How to use an Employer of Record in Finland

Finland has a reputation for being one of the world’s happiest nations and is blessed with a strong healthcare and education system — in fact, often quoted as the best in the world. 

Like its Nordic neighbors, Finland has been undergoing a technology renaissance that’s produced startups and tech giants like Nokia, Rovio (remember Angry Birds?), and delivery giant Wolt (acquired by DoorDash for $8 billion). The country is home to a growing number of developers, writers, designers, and technology specialists. All of these factors make it an ideal place to find talented workers if you’re looking to scale your team.

International hiring is a complex process. If you’re looking to tap into Finland’s labor market, an employer of record can set you up to hire locally. Rather than open a new entity in Finland, and take on the tiresome (and expensive) tasks of hiring, paying, and managing your workers in Finland, you can partner with an EOR who can do the heavy lifting. If you choose to handle hiring in Finland alone, you might find yourself at risk of noncompliance, attracting fines and penalties.

In this article, we’ll explain how you can hire workers in Finland compliantly using an EOR. We’ll also discuss costs, benefits, and how you can use an EOR to navigate Finnish laws.

Six steps to hiring employees in Finland using an employer of record

Hiring employees via an employer of record can help you meet regulatory obligations, so you can employ your dream team faster. Essentially, an EOR can ease you into the Finnish labor market at a fraction of the cost and help you minimize the potential risks of hiring abroad.

There are hundreds of employers of record that can help you expand into Finland, offering slightly different versions of the same service. So, how do you choose the best one? The following steps can help you find the right EOR for your needs.

Step 1: Weigh up the pros and cons of each potential partner

The first step is to consider what your business needs and requirements are. Make a checklist of the essential features an ideal employer of record should provide to support your expansion into Finland. Depending on your needs, this may include:

• Offering a user-friendly interface for your employees to engage with

• Staying compliant with local labor regulations

• Securing your intellectual property and any internal company data

• Managing payroll to ensure employees get paid on time

• Extensive HR features to manage onboarding, benefits, employment paperwork, and payroll taxes

Using the checklist above will help you vet potential EOR providers to determine how well they suit your legal and technical needs.

Step 2: Take the time to select the most appropriate EOR service provider 

An employer of record should own its registered entity that acts as the legal employer of any employee you hire in Finland. Several EOR providers actually don’t own their own entities and depend on third parties to provide their employer of record services. 

This means that you can’t be sure if those far-removed partners have systems in place to protect your company’s data. It can also end up being pricier for you because of add-on costs. You might also be exposed to risks if any of the companies in that complicated web gets into trouble with the law. 

Learn more about the difference between owned-entity and partner-dependent providers, and what this can mean for your business.

Step 3: Check the reviews, testimonials, and coverage of your shortlist of providers

You can verify your potential EOR provider’s service quality by reading online reviews, and testimonials, and checking out third-party reviews on platforms like Trustpilot, Saasworthy, and G2. Finding out what the EOR’s past and current clients are saying about them can help you get a better idea about their operations or how well (or not) they will treat your employees.

Step 4: Ensure that the EOR solution for Finland will provide a best-in-class employee experience

An employer of record serves as an extension of your company to your employees and is the face of your brand. That’s why it’s essential that the EOR has the capability to support your employees and offer a positive experience at every step. Your prospective EOR should be able to pay salaries on time, respond to employee queries urgently, and provide best-in-class service to your employees in Finland.

Step 5: Work with your partner to make sure you always provide a fair and equitable compensation package 

Salaries for remote roles can vary wildly depending on the local cost of living, skill level, and market rates. A software developer in San Francisco earns $107,741 annually on average, while the same role in Helsinki would cost $45,818 on average — a big reason why you might be looking to hire in Finland!

Work with your EOR to figure out salaries for the roles you’re hiring for, using a combination of market rates, skill level, and local cost of living to figure out an optimal salary. To attract and retain the best candidates in Finland, make sure that the EOR offers a competitive benefits package factoring in local labor laws, as well as the individual’s role, experience, and skill level.

