Expand your organization into Finland, even without a Finnish entity
Finland may not often make huge waves on the international stage, but the Northern European country is an attractive place for many businesses to expand. It has an advanced economy, an exceptional education system, and among the highest living standards in the world, so many organizations choose to establish a presence in the country.
If you are looking to expand in Finland, an important early step will be to hire locally, and this generally means setting up a Finnish entity. While it is possible to do this independently, it can be a difficult process and you will have to closely follow the country’s complex set of administrative procedures and business laws, and communicate in the unique local language of Finnish. There is also a strong trade union culture, and collective bargaining agreements (CBAs) are common, complicating things even further.
At New Horizons, we offer extensive outsourcing services to help businesses expand into Finland. Our professional employer organization (Finland PEO), employer of record, and payroll services give you everything you need to seamlessly expand into Finland, even if you don’t have an established presence there.
Our in-house recruitment team can also find, recruit, and onboard your local employees, and take care of any ongoing HR administration. Our team will provide everything you need to expand into Finland quickly and efficiently, potentially saving you thousands in expansion costs.
Our Finland PEO simplifies your expansion
New Horizons enables your business to expand its operations into Finland, even without setting up a legal subsidiary.
Employment & Labor Laws in Finland
Employment contracts in Finland
When hiring in Finland, you will need to provide all employees with a formal contract of employment. These contracts should include all relevant details of the working arrangement, such as wage/salary, parental leave, and severance terms. It should be written in Finnish and reference the local Euro currency.
By partnering with our Finland PEO, New Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
Working hours in Finland
Working hours in Finland are limited to 40 hours per week and eight hours per day, but could be lower depending on how specific contracts have been negotiated. Beyond this, employers must be paid. Overtime pay is 150% of normal pay for the first two hours, then 200% of pay for more than two hours. Additionally, employees can refuse overtime hours at any time.
Finland public holidays
Most Finnish workers are entitled to several public holidays per year.
Christmas Eve and Midsummer Eve are not officially recognized, however, these (and some other holidays) are commonly given to employees anyway. The following are common throughout Finland:
New Year’s Day
Second Easter Day
All Saints’ Day
Second Day of Christmas
Finland vacation leave
Employees in Finland are entitled to five weeks (25 days) of paid vacation leave. This leave is accumulated over time, with one month of employment generally earning an employee 2.5 days. In some cases, CBAs mean the number of vacation days can be significantly higher.
Finland sick leave
Employers in Finland are required to pay employees who are off work with sickness. The amount of coverage depends on the length of employment. For employees of more than one month, employers must pay up to nine days of sick leave at full pay. For employees of less than one month, employers only need to cover half of normal pay.
Parental leave in Finland
Parents in Finland can both take paid parental leave. Maternity leave is 105 days, and paternal leave is 54 days, and there is another 158-day allowance that can be shared between parents. Payments during parental leave are paid by the government, not employers.
In 2021, the law is changing to give parents of any gender an equal right to parental leave.
Terminations and severance in Finland
The length of notice period required for terminations in Finland depends on length of employment. For employers who have been employed for less than five years, 14 days of notice must be given. For employees of more than five years, the mandatory notice is one month.
Notice periods can also vary dependent on CBAs that might be in place for specific roles, industries, and companies.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. New Horizons’ Finland PEO can mitigate risk for foreign companies and provide guidance through this process.
Taxation in Finland
The personal income tax system in Finland is progressively scaled at rates between 0% and 31.25%. There is also a local municipal tax which varies between 16.5% and 23.5% depending on location. Members of some religious groups must also pay a church tax of between 1% and 2.2%, depending on the parish.
The corporate income tax rate is 20%.
Health coverage in Finland
Finland has a high-quality public healthcare system, so employers are not expected to provide private health insurance as part of their benefits packages.
Finland compensation and benefits
Compensation laws in Finland
There is no legally defined minimum wage in Finland, and the minimums depend on negotiations and CBAs in specific roles and industries. For this reason, it is important that any employer is familiar with the up-to-date norms for their situation.
Benefit management in Finland
Setting up a benefits system for your Finnish employees can be difficult and complicated to navigate if you are unfamiliar with the country and its labor laws. If you want to tackle the setup independently, you can expect it to take several weeks and potentially present delays to your expansion process.
New Horizons offer an alternative to simplify your Finland PEO & benefits management. Our outsourcing services will cover your benefit setup and management, helping you focus on a faster and more successful expansion.