Guide to Hiring in Finland

Key takeaways

• Access a diverse talent pool: Finland has a robust economy with many employees who specialize in technology, forestry, energy, and maritime manufacturing.
• How to employ people in Finland: Finland offers many options for businesses seeking skilled workers. You can set up your own legal entity in Finland, or you can get assistance from an employer of record.
• Pay and benefits in Finland: Finland doesn't have a national minimum wage. However, it does have rules about matters like sick leave, vacation days, and insurance.
• Finland employment laws: Finland has very detailed employment legislation. There are rules about how to handle job postings, taxes, collective bargaining, and more.

Finland is an incredibly promising place to find talented employees. The country has a vibrant entrepreneurial landscape and an excellent tech infrastructure that includes advanced 5G networks. Finland's population is one of the most digitally skilled in Europe. The workforce is strong in technical fields like information and communication technology (ICT), engineering, and health technology. Furthermore, Finland is one of the least corrupt countries in the world, according to the Corruption Perceptions Index (CPI). It has strong protections in place for both businesses and employees, and companies that work here have a very low risk of encountering issues like bribery or state capture.

Before expanding into Finland, you'll need to understand contracts, taxes, wages, benefits, and other employment laws. This country prioritizes fairness and safety, so most aspects of employment are heavily regulated. If you want to get the benefits of hiring skilled Finnish workers, read our guide to learn everything you need to know about hiring in Finland.

What to know before hiring in Finland

If you're expanding your business into Finland for the first time, you need to be aware of some important legal requirements. These norms and laws influence hiring practices in Finland and many aspects of the employer-employee relationship, including compensation and benefits.

G-P Gia™, our AI-powered global HR agent, can answer your toughest compliance questions about Finland and over 50 other countries. Reduce your reliance on outside counsel and cut the time and cost of compliance by up to 95% with Gia.

Now let's look at the essentials. Here are five things to know about hiring in Finland.

1. Collective Bargaining Agreements (CBAs)

Finland has over 160 universally binding Collective Bargaining Agreements (CBAs). A universally binding CBA applies to all employers regardless of whether they're members of an employers' association. The goal of CBAs is to create a level playing field and set minimum standards for employment terms.

CBAs in Finland cover wages, working hours, overtime, holiday entitlements, sick pay, and notice periods. They can address issues like training, occupational safety, and procedures for resolving disputes, too. If you're expanding to Finland, make sure you check the applicable CBA for your sector.

2. Working hours and pay

The statutory working time is 8 hours per day and 40 hours per week. Many CBAs set shorter weekly hours such as 7.5 hours per day and 37.5 hours per week. To provide you with flexible scheduling, Finnish laws allow you to average working hours over a period of up to 52 weeks.

Finland doesn't have a national minimum wage. However, sector-specific CBAs set minimum pay. Most payrolls operate on a monthly basis. Employees receive holiday pay, sick pay, and other benefits as set by law or the applicable CBA.

Overtime is allowed with employee consent. Overtime pay is at least 50% extra for the first two hours and 100% extra for any hours after that.

3. Taxes and social benefits

Employees pay national and municipal income taxes. The national tax rate increases with income, while municipal rates vary by location. Evangelical Lutheran and Orthodox church members also pay a church tax.

Both employers and employees contribute to social benefits. Employees pay pension, unemployment, and health insurance contributions that are withheld from their salary. Employers pay extra social security contributions, which are usually 20% to 25% of a worker's gross salary. These taxes and social security contributions fund Finland's universal healthcare.

4. Paid time off

Employees generally accrue two days of annual leave for each leave-earning month if their employment has lasted less than one year by the end of the holiday credit year, which runs from April 1 to March 31. After one year, employees generally accrue 2.5 days per leave-earning month, for a total of 30 days of annual leave over a full holiday credit year. Saturdays generally count as leave days, which means 30 days of annual leave typically equals five weeks off.

Finland has 12 national holidays. Employees usually get paid leave on these days. Employees in Finland also get paid sick leave. Employers pay full salary for the first 9 days. The Social Insurance Institution provides sickness allowance after that.

Finland has paid maternity (known as pregnancy leave) and parental leave as well as leave for child care and family emergencies:

• Pregnancy leave: 40 working days that typically start 30 days before the due date.
• Parental leave: After pregnancy leave, each parent (regardless of gender) is entitled to 160 working days of parental leave. The parent can divide this leave into 4 periods but must use it before the child turns 2. A parent can transfer up to 63 days to the other parent, and single parents are entitled to the full 320 days.

5. Local languages

Finland has two official languages: Finnish and Swedish. Finnish is more widely spoken, while Swedish-speaking communities are concentrated primarily along Finland's western and southern coasts and in the Åland Islands.