Step 6: Make sure your partner will guard your intellectual property and maintain data security for your business

An EOR should ensure you retain rights to the intellectual property that your employees produce with your company’s assets. They must also have measures in place to protect your company’s sensitive financial and operational data that might endanger your company’s health and reputation if leaked.

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What are the benefits of using an employer of record in Finland?

An employer of record maintains local entities through which you can hire Finnish employees quickly. An EOR supports you with a wide range of HR and administrative tasks such as dealing with onboarding and termination procedures, processing payroll and benefits, paying taxes and levies, and ensuring compliance with Finnish employment regulations. An EOR can save the time, money, and hassle of hiring and paying workers yourself.

An employer of record acts as a channel through which you can legally hire employees. An EOR can help you:

• Maintain a local entity that qualifies you to hire in Finland

• Manage payroll processes to ensure that your employees get paid on time

• Ensure your employees and contractors are classified correctly so that you remain compliant with labor regulations

• Manage the termination process so that your employees are only let go according to Finnish procedures for employee termination, to avoid legal trouble

• Secure any patents and intellectual property produced by employees using your assets

• Provide a channel for paying any requisite taxes and levies to the government

The right EOR partner will help you hire and pay workers in Finland easily, and stay compliant and agile in your HR operations.

How much does it cost to use an EOR in Finland?

If you decide to use an EOR to hire employees in Finland, you’ll find several EOR providers offering different kinds of services. Usually, EOR costs depend on the services, the number of employees you want to hire, and their location. Generally, costs range between $599 to $2,000 per employee per month.

Older, well-established EORs are known to charge enterprise rates as they offer a wide variety of services and support many countries. In contrast, newer EORs providers charge less, but may be cutting corners on compliance or security — which is something you need to check for when you're considering a low-cost EOR. They may not have the infrastructure to support your hiring needs or may not integrate seamlessly with your HR stack. You might have to rely on other services in this case, which means you might end up paying more than it would cost to use a legacy EOR service.

This is where Remote comes in. Remote offers a comprehensive global employment solution that handles everything related to employee hiring and management in Switzerland and across the globe. We can easily help you onboard new employees, manage payroll, secure your IP rights and patents, and stay compliant with Finland’s labor regulations, all for one flat price.

Learn how Remote compares with other EOR providers and how we can help you start scaling your team in Finland quickly, safely, and easily. 

Hiring in Finland

Getting acquainted with Finland’s labor regulations can help you choose the right employer of record that’s well-positioned to help you keep compliant. Not doing so can be costly, as Finland’s labor regulations prescribe hefty fines and penalties for any violations.

Finnish employment regulations are spelled out across several legislative Acts such as:

• The Employment Contracts Act

• Working Time Act

• Annual Holidays Act

• Non-discrimination Act

• Act on the Protection of Privacy in Working Life, etc.

Remote’s guide to hiring in Finland can shed more light on these labor rules and how they operate in practice so that you can create a positive working environment for your employees.

Employment contracts and agreements in Finland

Finland’s Employment Contracts Act specifies several types of employment contracts, such as:

• Indefinite contracts

• General fixed-term contracts

• Probationary period contracts

Written and verbal agreements are equally valid under Finnish law, although a written contract provides more protection in case of labor disputes. Written and electronically signed contracts are equally enforceable and should contain:

• The identities of both parties to the contract

• The date of commencement

• Contract term, i.e, either indefinite or fixed-term

• Probationary period

• Designated workplace

• Job description

• Remuneration and payment methods

• Working hours

• Annual holidays and holiday pay

• Notice periods

• A mention of any collective agreements observed in the contract.

Labor compliance in Finland

The International Trade Union Convention’s Global Rights Index rates Finland along with Iceland, Ireland, and Germany as having some of the world’s strongest labor protections.

These strong standards signal that slight violations can result in severe financial and legal penalties that may hurt your company’s reputation.

