Hiring guide in Finland

What should I know about hiring in Finland?

Hiring remote employees in Finland is a process that should be taken seriously. First and foremost, the Finnish labour market is highly regulated, and this means that there are specific rules and regulations that you need to follow when hiring someone. 

The employment contract is not subject to formal requirements in Finland. The act of contract may be oral, written or electronic. It can also arise tacitly when an employer allows an employee to work for them. However, the principal terms of employment are expected to be given to the employer applied to the employment relationship.

All employers must provide their employees with health insurance, and there are strict laws regarding vacation days and working hours. Furthermore, employers in Finland must deduct and remit payroll taxes from their employee’s paychecks before sending those funds to the Finnish Tax Administration.

Why is Finland a good choice for finding remote employees?

In a world where more and more businesses are going global, it’s crucial to have a remote workforce to help you stay competitive. And when it comes to finding the best place to outsource your remote employees, there’s no better choice than Finland. 

First, the Finnish education system is one of the best in the world. This means that you can find highly-skilled workers in Finland who are ready and able to take on your business challenges. Finnish workers are also known for their strong work ethic. You can trust that your remote employees from Finland will be diligent and dedicated to their work. 

And finally, The quality of life in Finland is high. Your remote employees will be happy and productive in their work if they live in a country with a high quality of life. And since Finland ranks consistently high on quality of life measures, you can be sure your employees will be happy here.

How can Native Teams help you hire in Finland?

When it comes to finding the right employees, it can be tough to know where to start. Having Native Teams’ Employer of Record on your side may assist in ensuring that your company follows all applicable Finnish legislation, beginning with the recruiting procedure and ending with the payment of wages and benefits. In addition, Native Teams can provide valuable insights into the local job market and help you navigate the cultural and legal landscape.

Hire your first Finish employee with Native Teams.

Legal requirements for hiring in Finland

This section will cover the rules and regulations that employers need to follow when hiring new employees in Finland.

Legal framework

Types of employment contracts

In Finland, there are two types of employment contracts: permanent and fixed-term contracts. 

Permanent employment contracts (Toistaiseksi voimassa oleva työsopimus) are the most common ones. These contracts have no set end date and remain in effect until either the employer or the employee chooses to terminate them. They offer the greatest job security, as termination requires a just cause and adherence to statutory notice periods. 

On the other hand, fixed-term employment contracts (Määräaikainen työsopimus) apply to roles that aren’t intended for full-time. They are typically used for project-based work, seasonal employment, or to cover for an employee on leave. Such contracts must have a legitimate reason for their temporary nature, and the specific end date or condition that concludes the contract must be stated.

Content of an employment contract

Under the Finnish Employment Contracts Act, every employment contract must include specific elements to ensure clarity and legal compliance. Understanding these components is essential for both employers and employees to protect their rights and avoid potential disputes.

A written employment contract should detail the names and contact information of both parties, indicating who the employer and employee are. It must specify the start date, marking when the employment begins, and state whether the contract is permanent or fixed-term, including the end date if applicable. 

If there is a probationary period, the contract should note its duration, during which either party may terminate the agreement with shorter notice. The job description should clearly outline the employee’s duties and responsibilities, while the primary place of work must be stated.

Working hours must be defined, covering regular hours and any provisions for overtime or flexible arrangements. Salary and benefits, including the employee’s pay, payment schedule, and additional perks like bonuses or allowances, should be clearly laid out. 

The contract should also specify leave entitlements, such as annual leave, sick leave, and other types of leave. Terms of termination, including the notice periods for both parties, need to be included. Lastly, if a collective agreement applies, the contract should identify which one governs the employment relationship.

 Download a free employment contract in Finland through Native Teams.

Oral, written, or electronic employment contracts

Finland recognises employment contracts in oral, written, or electronic form. 

Oral employment contracts become legally binding as soon as both parties agree on essential terms, such as job duties, salary, and working hours. However, because oral agreements rely on memory, they can result in disputes due to differing interpretations of what was agreed upon. 

Without a written record, proving the agreement’s specifics during a disagreement can be difficult. While legally allowed, oral contracts are generally not recommended, particularly in complex employment scenarios involving numerous detailed terms.

