Laws and Policies in Finland

Employment Contracts in Finland

Employment relationships are governed by the Finnish Employment Contracts Act, the Working Hours Act, and various Collective Bargaining Agreements (CBAs).

Mandatory Contract Requirements

Contracts may be written, verbal, or electronic, but written contracts are strongly recommended.

Contracts must include:

• Job title and responsibilities
• Working hours
• Salary and payment frequency
• Applicable collective agreement (CBA)
• Probation period
• Leave entitlement
• Employment type (fixed-term/indefinite)
• Termination conditions

Types of Contracts

• Indefinite-term contracts (default and most common)
• Fixed-term contracts (must have a valid reason)
• Part-time contracts
• Remote/hybrid work contracts

Probation Period

• Maximum 6 months
• If training is provided, probation may extend beyond 6 months by agreement.

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Working Hours in Finland

• Standard workweek: 40 hours
• Typical schedule: 8 hours/day, Monday–Friday
• Flexible working hours and remote work are very common in Finland.
• Many CBAs offer 37.5-hour workweeks instead of 40.

Overtime Rules

Overtime must be agreed in advance and is compensated at:

• 150% for the first 2 hours
• 200% for additional hours
  CBAs may include more generous terms.

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Employee Leave in Finland

Annual Leave

Annual leave is defined under the Annual Holidays Act:

• 2.5 days of leave earned per month (30 days/year) after 1 year of service
• New employees earn 2 days per month (24 days/year)

Finland uses calendar days, not working days, for leave calculation.

Sick Leave

• Employees receive full salary during the first 9 days of sick leave (paid by employer).
• After that, Kela (the Finnish Social Insurance Institution) pays daily sickness benefits.

Maternity Leave

• 105 working days (approx. 4 months)
• Paid benefits provided by Kela based on income.

Paternity Leave

• Up to 54 working days may be taken.

Parental Leave

• Both parents can share 320 working days of parental leave.

Public Holidays

Finland observes 12–15 paid public holidays, such as:

• New Year’s Day
• Good Friday & Easter
• Midsummer
• Independence Day
• Christmas

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Employee Benefits in Finland

Statutory Benefits

Through social tax and employer obligations, employees receive:

• National health insurance
• Pension system (TyEL)
• Unemployment insurance
• Accident insurance
• Parental benefits
• Extended sick leave benefits

Mandatory Employer Contributions (approx.)

• Earnings-related pension (TyEL): 16.95%
• Unemployment insurance: 0.52%
• Accident insurance: ~0.5–1%
• Group life insurance: ~0.06%

(Employee contributions are deducted from salary.)

Common Additional Benefits

To remain competitive, employers often add:

• Private health insurance
• Meal/commuting benefits
• Sports & wellness allowance
• Remote work support
• Laptop & equipment allowance
• Additional paid time off

An EOR ensures benefits packages meet both compliance and local expectations.

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Payroll & Tax in Finland

Payroll Currency

• Salaries paid in Euro (EUR).

Payroll Frequency

• Monthly (standard)
• Paid on the last working day or as specified in contract.

Income Tax (Employees)

Finland has a progressive tax system, with municipal and state tax combined:

• Roughly 12% to 31.25% (municipal + state)
• Additional church tax (optional)
• Employees also pay pension and unemployment contributions.

Employer Obligations

Employers must:

• Withhold income tax
• Pay employer social contributions
• Submit monthly reports to the Incomes Register
• File and remit VAT if applicable

An EOR manages all calculations, tax cards, withholding, reporting, and payments.

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Employment Laws & Compliance in Finland

Key Regulations

• Employment Contracts Act
• Working Hours Act
• Annual Holidays Act
• Non-Discrimination Act
• Data Protection Act (plus GDPR)
• Collective Bargaining Agreements (sector-specific)

Termination Rules

Termination requires valid grounds, such as:

• Redundancy
• Company restructuring
• Employee misconduct
• Performance issues (after documented warnings)

Notice Period

Depends on length of service:

• 14 days (<1 year)
• 1 month (1–4 years)
• 2 months (4–8 years)
• 4 months (8–12 years)
• 6 months (>12 years)

Severance

Finland does not mandate severance unless required by a CBA.
However, compensation may apply for unfair dismissal.

Non-Discrimination

Employers cannot discriminate based on gender, age, ethnicity, religion, disability, sexual orientation, or political views.