4. Types of leave

There is no information about the types of leave for this country.
Learn more about types of leave >

Paid time off

The time from April 1st to March 31st of the following year is used to measure annual leave. Usually, vacation is taken between May 2 and September 30. (4 weeks in the summer and 1 week in the winter).

Employees who have worked for more than a year are entitled to two holiday days per month or 2.5 vacation days per month. Employees who have worked for the company for at least 15 years are entitled to three vacation days every month.

Public holidays

Finland recognizes ten public holidays.

Sick days

Employees who have worked for at least a month are entitled to complete sick leave for a period of nine working days. Within the nine days, the employee must have a doctor's medical certificate.

Maternity leave

Pregnant workers have the option of starting maternity leave up to 50 days before the planned due date. The employee earns insurance for 105 working days after maternity leave starts (Monday-Saturday, excluding holidays).

At least two months before taking maternity leave, the employee must contact the boss and register for maternity pay.

Paternity leave

Employees who have worked for at least a month are entitled to complete sick leave for a period of nine working days. Within the nine days, the employee must have a doctor's medical certificate.

Parental leave

Both parents are entitled to 158 days of paid maternity leave, which begins when the child is approximately 9 months old and expires when the child is approximately 9 months old. Since the leave cannot be taken by both parents at the same time, parents must agree on when they will take it.

Other leave

5. Employment termination

There is no information about employment information for this country.

Termination process

Employers must offer reasonable justification for terminating an employee. Before terminating an employee for poor performance, the employer must get a warning and an opportunity to improve.

Before terminating employment, an employee must offer written notice to the employer and adhere to the notice period.

Employment on a fixed-term basis cannot be terminated.

Notice period

When the employer initiates the termination, there is a notice period. There will be a 14-day notice period for up to one year of employment. There will be a one-month notice period for employees who have worked for one to four years. There will be a two-month notice period for employees who have worked for four to eight years. There will be a four-month notice period for employees who have worked for eight to twelve years. There will be a six-month notice period for employees who have worked for more than 12 years. If the employee is the one who initiates the termination, the notice period will be different. There will be a 14-day notice period for employees who have worked for one to five years. A one-month notice period is required for employees who have worked for more than five years.

Probation period

The probation period in Finland usually lasts for six months.

Severance pay

There is no statutory provision for severance pay unless the employee's termination is arbitrary or the company chooses to grant it voluntarily.

6. Working hours

There is no information about the working hours for this country.

General working schedule

The standard workweek is 40 hours with eight hours per day, and white collar employees work 37.5 hours per week. Regular working hours may be set at an average of 40 hours per week for a period of up to one year. Typically, collective bargaining agreements provide for reduced work hours. However, over a four-month period, the workweek cannot exceed 48 hours.

Overtime

Each overtime period requires the employee's consent. Overtime hours are limited to 138 hours per four-month period and 250 hours per year. If necessary, an additional 80 hours of overtime may be agreed upon. Overtime can be exchanged for vacation time, and employees have the option of refusing overtime.

Overtime increases pay by 150 percent for the first two hours and 200 percent for the remaining hours. Weekly overtime is compensated at 150 percent of the regular rate of pay. Sunday work is compensated at a rate of 200 percent.

Overtime pay varies according to collective bargaining agreements.

7. Minimum wage

There is no information about the working hours for this country.

Compensation laws in Finland do not mandate a minimum wage, but collective agreements may specify minimum salary requirements for specific industries.

Employee bonuses are not required by law, but they are common. A collective bargaining agreement, for example, may include a provision for a holiday bonus of approximately 50% of the pay for that annual holiday. Employers have the option of paying this bonus to employees before or after the holiday.

8. Employee benefits

There is no information about the working hours for this country.

Due to the high quality of health care provided for the public sector, the private health care system only provides about 3-4 percent of care. Supplemental insurance coverage is not required.

Employees in Finland are covered by employment-based benefits insurance. These would include an earnings-related pension, vocational rehabilitation, workplace injury compensation, and occupational illnesses. The earnings-related pensions are administered by the Finnish Centre for Pensions, ETK. Employers are required by law to provide employees with occupational health care services.

9. Taxes

There is no information about the working hours for this country.

Corporate tax

Dividends, rentals, and capital gains are subject to capital income tax. In 2017, capital income is taxed at a constant rate of 30%, or 34% if the income exceeds 30,000 euros. Some businesses are taxed differently depending on whether they are listed or not. Tax-free dividends are paid by public businesses on 15% of their earnings. Thus, the effective dividend tax rate is between 25.5 and 28.9 percent.

Dividends from non-listed businesses, on the other hand, are taxed at a considerably lower rate. Up to 150,000 €, up to 75 percent of these dividends are tax-free. This still contains the requirement that the dividend be less than or equal to 8% of the stock's mathematical value (portion of net assets for a single share). Instead, 75% of the portion that exceeds the 8% limit will be taxed as earned income. If a person receives more than 150,000 € in dividends from non-listed limited businesses, the tax-free percentage is only 15% of the amount in excess of 150,000 €. The effective tax rate for a dividend that does not exceed 8% of a stock's value is 7.5 - 8.5 %. Dividends paid by debted private businesses are typically taxed as earned income due to the impact of net assets.