Other common languages in Finland are English and German. English is especially common in business settings.

Hiring models for global companies in Finland

When you're looking to connect with workers in Finland, a few different methods are available to you. Here are the most common ways for global companies to legally hire people in Finland:

• Direct employer registration: One of the most straightforward options is to formally register a business in Finland and start hiring. However, keep in mind that, even though this is simple on paper, it can be complex in reality. You'll need to have a fully operational business with all the licenses and permits that Finland requires.
• Employer of record: An employer of record (EOR) is a helpful party that hires employees in Finland for you. They handle the local details, like staying compliant with hiring laws, and you handle day-to-day things like assigning the employees tasks.
• Subsidiary or branch: Subsidiaries and branches are registered entities that operate in Finland while still being connected to your company elsewhere. They're a little quicker to open than a brand-new entity. However, they still require a lot of work to set up and run the subsidiary or branch.
• Independent contractors: Independent contractors are self-employed workers that you hire on an individual basis for specific tasks. They're very fast to hire and provide flexible assistance. However, the Finnish Supreme Court is very strict about what sort of work classifies as independent contracting. Employers who misclassify full-time workers as independent contractors may owe extra taxes and face fines for violating leave and payroll provisions.

Top hiring hubs in Finland

Some cities in Finland are known for particular industries. Knowing what each city has to offer allows you to focus your hiring efforts in the right place and fill positions faster.

Here are the top talent hubs in Finland:

• Helsinki is the capital. It has the largest population and the highest concentration of businesses in the country. The city has produced several start-ups with a value of over USD 1B. Companies include game developer Supercell and food delivery platform Wolt.
• Espoo is part of the greater Helsinki area. It's a major tech hub home to Nokia's headquarters and Aalto University's innovation ecosystem.
• Vantaa is part of the Greater Helsinki area. Vantaa is home to the Helsinki airport and several logistics, technology, and service companies.
• Tampere is located in southern Finland. Tampere is the third-largest city and a big economic center. Tampere is known for its engineering, manufacturing, and IT sectors.
• Turku is an important port city. Shipbuilding, biotechnology, pharmaceuticals, the food industry, and logistics are strong in Turku.
• Oulu is located in northern Finland. It's known for 5G technology, software development, and other high-tech industries. It offers a lower cost of living compared to southern hubs.

Key industries in Finland

Understanding Finland's main industries allows you to benchmark salaries and benefits. Use these insights to make smart choices about where to invest and grow your workforce.

The main industries in Finland include:

• Forestry and paper: Global pulp and paper companies like Stora Enso and UPM-Kymmene have headquarters in Finland. The country produces timber, plywood, and various wood-based building materials and furniture. Specialist talent includes bioeconomy and biorefinery experts, forest resource management and sustainability professionals, and process automation mill workers.
• Maritime and shipbuilding: Finland is known for building specialized vessels including icebreakers and luxury cruise ships. Wärtsilä is a global leader in marine and energy solutions. Specialist talent includes Arctic marine technology experts, naval architects, marine engineers, and sustainable shipping experts.
• Technology and ICT: Finland has a thriving ICT sector. Software development, telecommunications, and electronics are the main areas. Companies like Nokia are based in the country. Specialist talent includes cybersecurity specialists, software development, 5G development, and telecommunications engineers.
• Energy: Finland is a leader in clean energy. A big portion of its electricity comes from nuclear power. The country is aiming for carbon neutrality by 2035. Specialist talent includes energy efficiency experts, smart grids experts, renewable energy engineers, and combustion specialists.
• Chemicals: Finland has a big chemical sector. It produces chemicals, plastics, and pharmaceuticals. Specialist talent includes bio-based chemical scientists, process engineers, analytical chemists, and quality control professionals.

The cost of hiring an employee in Finland

Whether you're hiring one employee or an entire team in Finland, expenses are inevitable. Budget for the following:

• Setting up an entity (unless you partner with an employer of record)
• Advertising job positions
• Paying referral bonuses to employees with connections in Finland
• Paying an in-house hiring committee
• Traveling to and from Finland, including hotel stays, meals, and transportation
• Partnering with a translator to draft documents or facilitate conversations (if applicable)
• Using a background check service for screening candidates
• Consulting with HR and legal experts to draft compliant employment contracts
• Costs for providing computers, phones, and software licenses
• Onboarding materials and initial training
• Costs for maintaining tax and payroll records and documentation

According to G-P verified sources from Gia, the employer burden rate in Finland ranges from 20–25%, including all costs on top of salaries besides accident insurance.

What does a company need to do to hire employees in Finland?