Written employment contracts, on the other hand, offer the highest level of security and enforceability. They clearly record the agreed terms, including job responsibilities, salary, benefits, working hours, and notice periods. 

Finnish law mandates that if an employment contract isn’t written, the employer must provide the employee with a written statement of the key terms within 1 month of employment commencing.

Working hours

Standard working hours in Finland are set at a maximum of 8 hours per day and 40 hours per week. This general standard applies to most employees, though exceptions exist depending on the nature of the work or specific collective agreements. For instance, in the IT sector, collective agreements often establish regular working hours at 7.5 hours per day and 37.5 hours per week, aligning with the sector’s emphasis on work-life balance and the cognitive demands of the work.

The Working Hours Act also accommodates flexible working arrangements, which are frequently seen in the IT industry. These arrangements allow employees to modify their start and end times within set boundaries, provided they meet their total working hours over a given period. Collective agreements typically specify the terms for implementing flexitime, including limits on accrued hours, which usually range from -20 to +80 hours.

Night work

Night work is common in sectors such as healthcare, transportation, manufacturing, and IT, particularly in roles requiring continuous operations or 24/7 support. In the IT industry, night work might be needed for system maintenance, server updates, or providing continuous technical support for international clients.

Employers requiring night shifts must ensure that work schedules include sufficient rest periods and don’t compromise employee health. The law stipulates that employees must have at least 11 consecutive hours of rest within any 24-hour period, which applies to night shift workers as well. Plus, employees must receive at least 35 consecutive hours of rest per week, usually including a full day off.

Breaks and types of leaves

For work shifts exceeding 6 hours, employees are entitled to a meal break of at least 30 minutes. This break is usually unpaid, but employees must be allowed to leave their workplace during this period. If the nature of the work doesn’t permit a 30-minute break (such as in continuous operations), employers must provide shorter breaks that collectively amount to at least 30 minutes throughout the day.

Annual leave

In Finland, employees earn annual leave based on their length of service. For each complete month of employment, employees are entitled to 2.5 days of paid leave, totalling 30 days (or 5 weeks) per year for those employed for a full year. Employees with less than a year of service accrue 2 days of leave per month. A full month of employment is defined as one where the employee has worked at least 14 days or 35 hours.

The Annual Holidays Act designates the main holiday season in Finland from May 2 to September 30, during which employees are entitled to take at least 24 days of their annual leave. 

The timing of this leave should be mutually agreed upon by the employer and employee, considering both the employee’s preferences and the employer’s operational requirements. If no agreement can be reached, the employer can decide the timing but must provide the employee with at least 1 month’s notice before the holiday begins.

Public holidays

Finland observes a variety of public holidays throughout the year, including both national and religious observances. Key public holidays include New Year’s Day on January 1, Epiphany on January 6, Good Friday and Easter Monday, which vary each year, and May Day on May 1. 

Ascension Day and Midsummer Day, which falls on a Saturday between June 20 and 26, are also observed. All Saints’ Day is celebrated on a Saturday between October 31 and November 6, followed by Independence Day on December 6. The Christmas season includes Christmas Day on December 25 and Boxing Day on December 26.

Salary

Unlike many countries, Finland doesn’t have a national minimum wage set by law. Instead, minimum wage levels are determined by collective agreements within each sector. These agreements establish the lowest wage that can be paid to employees in specific roles, ensuring fair compensation that aligns with the job’s demands and the cost of living.

In the IT sector, collective agreements outline minimum wage levels for various positions, ranging from entry-level roles to senior management. These wage levels are periodically reviewed and adjusted to reflect changes in the industry, inflation, and broader economic conditions. 

In addition to basic salaries, Finnish law and collective agreements often include provisions for wage supplements and bonuses. Employees who work beyond their standard hours are entitled to overtime pay, typically ranging from 50% to 100% above the regular hourly rate, depending on the time and duration of the overtime. In the IT sector, where project deadlines may require extra hours, overtime pay plays a significant role in overall compensation.

