Introduction to Payroll in Finland
If you’re planning on hiring a remote employee in Finland, you need to carefully consider the local labor laws to ensure that your payments are timely, accurate, and compliant.
With in-country expertise and support, Skuad, a trusted Finland payroll company, can keep track of:
- Holiday leave
- Finland payroll taxes
- Other Finland payroll requirements
If you are building a remote team in Finland, you can get help from Skuad to stay fully compliant with local labor laws and tax legislation
Payroll Process in Finland
The payroll process in Finland includes three main phases: pre-payroll, payroll calculations, and post-payroll.
During the pre-payroll period, you’ll gather documentation, communicate policies, and get ready to pay employees while staying compliant with all laws.
Setting up the organization
Set policies in place, such as leave policies, pay frequency, and attendance. Make sure all of your employees are on board.
Your company should have a registered business number which will be needed to send out things like tax forms and payslips.
Requirements can differ locally or regionally within Finland. If you’re based all over the country, each workplace can have its own policies.
Let all your employees know about your leave policies. Employees are legally entitled to some categories of leave in Finland, including parental leave, sick leave, and paid holidays.
Document timesheets, doctor’s notices for sick leave, and supervisor permission for requested time off. Biometric devices can help keep track of hours worked.
Account for everything you need to pay or provide your employees by law.
A payroll provider in Finland such as Skuad can ensure compliance with Finland’s labor laws.
The payroll frequency in Finland is monthly, usually paid on the last day of the month.
Collect and record employee information such as their department and job titles.
Payroll calculation phase
The main component of the process is the Finland payroll calculation phase. Data from the pre-payroll phase is input into a system to calculate each employee's paycheck, resulting in the salary paid after deductions, withholding, and taxes. Partnering with a payroll provider in Finland with an automated system can make this process easier.
The post-payroll phase is when employees are paid. After all payroll calculations are made and are complete, send your bank advice to your corporate bank for salary disbursements.
Payroll is an important and large expense. Balance the accounts and keep track of total payroll funds spent after payments have been sent out.
Payroll reporting and compliance
Deductions such as employee and employer contributions to social security are withdrawn and remitted to government agencies by their respective due dates. To ensure full compliance with laws and that your payroll is taken care of, get a Skuad demo today.
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Payroll Processing in Finland
If you’re looking to payroll outsource in Finland, contact Skuad to access our services and make payroll processing easier for you.
Payroll Processing Company in Finland
Skuad makes it easier to set up payroll in Finland so your company can expand and you can concentrate on growing. Contact us today to get started.
Payroll Management in Finland
Payroll management means keeping accurate financial records for payroll, paying employees, generating payslips, and obeying labor laws. A payroll provider in Finland like Skuad can automate payroll to ensure timely payment to employees.
Payroll Compliance in Finland
Part of the process of managing payroll is making sure you are compliant with labor laws and benefits regulations such as taxes, leave entitlements, and other laws. If you partner with a payroll company in Finland like Skuad, all of the compliance is taken care of.
Payroll Components in Finland
If you partner with payroll outsourcing in Finland, you can be sure all of the following components will be handled by one of the Finland payroll providers:
Finland has no national minimum wage but requires employers to pay a minimum wage agreed upon in collective agreements.
The working week in Finland is generally no more than 48 hours and eight hours per day.
All hours worked above and beyond the normal working hours are counted as overtime, regulated by the mutually-agreed employment contract and collective bargaining. It is paid as 150% of the regular salary for the first two hours of overtime, and 200% of the regular salary beyond that. Overtime cannot exceed 138 hours over four months and 250 hours per year.
Employers and employees must pay for pension, health insurance, and unemployment insurance.
Employers must pay:
- 25.85% for pension
- 1.34% for health insurance
- 0.5% for unemployment for salaries up to 2,197,000 Euros annually and 2.05% for the part of the salary above that.
Employees must pay:
- 7.15% for pensions if they are under age 53 and 8.65% if they are age 53 to 62
- 1.71% for health insurance
- 1.4% for unemployment insurance.
If an employee has worked at least one month at a firm, they are entitled to 10 days paid sick leave at full pay paid by the employer, not counting public holidays. After 10 days the employee is paid 50% of their salary by social insurance.
Unpaid study leave is allowed for employees who have worked for a company for at least a year. This leave can last a maximum of two years out of a period of five years. Five days of study leave is allowed for employees who have worked between three months and one year at a company.
Job alteration leave is allowed for employees who have worked at least 20 years and are under 60 years old. It allows them to take a leave of absence of 100 to 180 days in a year. This is paid by the unemployment fund of the Social Insurance Institution.
Family leave in Finland is maternity leave, paternity leave, parental leave, and childcare leave.
The pay for maternity leave is stipulated by the employment contract but is usually unpaid. Pregnant employees are entitled to 105 days of maternity leave. Mothers cannot work for the two weeks before and after childbirth. If the child is born prematurely, maternity starts the working day following the birth.
Paternity leave is up to 54 days. A father can stay at home with the mother at the same time for up to 18 days and can take the other 36 days at different times but leave must be taken before the child has reached two years of age.
Parental leave is 158 days, which can be taken at different leave periods of at least 12 days and a maximum of two leave periods. It can be taken part-time with reduced pay for at least two months.
Parents can take childcare leave, which is unpaid time off to take care of their adopted children until two years after adoption or until the child goes to school. This leave is paid by the Social Insurance Institution.
There are 11 public holidays in a year in Finland for which employees must be given paid time off. If an employee must work on a holiday, they are to be paid double pay. Employees working on a weekend are paid double their regular salary.
Employees earn 2.5 days of vacation time per month worked up to one year of employment. After one year of employment, vacation time is four weeks out of a year. When an employee has worked for 15 years at a company, vacation time is increased to three days a month. Vacations are usually taken between May 2 and September 30. Finland has 11 public holidays for which employees must be paid and take off.
Public holidays in Finland:
- New Year’s Day
- Good Friday
- Easter Monday
- May Day
- Ascension Day
- Whit Sunday
- All Saints Day
- Independence Day
- Christmas Day
- Boxing Day
Payroll taxes in Finland
Taxes are a big part of payroll costs in Finland. The Finland corporate tax rate is a flat tax rate of 20%.
For employees, the income tax rate in Finland is a progressive rate based on brackets of income.
Annual earnings/Tax Rate:
- €0 to €15,200: 0.00%
- €15,200 to €22,600: 6.50%
- €22,600 to €36,800: 17.50%
- €36,800 to €66,400: 21.50%
- €66,400 and up: 30.00%
A probation period cannot exceed six months. Employment contracts can stipulate a notice of termination period of no longer than six months.
The notice period may change depending on the reason for dismissal and length of service with the company:
- 14 days’ notice - one year of employment.
- One month’s notice – one to four years of employment.
- Two months’ notice – four to eight years of employment.
- Four months’ notice – eight to 12 years of employment.
- Six months’ notice – over 12 years of employment.
Using a payroll company in Finland can help you with all of these payroll components.
Paying independent contractors and employees in Finland can be easy with the right management system. If you are ready to hire someone and pay them with one-click payroll services in Finland, stay compliant, and save time and money, contact Skuad and ask for a demo today.
Note about the current currency exchange rate: as of May 2022, 1 Euro is U.S. $1.07.