If you plan on setting up your own legal entity instead of working with an EOR, make sure you cover these essentials before expanding your team in Finland:

• Register your company with the Finnish Trade Register.
• Get a business ID.
• Register with the Finnish Tax Administration.
• Register as an employer.
• Subscribe to the incomes register.
• Open a local bank account and deposit the minimum capital requirement.
• Obtain employee personal identity codes for tax, social security, and payroll purposes.
• Buy policies from insurance companies that Finnish law has authorized.
• Notify the Finnish Immigration Service (for international employees).
• Keep comprehensive employment and payroll records.

Employers must also arrange the following statutory insurance coverage in Finland:

• Earnings-related pension insurance (TyEL): Employers insure employees under the Employees Pensions Act and withhold the employee's share through payroll. They also pay the employer's share to the pension provider.
• Workers' compensation insurance: Employers must arrange coverage for workplace accidents and occupational diseases when statutory conditions apply. The premium depends on factors such as payroll and occupational risk.
• Group life insurance: Employers must arrange statutory group life insurance when the applicable collective bargaining agreement requires it. The coverage usually applies alongside workers' compensation insurance.
• Unemployment insurance: Employers withhold the employee's contribution and pay both the employee and employer shares to the Employment Fund. The contribution rates can change each year.
• Health insurance: Employers withhold the employee's health insurance contribution through payroll and pay the employer's health insurance contribution to the Finnish Tax Administration.

Confirm current rates, thresholds, and payment deadlines before your first payroll run. The applicable collective bargaining agreement can also add insurance or reporting obligations. Accurate payroll setup helps you budget total employment costs and meet Finnish reporting requirements.

Setting up a subsidiary in Finland can take weeks or months. Use a Finland EOR to hire full-time employees without setting up your own entity. Build your team at a lower cost and with peace of mind that you're doing so compliantly.

The steps to hiring in Finland

The hiring process in Finland is similar to the one you're likely familiar with in your own country. The hiring process follows five basic steps: advertising the job, evaluating applications, interviewing candidates, sending job offers, and onboarding new employees.

1. Advertise job vacancies

Clearly outline the job description, responsibilities, and qualifications. Make sure the advertisement is nondiscriminatory and complies with Finnish equality and antidiscrimination laws. All criteria in the job ad must be objectively justified and relevant to the position.

Employers can publish job postings on the official Job Market Finland e-service platform. The platform provides structured templates and guidance to help ensure compliance with transparency and nondiscrimination laws. Duunitori, Jobly, Oikotie Työpaikat, Indeed, and Job Market Finland are other popular job sites in Finland.

2. Evaluate applications

Gather CVs and application forms. Make a shortlist of candidates based on objective criteria relevant to the job description. Obtain explicit consent for any psychological or health-related assessments.

3. Interview candidates

Interview candidates who made it onto your shortlist. Use structured, nondiscriminatory interview questions. Gia can help you create questions that follow antidiscrimination laws in Finland so you can find the best fit for the role while complying with local regulations.

4. Make job offers

Contact your chosen candidate to offer them a position with your company. Prepare an employment contract that complies with the Finnish Employment Contracts Act. The contract can be written, oral, or electronic. For an oral agreement, the employer must provide a written version within a month.

5. Onboard new employees

Now, you can onboard new employees. Register the new employee with the Finnish Tax Administration and relevant social security authorities. Provide necessary onboarding documents, workplace orientation, and health and safety training.

If you're working with a G-P EOR, you can reduce the administrative work of onboarding. We'll streamline the process, so you can focus on training your new hire and integrating them into your company culture.

Hiring contractors in Finland

Working with independent contractors in Finland can be a cost-effective way to test the market and build a presence without the commitment of full-time employees.

Contractors based in Finland understand local consumer behavior, rules, and business practices. They'll be ready to start working quickly with their own equipment and established work processes. Hiring contractors allows you to easily adjust your workforce based on your business needs without the complexities and costs of employment.

Before you enter an agreement with an independent contractor in Finland, consider the following:

1. Employees vs. independent contractors

It's important to understand the difference between employees and independent contractors. In Finland, employers hire employees to do work and, in return, pay them a regular salary and benefits. Independent contractors provide services. Unlike employees who have an ongoing role, contractors set their schedules, use their own equipment, and work on specific projects.

2. Penalties for misclassification

Classifying someone as a contractor when they're not can lead to severe penalties. If misclassification occurs, you'll have to:

• Pay unpaid social security contributions, taxes, and employment benefits.
• Pay administrative fines.
• Face criminal sanctions in cases of intentional or gross negligence.

3. How to pay contractors in Finland

If you want to hire contractors in Finland, G-P Contractor™ takes away the messy, time-consuming process of hiring and paying people. You can create and issue contracts and pay contractors with just a few clicks, all while ensuring a compliant process.

Hire employees and contractors in Finland with G-P

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Make your expansion to Finland easier with G-P. Contact us or book a demo today.

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