UTC+2

Undoubtedly, payroll is a critical process for any organization. The pay cycle in Finland refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.

In Finland, the payroll cycle is monthly, and wages are paid at the end of the month.

13th-month salary payments are customary in Finland and are usually paid in summer, before the employee’s holiday.

There is no statutory minimum wage that must be paid by the employer to the employee for work performed. The law states that if no collective agreement applies to an employment relationship, and the employer and the employee have not agreed on remuneration, the employee must be paid reasonable remuneration for the work performed.

However, many collective agreements set out minimum wages that must be paid to employees to whom the agreements apply. For example, the Collective Agreement for Salaried Employees in the Technology Industries provides a minimum monthly wage of EUR 1,634 for the category of employees carrying out the least demanding duties covered by that agreement, whereas the minimum wage for the category of employees carrying out the most demanding duties covered by that same agreement is EUR 3,491. These minimum wages are typically reviewed annually.

Overtime work requires the employee's consent for each overtime period, and it must be initiated and approved by the employer to be considered overtime. Overtime hours are limited to 138 hours in a four-month period and 250 hours per year. If necessary, an additional 80 hours of overtime may be agreed upon. Overtime pay is increased to 150% of regular pay for the first two hours and 200% for the next two hours. Overtime is paid at a rate of 150% of regular pay on a weekly basis. Any work done on Sunday is paid at a rate of 200%. Depending on collective bargaining agreements, overtime pay may differ.

Change in security for Employees aged 55 or over

• The employer needs to inform the employee of the change in security allowance. 
• The employer needs to inform the employee of change security training.
• Extended paid re-employment leave. 
• New change security fee for employers. 
• Extended eligibility for unemployment benefits to be phased out and related employer contributions will change.

The Finnish Accounting Act requires that employers maintain accounting records on business activities, including payroll. Records should be maintained for at least ten years.

Equal treatment of all people is guaranteed by Finland’s constitution.

Equality (yhdenvertaisuus) means that all people are equal regardless of their sex, age, ethnic or national origin, nationality, language, religion or beliefs, opinion, disability, health, sexual orientation, or any other circumstance connected to the person.

Issues on equality in working life are enacted in the Equality Act and Employment Contracts Act. They state that employees must be treated equally as regards employment, working conditions, conditions of employment, staff training, and career advancement.

The Equality Act (yhdenvertaisuuslaki) provides that job seekers are treated equally. An employer shall choose the most distinguished applicant for the task. The employer must also be able to prove that the choice is justified on acceptable grounds related to the nature of the work and that the choice was not made on a discriminatory basis. Qualities that are not necessary for the performance of the tasks must not be required of job seekers.

According to the Non-discrimination Act, an employer may not state in a job advertisement that applicants must have particular qualities or personal characteristics; for example, certain language skills that are not required for the work. Different treatment in employment relationships and during employment is justified if the treatment is founded on genuine and determining requirements concerning the type of occupational tasks and their performance, and the treatment is proportionate to achieving the legitimate objective.

The following documents are required during onboarding:

• Government ID proof
• Address proof
• Bank account details
• Tax Agency document
• Previous employment certificates (But only in cases where the new employers need them to verify the number of years they have been working within a certain field of business)

Employment may be subject to a probationary period.

The employer and employee may agree on a probationary period of up to six months from the start date. The employer has a right to extend the probationary period if the employee has been absent from work due to incapacity for work or family leave.

In a fixed-term employment agreement, the probationary period may not exceed 50% of the employment period and must be for no more than six months.

If the employer is bound by a collective agreement containing a provision on probationary periods, the employer must inform the employee of this provision at the time the contract is executed.

There are 15 public holidays in Finland.

• January 1: New Year's Day
• January 6: Epiphany
• April 7: Good Friday
• April 9: Easter Sunday
• April 10: Easter Monday
• May 1: May Day
• May 18: Ascension
• May 28: Whitsun
• June 23: Midsummer Eve
• June 24: Midsummer Day
• November 1: All Saints' Day
• December 6: Independence Day
• December 24: Christmas Eve
• December 25: Christmas
• December 26: St. Stephen's Day

The remaining holidays differ from state to state.

Employees who have been employed for at least a month receive full sick pay for nine working days. After nine days, the employee must provide a medical certificate from a doctor.

Pregnant employees are allowed to choose when maternity leave begins with a maximum of 50 days before the expected due date. Once maternity leave begins, the employee receives benefits for 105 working days (Monday-Saturday, excluding holidays).