Many collective agreements, including those in IT, also include a holiday bonus (lomaraha), typically 50% of the holiday pay, which provides employees with additional financial support during annual leave. Employees who work evening, night, or weekend shifts are often entitled to shift allowances, compensating for the inconvenience and health risks of working irregular hours. 

Moreover, performance bonuses are common in the IT sector, with many employers offering them as part of their compensation strategy. These bonuses are typically linked to individual, team, or company performance and serve as an incentive to drive productivity and achievement.

To calculate the salary and taxes in Finland, click here.

Sick leave

A medical certificate is generally needed if the illness lasts for more than 3 days, though some employers may request one from the first day of absence.

For employees in the IT sector, where remote work is often the norm, there may be specific policies for managing sick leave when working from home. While remote work offers flexibility, it is important that employees aren’t pressured to continue working if they are unwell. Employers should encourage employees to take the necessary time to recover fully, even if they are able to work remotely.

Regarding payment during sick leave, employers are required to pay an employee’s salary if the employee is unable to work due to illness or injury, as outlined in their employment contract. However, this payment obligation doesn’t apply if the employee’s incapacity to work is a result of intentional actions or gross negligence on their part.

The duration of paid sick leave in Finland depends on the length of the employee’s tenure with the employer. For employees with less than 3 years of service, the entitlement is 4 weeks of paid sick leave. For those with 3 to 5 years of service, the entitlement is 5 weeks, and for employees with 5 to 10 years of service, it’s 6 weeks. 

Employees with 10 or more years of service are entitled to 8 weeks of paid sick leave. If the employee has been employed for less than 1 month, the Employment Contracts Act governs the employer’s obligation to pay the salary during the illness.

Parental leave

After maternity and paternity leave, both parents in Finland are entitled to parental leave, which can be shared between them. The leave lasts for 158 working days, and it can be taken by either parent or split between them. During parental leave, the parent receives a parental allowance from Kela, which is determined based on their previous earnings.

Parental leave in Finland is designed with flexibility in mind, allowing parents to take the time off in a way that best fits their family’s needs. In the IT sector, parents may be able to arrange their leave in combination with part-time or remote work.

Paternity and maternity leave

In Finland, mothers are entitled to maternity leave to support their recovery after childbirth and to care for their newborns. Maternity leave typically begins 30 to 50 days before the expected birth date and lasts for 105 working days after the birth. During this period, the mother receives a maternity allowance from the Social Insurance Institution of Finland (Kela), which is based on her earnings.

In the IT sector, employers may offer additional benefits during maternity leave, such as supplementary maternity pay or extended leave options. Some companies also provide flexible work arrangements for mothers returning to the workplace, helping them better balance their career and family responsibilities.

Fathers in Finland are also entitled to paternity leave. Paternity leave lasts for 54 working days and can be taken in up to 2 separate periods within the child’s first 2 years. Like maternity leave, paternity leave is supported by a paternity allowance from Kela, which is based on the father’s earnings.

Methods of employment termination

In Finland, the process of terminating employment is carefully regulated by legal frameworks such as the Employment Contracts Act, collective agreements, and other relevant laws. The collective agreement for the IT service sector includes specific provisions related to termination, highlighting the need for just cause and protecting employees from unfair dismissal.

What are the advantages of hiring employees from Finland vs other countries?

Hiring employees based in Finland gives companies easier access to the broader EU market, leveraging Finland’s business-friendly policies and advanced infrastructure. Helsinki, in particular, is recognised as an emerging hub for startups and international trade.

Moreover, Finland has comprehensive labour laws that ensure fair treatment and benefits for employees, contributing to positive employer-employee relationships. The country also promotes a balanced work-life culture that leads to higher job satisfaction, better productivity, and reduced burnout.

Why use Native Teams for hiring in Finland?

Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:

• No paperwork: We will handle all the necessary paperwork for you.
• Save on taxes: We help you handle your taxes.
• No company set up: You can expand your business using our company entitles.
• Online onboarding: We’re here to ensure your onboarding process is trouble-free.
• No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
• Increase your profit: We assist you in growing your business and maximizing your profits.
• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
• Local support: We can assist you in understanding and complying with the relevant local laws.