In the tech industry, the allure of Finland cannot be overstated. The country is a powerhouse of innovation, offering a pool of high-quality tech talent. Hiring in Finland, however, requires a comprehensive understanding of the local Finnish employment law. This article highlights everything you need to know about the employment law, terms and conditions of employment contracts, employment details and how to navigate hiring compliantly in Finland.
Main Sources of Employment Law in Finland
Navigating through the Finnish legal landscape can be challenging, particularly for businesses accustomed to other jurisdictions. However, a clear understanding of the main sources of Finnish employment laws can significantly ease this process.
The Employment Contracts Act
The Employment Contracts Act forms the backbone of Finnish employment law. It contains extensive details on various aspects of the employer-employee relationship. This includes everything from the formulation of employment contracts, as illustrated in this sample agreement, to norms for working hours, wages, and the termination of employment. It also addresses issues like temporary layoffs and the protection of employees in case of business transfers. Understanding the Employment Contracts Act is, therefore, fundamental to operating within the confines of the law in Finland.
The Working Hours Act
The Working Hours Act is another major piece of legislation in Finland's employment law structure. It defines the maximum hours that an employee can work, stipulates the norms for overtime work, and sets the standards for rest periods, including the minimum working hours. It also provides specific rules for night work and Sunday work. Compliance with the Working Hours Act is paramount in avoiding potential legal troubles related to overworking employees or improper payment for overtime.
Other Legal Considerations
In addition to these primary laws, other acts, such as the Act on Co-operation within Undertakings, the Act on the Protection of Privacy in Working Life, the Annual Holidays Act, and the Non-Discrimination Act, also play crucial roles in shaping the employment regulation in Finland. Moreover, collective bargaining agreements at the industry level or company level often contain provisions that exceed the minimum wage and minimum requirements provided by law. It is therefore essential to be aware of these collective agreement to avoid common HR compliance mistakes.
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Employment Contracts in Finland
In establishing an employment relationship, the terms of employment and conditions have to be agreed upon by both parties - the employer and the employee. The employment contract is the legal binding document that establishes the terms of employment in Finland. It typically states the employment contract terms such as the employee's salary, relevant employment dates, and the type of work.
Significance of a Written Contract
While Finnish law allows for verbal agreements, a written employment contract is highly encouraged. It serves as a tangible document that can be referenced in case of disagreements or disputes. A written employment contract also assures clarity on employment terms for both parties involved.
Key Components of an Employment Contract
The sample letter of agreement between employer and employee provides a general format for such employment contracts. However, every written employment contract in Finland needs to cover some crucial details:
Date of Commencement: The exact start date of the employment should be clearly indicated.
Job Description: The written employment contract should detail the tasks and responsibilities of the employee, providing a clear understanding of their role.
Place of Work: This section is especially important for remote tech talents. If employees are to work from different locations or are a part of a global distributed team, such conditions must be explicitly stated.
Probationary Period: If there is a probationary period, it must be stated in the contract. Under Finnish employment law, the maximum probationary period is six months.
Wage Details: The contract should explicitly mention the salary, along with any bonuses or benefits, the frequency of payment, and the method of payment. The Wage Guarantee Act should be taken into account when specifying the wage details to ensure that workers' rights are protected.
Regular Working Hours: Clearly indicate the regular working hours, and if there's a flexible working arrangement, specify the same. They may involve variable employment contracts.
Annual Holidays: The contract should mention the annual leave to which the employee is entitled. Under the law in Finland, these should also include provisions for family leave.
Notice Periods: Both for the employer and the employee, the periods of notice must be clearly mentioned. Under Finnish employment law, this should take into account any applicable collective agreement.
These components ensure that the contract is comprehensive and leaves no room for misinterpretation. A well-drafted contract also helps avoid potential penalties for misclassification of independent contractors, a common issue that can lead to legal troubles.
Tailoring Contracts to the Tech Industry
When hiring tech talent, it's essential to tailor the contract to the nature of the industry. For instance, remote work clauses, data security requirements, and intellectual property rights are significant considerations in tech employment contracts. Having these points in the contract, including the safe handling of personal data, will prevent any common legal troubles for global businesses, offering a more streamlined operation for your business.
Minimum Employment Terms and Conditions
The foundation of Finland's employment landscape is the set of basic terms and conditions that establish a protective environment for employees. These provisions, forming the core of employment relationships, are governed by various legal frameworks that employers must adhere to under the law in Finland.
Working Hours and Rest Periods
At the forefront of these regulations is the Working Hours Act. In a standard work agreement, the maximum regular working hours are set at 40 hours per week and 8 hours per day. Yet, the increasing prevalence of remote work in the tech sector has led to flexible working hours models, facilitating work-life balance for Finland's tech talents, including those on fixed-term contracts.
The Act also mandates rest periods - employees are entitled to a daily rest of no less than 11 consecutive hours for every 24-hour period, and a weekly rest period of 35 hours on average. Additional rest could also come from family leave entitlements.
While Finland does not have a statutory minimum wage, wages are often determined by collective agreements in various sectors. Thus, tech firms hiring in Finland must ensure that they adhere to these standards, avoiding penalties for misclassification and ensuring fair compensation. Trade unions play a crucial role in negotiating these agreements.
Healthcare and Social Security
Finland provides an extensive social security system, including health insurance. The free healthcare offered serves as a great incentive for businesses to hire and for professionals to work in the country. Employers are required to make social security contributions as per the law in Finland.
Mandatory Leaves in Finland
When it comes to work-life balance, Finland is often held up as a global standard bearer. A key aspect of this balance lies in the country's generous mandatory leave provisions, which go far beyond mere vacation time, incorporating various types of leave intended to cater to the diverse needs of workers. Understanding these leave provisions and other aspects of Finnish employment law is crucial for any company seeking to build a successful, compliant team in Finland.