Maternity leave is a total of 90 days and is typically split between 45 days before birth and 45 days post-birth, but not required. At least 30 days must be taken before birth.

In addition, employees can apply to the Federal Government scheme, which provides payment for 18 weeks of maternity leave.

Fathers are given 54 days of paternity leave, with a maximum of 18 days to be used at the same time as the mother. The remaining days are to be taken in more than two periods.

Both parents are allowed to take parental leave with benefits for up to 158 days which ends when the child is approximately 9 months old. Parents are to agree when each takes the leave since it cannot be taken by both simultaneously. 

Employees are entitled to leave for family purposes, including maternity leave, paternity leave, and parental leave, such as for child care. When leave causes the end of employment, employees are entitled to return to their former job, or similar work for their employer, depending on the occupation's collective bargaining agreement.

Total maternity and parental leave are capped at 263 weekdays. Maternity leave alone is 105 days, with parents capable of dividing the remaining leave between themselves. Fathers are eligible for taking 54 days of paternity leave, and 18 of these days can be while the mother is also on leave.

Kela is responsible for covering the daily allowances, which are scaled to employee incomes. Most collective bargaining agreements cover leave at 100% of wages.

A summer holiday of 24 weekdays must be granted to employees between May 2 and Sept. 30, although the timing and arrangement of such holiday are determined by employers in consultation with employees. A winter holiday, comprising the rest of the employee's annual leave, must be taken between Oct. 1 and April 30.

Annual leave generally accumulates at a rate of two days per month for workers employed by their employer for less than one year and 2.5 days per month for all other employees, using a holiday year running from April 1 to March 31. Employees must meet one of two rules, known as the 14-day rule and the 35-hour rule, to qualify for their annual leave entitlement for a month of employment. The 14-day rule applies to employees who work at least 14 days every month, regardless of the number of hours worked per day, while the 35-hour rule applies to employees who work at least 35 hours in one month, but do not meet the 14-day rule. Employees that meet the 14-day rule and employees that meet the 35-hour rule every month must receive their normal wages for periods of annual leave. Employees that meet the 35-hour rule only in some months, or that meet the rule and are paid on an hourly basis, instead receive a holiday allowance of 9% of their wages earned during the holiday year, or 11.5% if they have been employed by their employer for at least one year.

Employees that do not meet either the 14-day or the 35-hour rule instead receive two days of leave for each completed month of employment and the same holiday allowance as other employees who do not receive their normal wages for periods of leave.

Accrued leave cannot be exchanged for pay unless the employment is terminated. A six-day week is used for the purpose of determining the length of periods of annual leave. The summer holiday may be divided into multiple parts, but one part must be at least 12 weekdays. The employee may also choose to take 18 weekdays of leave in a holiday year and carry the remaining portion over to a succeeding holiday year.

Employees that do not earn 24 weekdays of leave in a year because of illness- or injury-related absences from work are entitled to as many additional days of leave as required to make up an annual leave period of 24 days. This entitlement lasts for up to 12 months after the employee returns to work.

Employers must notify employees of their periods of leave at least one month before the period starts.

Employees are entitled to take unpaid childcare leave for the full-time care of a child under the age of 3 or the care of an adoptive child for two years after adoption. The employer must take leave before the child enters the school.

Study leave is granted under the Study Leave Act (1979) to employees with at least one year’s full-time service with the same employer. The leave may be taken for general, vocational, professional, or trade union education and training. The maximum amount of study leave is two years in the course of five years of service. No wages are paid during the time of the study leave.

Furthermore, it is common that collective agreements to provide for trade union courses and other educational leaves. Professional courses arranged by the employer, as well as courses for workers’ representatives, generally include compensation for the time off.

An employer must give notice of termination to employees prior to dismissal, regardless of the grounds. For terminations on individual grounds, notice must be given a reasonable time after the employer first has knowledge of the grounds underlying the termination. The law remains silent on the length of the reasonable time period. The assessment is case-specific.

The length of the notice periods to be observed by the employer varies between 14 days and six months, as follows:

• 14 days for an employee who has served for up to one year;
• one month for an employee who has served for more than one year but no more than four years;
• two months for an employee who has served for more than four years but no more than eight years;
• four months for an employee who has served for more than eight years but no more than 12 years;
• six months for an employee who has served for more than 12 years.

The employer is not liable to pay any additional compensation for legally valid terminations. Therefore, the employer has no statutory obligation to pay severance pay.

Provided that the termination is performed lawfully and the employer and employee have not agreed otherwise (e.g., in the employment contract), the employer is not obliged to make any additional payments to the employee upon termination of employment. However, the employee is legally entitled to compensation if the employment contract is terminated without proper grounds.

