term employees whose employment period lasts less than 8 months, the trial period may not exceed half the employment duration, up to 6 months. If a collective agreement applicable to the employer contains a provision on a trial period, the employer must comply with said provisions and inform the employee when concluding the contract. During the trial period, the employment contract can be terminated by both sides. However, the employment contract may not be terminated on grounds that are discriminatory or otherwise irrelevant to the purpose of the probationary period.

Working Hours

According to the Working Time Act of Finland (the Act), which entered into force on January 1, 2020, the statutory number of hours in a workday should not exceed 8 hours a day and 40 hours a week. Unless otherwise indicated by a collective agreement, regular working hours can be extended by 2 hours, up to a total of 10 hours. Weekly working hours cannot exceed 48 hours, and working hours should not exceed an average of 40 hours over a period of 4 weeks. In period-based work, the regular hours should not exceed 120 hours during a three-week period or 80 hours during a two-week period. The period-based working hours can only be used in companies, shops, institutions, and jobs listed in the Act. Telecommuting is defined as flexible, voluntary, or paid work based on agreed rules, which can also be done outside of the actual workplace. The working time can either be entirely or partially remote. Remote work arrangements are usually agreed upon in writing. 

Holidays / PTO

• Statutory Holidays

In Finland, the following holidays are observed: New Year – January 1 Epiphany – January 6 Good Friday – date subject to change annually Easter Monday – date subject to change annually  May Day (Vappu) – May 1 Ascension Day – date subject to change annually Midsummer Eve – date subject to change annually* Midsummer – date subject to change annually All Saints' Day – date subject to change annually Independence Day – December 6 Christmas Eve – December 24* Christmas Day – December 25 Boxing Day – December 26 *Although not official public holidays, many Finns do not work on Midsummer Eve and Christmas Eve. Businesses frequently close for all or part of the day, and public transit runs on special timetables. Collective agreements will often specifically stipulate working hours for these two days.

• Paid Annual Leave

In Finland, regulations concerning annual leave may be found in the Annual Holidays Act and collective agreements. Employees are entitled to 4 weeks of summer holiday and one week of winter holiday. In short employment relationships, the annual holiday allowance is reduced accordingly. Employees earn holiday days by working during the holiday credit year, which runs from April 1 to March 31. They are entitled to holiday pay (which may not be below the regular payment) for the duration of the holiday. If the holiday exceeds 6 days, the holiday pay must be issued before the start of the holiday. For a holiday not exceeding 6 days, it is paid on the employee’s normal payday. Employers' obligation to pay holiday bonus is based on collective agreements, employment contracts or well-established practices. Holiday bonus is 50% of the holiday pay. There are no provisions in the Annual Holidays Act obliging employers to pay holiday bonus. 

• Sick Leave

Finnish law does not limit the amount of employee sick leave. The Employment Contracts Act guarantees employees' pay up to nine days for full-time absence due to illness if the employment relationship has lasted for at least one month. When employment relationships last less than one month, employees receive 50% of their pay. When an employer's obligation to pay sick leave ends, the employee becomes eligible to receive a sickness allowance from the sickness insurance system managed by the Social Insurance Institute (Kela). The allowance is approximately 70% of the employee's previous salary. The 2023 minimum sickness allowance is EUR 31.99 (euros).

• Maternity Leave

Per the Health Insurance Act of Finland, employees can take maternity leave at 50 weekdays (at the earliest) before the estimated delivery date, and 30 weekdays before the estimated delivery date at the latest. Employees are entitled to a total of 105 weekdays of paid maternity leave. The allowance amount depends on their income. The current minimum daily rate is EUR 31.99. In addition to this, a maternity grant can be claimed in the form of either a maternity package or a tax-free cash benefit of EUR 170. The Employment Contracts Act requires the employee to notify the employer of the need for maternity, paternity or parental leave or childcare leave at least 2 months before it starts. Employees shall be entitled to take parental leave in one or two periods, the minimum duration of which must be 12 working days. According to the reform to family leave, employees whose expected delivery date is September 4, 2022, or later are entitled to pregnancy allowance for 40 working days, starting 30 working days before the estimated due date of the baby. After that, the mother can take parental leave up to 160 days, out of which 63 days are transferable to someone else taking care of the child. 

• Paternity Leave

Under Kela, the Social Insurance Institution of Finland, currently, fathers who are residents or workers employed in Finland for an extended period are entitled to a paternity leave up to 54 working days. For two children, the paternity allowance period can be 72 working days, for three children – 90 working days, and four or more children – 105 working days.  Fathers must give their employer at least two months' notice before taking paternity leave. However, if the duration of their leave is under 12 days, one month of notification is sufficient. According to a new reform, for children born on or after September 4, 2022, the duration of parental leave will be increased to 320 days, divided equally between both parents. It can be taken in different periods until the child reaches the age of 2. Parents can work part-time and apply for partial parental allowance for that same period. The amount of paternity allowance depends on the annual income of the parent. The minimum daily rate of paternity pay is EUR 31.99 (Euros). The amount of parental allowance depends on the annual income of the parent.

Termination of Employment

• Notice Period

According to the Employment Contracts Act of Finland, the notice for dismissal is based on the duration of the employment relationship. The employer must give the following notice periods: 14 days for the length of service of up to 1 year 1 month for the duration of service between 1 and 4 years 2 months for service between 4 and eight years 4 months when employment lasted 8 to 12 years 6 months for the duration of employment over 12 years Unless otherwise agreed, the employee must give the following notice period if the employment relationship has continued uninterrupted: 14 days, if the employment lasted up to 5 years 1 month if the employment relationship has continued for more than 5 years Collective agreements can be used to agree on notice periods. If the notice periods under the collective agreement differ from the statutory notice periods, the employer and the employee must comply with the notice periods under the collective agreement, unless the collective agreement provides for the possibility of agreeing on other notice periods.   

• Severance Benefits

Severance pay is not formally regulated for non-public employers in Finland. However, employers must pay out employees' remaining salary, unused holiday leave, and unpaid bonuses or commission when their employment contract is terminated. Workers with difficulty finding new employment may become eligible for a severance payment from public authorities. Employees who have been laid off (suspended with no payment but the employment relationship is not terminated) for more than 200 calendar days are entitled to severance pay as well as holiday compensation if they are terminated. Their severance pay is calculated based on the notice period specified by their employer.