Corporate income tax is levied at a rate of 20.0 percent. Before 2004, the corporation tax was completely paid as dividend tax, however due to the EU's neutrality rules, the tax credits permitted for dividends have become more complicated. In January 2014, the corporate tax rate was reduced from 24.5 percent to 20.0 percent.

Individual income tax

Earned gross income is taxed via a combination of proportionate community taxes paid to municipalities (16.5 percent – 22.5 percent, average 19.17 percent ) and parishes (1.00 percent – 2.00 percent, average 1.34 percent ) and a progressive state tax. [8] Local taxes have an earned income tax credit, making them somewhat progressive despite their fixed rate. In reality, low-income people do not pay any state tax since the tax on their earnings does not exceed the standard deductions.

For an income between 0 and 17,200 Euros, the marginal tax rate is 0.

For an income between 17,200 and 25,700 Euros, the marginal tax rate is 6 percent.

For an income between 25,700 and 42,400 Euros, the marginal tax rate is 17.25 percent.

For an income between 42,400 and 74,200 Euros, the marginal tax rate is 21.25 percent.

For an income over 74,200 Euros, the marginal tax rate is 31.25 percent.

VAT, GST and sales tax

VAT is levied at a standard rate of 24% (January 2013), as well as two reduced rates of 14% on food, restaurant services, catering services, and animal feed, and 10% on books, pharmaceutical products, services providing opportunities for physical activity, passenger transportation, and accommodation.

Alcohol, cigarettes, sweets, lotteries, insurance, transportation fuels, and cars all have excise taxes (2011). The car tax is significant. Permanent residents are generally not permitted to drive foreign-registered vehicles in Finland. Persons having permanent residency outside Finland may drive a foreign-registered vehicle in Finland for six months, or up to 18 months if proof of presence elsewhere is shown to Customs separately. European Civil Service workers working for the European Union, on the other hand, are free from paying the car tax on their own vehicle.

Pharmacies pay just the excise tax on their annual revenue; there is no VAT on medicines. Pharmacies that maintain subsidiary pharmacies are eligible for a tax benefit (sivuapteekki). The goal of this strategy is to encourage the continued operation of pharmacies in sparsely inhabited areas.

10. VISA and work permits

There is no information about the working hours for this country.

Citizens of the Nordic nations (Sweden, Norway, Denmark, and Iceland) are able to come and remain in Finland without a residence permit. They may also work for a living without requiring a residency permit for an employed individual.

Without a residence permit, EU nationals and residents of Iceland, Liechtenstein, Norway, and Switzerland have the right to enter, remain, study, seek job, or practice a profession in Finland for three months. If they want to remain in Finland for an extended period of time, they must register their right to do so at a police station.

Persons from outside the EU must get a work permit as well as a residency permit. Several categories are determined by the employment grade and status. Highly qualified individuals with an offer of employment in Finland must apply for a specialized permit. Persons living outside the European Economic Area (EEA) may also be required to get a permission from the National Board of Patents and Registration in order to work in a management role or perform other duties in a firm.

11. Employer Of Record service terms

There is no information about the working hours for this country.

Employment contracts

In Finland, it is best practice to have a robust employment contract in place that specifies the conditions of the employee's remuneration, benefits, and termination criteria. In Finland, an offer letter and job contract should always mention the salary and any other compensation amounts in euros rather than foreign currencies.

Minimum assignment length

It is best practice is to put a strong employment contract in place in Finland that spells out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Finland should always state the salary and any compensation amounts in euro rather than foreign currency.

Payment currency

Euro (EUR)

13.Opening a subsidiary in Finland

There is no information about the working hours for this country.

How to set up a subsidiary

Before establishing a subsidiary in Finland, your firm should evaluate a number of factors. What sort of industry and company do you want to start? Where will the headquarters be situated, and what nationalities will be represented? Do you have any commercial deals or ties you'd want to discuss?

It is essential to pick the site of your construction with caution. Separate cities and areas may have varied Finland subsidiary laws and incorporation costs. Languages vary by geography as well. The majority of Finns speak Finnish, while a tiny minority also speak Swedish.

The Limited Liability Companies Act of Finland oversees the establishment of subsidiaries in Finland, as well as limited liability companies, limited partnerships, branches, and representative offices. The following stages are involved in establishing a subsidiary in Finland:

1. Choose between a private and a public limited liability business.

2. Determine your management structure.

3. Create a bank account with a little share capital.

4. Multiple papers must be submitted, including foundation deeds, a Memorandum of Association, a description of the company's commercial and banking activities, information on all shareholders and directors, and notarized copies of passports.

5. Submit a Business Plan Notification of an LLC application, together with supporting papers

6. Examine your company's name

7. Enroll in pension, accident, and medical insurance.

Subsidiary laws

Finland's subsidiary legislation aim to attract international investment. The setup method is likewise identical to that of the majority of EU nations. Before you can legally begin working at your subsidiary, the law requires you to complete a number of documentation. These are some examples:

(1) Under the Limited Liability Companies Act, a certificate from auditors certifying your shares is required.

(2) A statement of incorporation made in accordance with the legislation

These papers, as well as the others indicated above, must be submitted to the Finnish Trade Register together with your proposed company name. All company names must be examined for possible infringements on existing names or trademarks.

13. Why choose Rivermate as your Employer of Record / PEO in Finland

Establishing an entity in

Finland

to hire a team takes time, money, and effort. The labor law in

Finland

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

Finland

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

Finland

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

Finland

via our Employer of Record / PEO solution.

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