However, some organizations have established voluntary redundancy packages to be offered to employees under threat of dismissal on collective grounds. The size of the redundancy package is usually around 50% of the employee's salary for the notice period. For example, if the notice period is six months, the redundancy package could be an additional three months' salary, amounting to total compensation of nine months' salary. Such additional compensation does not, however, affect the employer’s liability for unjustified termination, unless the employee expressly waives his or her right to make claims about the employment relationship and its termination.

The managing director is not considered an employee of the company and employment law does not apply to the service relationship of the managing director. Managing director agreements usually provide a fixed compensation in the form of a severance payment if the company terminates the agreement for reasons unrelated to the managing director.

To work in Finland, one needs a residence permit for work. There are exceptions for short-term work. A special residence permit is required for employees who transfer to a company. Without the required permits, a penalty between €1,040 and €31,330 is levied on the employer that hired that employee.

Foreign workers traveling into Finland are subject to the Finnish Aliens Act and the Schengen Agreement. The Finnish Immigration Service and the Ministry of Foreign Affairs are responsible for foreign workers in Finland. Requirements for nonresidents vary based on country of origin, including between EU/EEA countries and non-EU/EEA countries. Foreign workers generally require both a visa and a residence permit to enter the Finnish workforce. Nonresidents requiring a visa should apply through the Finnish diplomatic mission in their home country.

Employee Obligations: Foreign workers should consult the Ministry of Foreign Affairs to determine whether they require a resident permit and/or a visa to enter Finland. Some foreign workers may be permitted to work in Finland without a residence permit. In this case, nonresidents must possess a valid visa or Schengen residence permit granted by another country. Finland has four types of visas: single-entry, double-entry, multiple-entry and airport transit visas. All visas are issued for 90 days or less with varying permitted visits in a six-month period. The multiple-entry visa may be extended for a maximum of five years.

Residence permits are divided into several categories and are granted for family, study, heritage, employment and other similar reasons. Nonresidents should apply for residence permits at Finnish embassies or consulates in person in the worker's home country, although applications can be submitted online in conjunction with a personal visit to the Finnish mission. Residence permits for workers can only be applied for following a job offer in Finland (verified by the employer). Residence permits for employed persons are categorized by professional group and applicants should apply for their employment group

Residence permits are not required for some occupational categories, including interpreters, teachers, specialists, sailors and asylum-seekers. Permits may be extended through application to the municipal police using the same form of initial application.

Notably, residents of Nordic countries, including Sweden, Norway, Denmark, and Iceland, can enter Finland without restrictions and remain without a residence permit. Moreover, EU and EEA residents do not require a residence permit or a visa, although they must register their stay with the district police department no later than three months after arrival.

Employer Obligations: Employers must confirm a job offer for employees seeking a residence permit through an employment contract and must file the TEM 054 form with the Immigration Service. The verification must note the nature of the position and employment relationship, as well as its duration and the employee's salary. Some positions may be filled by employees on temporary, 90-day visas without a residence permit, but employers should seek the advice of the Immigration Service.

Employers cannot apply for residence permits on behalf of employees, but they can advise on which forms to complete and whether they are completed accurately. Applications should be submitted online, but hard copy is available, although it may take several weeks longer. After application, employees are updated, though employers are given notice by the Employment and Economic Development Office regarding the labor availability for the hired employee.

Employers should keep records of their employees' residence permits and remind them to apply for extensions. If employers hire or continue to employ foreign workers without residence permits, either intentionally or accidentally, then an Immigration Service fine of €1,000 or as much as €30,000 may apply.

Background checks on employees are regulated by the Act on the Protection of Privacy in Working Life. The rule is that the employer may only collect personal data from the employee. If the employer collects information from other sources, the employer must have consent from the employee. Consent is not required when the employer acquires personal credit data or criminal record information to establish the employee’s reliability, and the law regulates the situations in which such data may be collected.

The Security Clearance Act contains provisions on procedures to be applied to verify the reliability of applicants for work related to the maintenance of the infrastructure critical for the functioning of society. An employer may apply for a security clearance check to be performed on the applicant by the Finnish Security Intelligence Service in the situations listed in the Act. The consent of the applicant is required for clearance.

According to the Act on Checking the Criminal Background of Persons Working with Children, the employer has to check the criminal records of an employee who will work alone with underage children.

The employer may hire a third party on a written agreement, but the same stipulations apply and only the legally regulated checks may be performed and only in the situations listed in the law.