If you’re hiring in Finland, you need to double down on compliance to ensure your employees’ rights are respected, and your company doesn’t come under fire for unintentionally violating labor standards. These include:

• Protecting employees from any form of discrimination due to race, religion, nationality, ideology, political affiliation, sex, financial, social, or physical condition

• Ensuring working hours don’t exceed eight hours daily or 40 hours per week

• Classifying employees and contractors accurately to ensure they’re getting compensated fairly for the degree of service they’re rendering

• Paying workers a minimum vital and adjustable wage for their efforts

• Providing dignified and safe working conditions as well as sufficient working breaks

• Providing sufficient notices and severance payments if employees are let go

Sanctions for breaking any of these labor standards can range from fines to prison time for breaching health and safety provisions.

Payroll and payroll taxes in Finland

Finnish tax rates for 2023 range from 12% to 44% which are to be withheld and remitted by employers.

Employer payroll taxes are capped at 18.53% covering:

• Pension insurance (16.95%),

• Health insurance (1.53%),

• Unemployment insurance (0.05%, 1.9% for whatever portion of the salary above €2,169,000), and

• Tentative accident insurance depending on occupational risk

Remote’s guide to hiring in Finland goes into the details of Finland’s tax policies that’ll help you plan ahead before setting up.

Employment benefits and compensation in Finland

As global corporations move in to take advantage of talent in Finland, it’s crucial to offer the right mix of perks and benefits to help you attract and retain the best brains Finland has to offer.

Maternity and paternity leave

Female employees are entitled to 105 workdays of maternity leave, starting from 30 to 50 days before delivery. Employers can recoup any maternity benefits paid from Kela (the Finnish Social Insurance Institution).

Fathers are also entitled to 54 workdays of paternity leave with benefits paid by Kela.

Sick leave

Employees are entitled to nine workdays of sick leave annually with full wages, provided they’ve been working for an employer for an entire month; otherwise, any sick pay is capped at 50%.

After ten days of an illness, employees can apply for up to 300 days of paid sick leave, and employers can file for reimbursement if they pay it.

Vacation and holidays

Employees are entitled to 13 paid public holidays, with double pay if they’re required to work on a public holiday. Depending on their contract and any applicable agreements, employees can enjoy anywhere from 24 to 30 paid days off annually.

Healthcare

Finland offers universal healthcare coverage, funded by payroll contributions. Although Finland offers some of the world’s best public healthcare, private hospitals still account for 25% of the nation’s health industry. Offering employees private health care coverage can be a tactic for attracting talent, especially if you’re hiring older talent for managerial positions.

Pensions

Employer and employee contributions (16.95% and 7.15% respectively) fund Finland’s pension fund that guarantees a pension for retirees at age 63.

Severance pay and employee terminations in Finland

Finnish law rules that employees can be terminated for just cause as long as they are notified in advance. Notice periods range from 14 days for workers who’ve been employed for a year, to six months for staff with more than 12 years of service. There’s no mandatory severance pay.

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What are the risks of employee misclassification in Finland?

Finnish law makes a distinction between employees and contractors based on the nature and circumstances of the work done. Employees work under the supervision and direction of the employer, who decides the location, schedule, and scope of the work. Contractors are self-employed individuals who work independently and decide their location and hours of work.

If an employer misclassifies a worker, they may get into legal trouble with the authorities. They may be forced to monetary penalties and compensation if they are found to be in breach of Finnish employment laws.

Get started with an employer of record in Finland

The rise of remote work has made it possible for companies to hire beyond borders, giving them the competitive edge over other companies, when it comes to finding talented workers. Finland can be a solid location to find skilled working professionals, given the country’s track record in education and human development. 

Hiring in Finland can be tricky, though. It’s also an expensive process, and it can take months to sort out the legal legwork needed to hire and pay employees abroad. Partnering with an employer of record is the easiest and most stress-free way to hire in Finland and beyond. Remote gives you the global infrastructure you need to hire and pay employees abroad with confidence. Remote simplifies hiring in Finland and makes it easy to:

• Own a dedicated legal entity that authorizes you to hire in Finland

• Manage HR and administrative work related to onboarding, employment agreements, taxes, and terminations

• Manage payroll efficiently and ensure workers are paid on time

• Stay compliant with changing local regulations

• Secure your intellectual property and protect your data from hacks and leaks

Learn more about how Remote’s global employment platform can unlock the many benefits of global expansion. If you’re ready, get started with our employer of record services and start hiring employees today!

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