Under the Annual Holidays Act, every employee in Finland has the right to annual holidays. Employees accrue 2 days of leave per each full holiday credit month during their first year of employment. After the first year, this increases to 2.5 days per month. This is particularly beneficial for tech talents who thrive on the opportunity to recharge and innovate. The law in Finland further secures this right by enforcing social security contributions from both employers and employees to ensure sustainable funding for those annual holidays.
Finnish laws provide strong protections for working parents, including maternity, paternity, and parental leave. This includes family leave provisions that go beyond many other countries. Maternity leave can start 30-50 days before the expected due date and continues for 105 weekdays after the birth. Fathers are entitled to 9 weeks of paternity leave. After maternity leave, either parent can take parental family leave, which extends up to 158 weekdays. This robust family support system is part of what makes Finland an appealing location for talent acquisition.
If an employee is unable to work due to illness or injury, they're entitled to sick leave. During this time, the employer is required to pay the worker's full salary for the first 9 weekdays of sickness after a waiting period of one day. Understanding these provisions can help companies avoid common legal troubles.
Termination of Employment in Finland
When it comes to terminating an employment contract in Finland, the laws can be quite stringent and specific. Both the employer and employee are subject to obligations that they must follow to ensure a fair and lawful termination process. Whether it is the grounds for termination, the notice period, or the severance package, each component is meticulously defined under the law in Finland.
Grounds for Termination
Under the Employment Contracts Act, the employer must have proper and weighty grounds to terminate an indefinite employment contract. These may include the employee's conduct, such as persistent neglect of duties, or a substantial decrease in the work available due to economic or production-related reasons. In such situations, trade unions often play a vital role in representing employees' interests and ensuring that the termination process is fair and complies with collective bargaining agreements.
Employers should be aware of these stipulations and ensure they have just cause for termination to avoid potential legal complications. It's also essential to document the reasons for termination accurately and thoroughly, as this may be necessary in the case of a dispute.
The length of the period depends on the duration of the employment relationship. For employment periods of less than a year, the notice period is 14 days. For periods longer than a year but less than 12 years, the it is one month. If the employment has continued for over 12 years, the notice period extends to three months. These notice periods are often a result of collective bargaining between employers and their trade union.
Severance Pay and Unemployment Benefits
In certain circumstances, such as terminations due to financial or production-related reasons, the employee might be entitled to a severance payment. Additionally, the Unemployment Security Act provides unemployment benefits to those who have lost their jobs.
Importance of Proper Classification of Employees
Misclassification of employees, such as treating employees as independent contractors, can lead to legal complications during termination. Therefore, it's crucial to classify employees correctly, as outlined in this article.
Anti-Discrimination Laws in Finland
Finland is stringent about anti-discrimination in the workplace. The country's Non-Discrimination Act prohibits discrimination based on age, origin, nationality, language, religion, belief, opinion, health, disability, sexual orientation, or any other personal characteristic.
The Non-Discrimination Act in Finland
The Finnish employment law ensures everyone is treated fairly regardless of their age, sexual orientation or any other characteristics. According to the Non-discrimination Act, it is illegal to show bias or make discriminatory actions towards employees based on their origin, nationality, disability or any other feature. The examples of Non-discrimination is as follows,
People With Disabilities' Rights
According to the Non-discrimination Act in Finland, people with disabilities are entitled to the same rights as every other person in Finland. They have the right to study, work, earn and do anything as long as it is within the ambits of the law. Also, the Act ensures that work environments must be configured to make it more accessible and safe for persons with disability to work with ease.
Gender Minorities & Sexual Rights
The Finnish law protects everyone from discriminatory practices on the basis of their sexual orientation. The law prohibits discrimination of workers based on their sexual expression or gender identity.
Promotion of Equality in the Workplace
Beyond simply preventing discrimination, Finnish law also mandates employers to actively promote equality in the workplace. This obligation includes developing an equality plan in cooperation with staff, outlining measures to promote equal treatment, and preventing discrimination. Implementing such plans can prevent common legal issues that global businesses may face when dealing with diverse workforces.
Penalties for Discrimination in Finland
the occupational safety and health authorities are responsible for ensuring or administering the necessary penalty for discriminatory practices in Finland. Typically, when an employee is found discriminating, a reprimand is first given, and more drastic punishment is administered if the employer or employer persists with discrimination practices.
The Act promotes equality, making Finland an attractive destination for hiring the next tech talent.
Data Privacy in Finland
In Finland, data privacy is primarily regulated by the General Data Protection Regulation (GDPR), supplemented by the National Data Protection Act. Employers must ensure that the collection, processing, and storage of employee data comply with these regulations. This is particularly important considering the digital nature of tech jobs, where legal and tax risks of remote employees working from abroad may come into play.
Ensure Compliance in Finland with Skuad
Staying compliant with Finland's employment laws not only enables your organization to avoid unnecessary fines and penalties but also ensures you build an efficient global remote team.
Skuad's Employer of Record platform enables organizations to compliantly hire and onboard independent contractors and employees in over 160 countries, including Finland. Skuad ensures your organization stays above legal challenges anywhere across the globe.
To learn more, schedule a demo with Skuad.
What is Finland's working hours Act?
The Working Hours Act makes provision for the standard work hours for all employees in Finland. According to the general provisions of the Working Hours Act, employees are obliged to work 40 hours per week and eight hours daily in Finland.
Can Americans live and work in Finland?
Yes, Americans can live and work in Finland, provided they have a residence permit and a job in Finland.