PEO & EOR services in Finland
Finland offers a diverse range of PEO/EOR employment opportunities, attracting both domestic and international talent to contribute to its thriving workforce.
PEO/EOR employment contracts in Finland
In Finland PEO/EOR employment, there are two common employment contracts: indefinite (permanent) contracts and fixed-term (limited) contracts. Both contracts can either be part-time or full-time. Contracts could be made orally, in written form or digitally. The most common one is the indefinite contract, which can be terminated only when either one of the two parties serves notice.
A temporary contract, also called a fixed-term contract, can be terminated only if previously agreed on by both the employee and the employer. If the employer cannot determine any fixed-term purposes, the employment contract is then considered to be an open-ended contract.
Additionally, in Finland, there is the option of a trial period. This period starts at the beginning of the employment relationship, and the length of it has to be previously decided by both parties and stated in the contract. The trial period cannot exceed four months, and it cannot be extended. For fixed-term contracts of a length of less than eight months, the trial period must not exceed half of the duration of the employment relationship.
PEO/EOR employment termination and notice period in Finland
As aforementioned above, in Finland, a temporary employment contract can only be terminated if previously agreed on or for misconduct from the employee side. Permanent contracts can be dismissed for gross misconduct (dishonesty, gross negligence, malicious damage, theft, serious breach of an organization’s policies, fraud, and physical violence). In this case, the work and the wages will be immediately stopped.
Another reason for dismissal is for neglect of duty (if he or she intentionally, knowingly, or deliberately fails to perform or perform work in a grossly negligent manner). In this case, the employer must inform the employee before terminating the employment contract as well as giving a warning and an opportunity to improve.
Additionally, an employee can resign, and he or she must inform the employer. The employee can also decide not to give a reason for the resignation of the contract and he or she must continue to work during the period of notice and will be paid as usual. The notice period varies if it comes from the PEO/EOR employer in Finland or the employee, and it works as follows:
When an employee resigns:
- 14 days if the employment has continued for no longer than five years,
- 1 month if the employment has continued for longer than 5 years.
When an employer dismisses the employee:
- 14 days if the employment has continued for no longer than one year,
- 1 month if the employment has continued for between 1 and 4 years,
- 2 months if the employment has continued for between 4 and 8 years,
- 4 months if the employment has continued for between 8 and 12 years,
- 6 months if the employment has continued for longer than 12 years.
Finland PEO/EOR employment: Salary, employer costs and working hours
In 2022, the average annual wage in Finland was $42.959,28. This is lower than the average annual wage in the United States: $53.490,00.
As a PEO/EOR employer in Finland, the actual employer costs are 21.25% higher than the gross annual salary, as we have seen in the social contribution. Based on $42.959,28 annual salary, the employment costs would be $51.980,73.
In Finland, the working hours per week are usually 37.5, which amounts to 7.5 hours per day. The working hours cannot exceed 40 hours per week and 8 hours per day. The usual working day starts at 8 am and finishes at 5 pm with one hour of lunch break.
Finland sets its standards pretty high when it comes to work-life balance, and family time is very important for Finnish people. Additionally, working overtime is quite common, any working hours after 40 hours per week have to be paid at a minimum of 150% of the normal hourly salary.
Paid vacation leave and public holidays in Finland EOR/PEO employment
In Finland, the annual leave is calculated from April 1 to March 31. Employees earn 2 vacation days per month in a fixed-term contract and 2.5 days per month in a permanent contract. If the employee works at the company longer than a year, the holiday entitlement in Finland is 4 weeks (20 days). Upon completing 15 years of service, the annual leave entitlement increases to 3 days per month.
In Finland, there are 11 paid public holidays. Those holidays are:
- New Year's Day – 1 January
- Epiphany – 6 January
- Good Friday – 15 April
- Easter Monday – 18 April
- May Day – 1 May
- Ascension Day – 26 May
- Midsummer's Eve – 24 June
- Independence Day – 6 December
- Christmas Eve – 24 December
- Christmas Day – 25 December
- Boxing Day – 26 December
Maternity and paternity leave through PEO/EOR Finland
In Finland, maternity leave lasts 105 working days. It usually starts 30 working days before the expected birth of the child, and it continues after the birth. It is possible to go on maternity leave more than 30 days before the expected birth but no more than 50 days in advance.
On the other hand, fathers have 54 working days of paternity leave. They can take up to 18 days of paternity leave while the mother is on maternity leave and the remaining days after the mother is back to work. The remaining days have to be used before the child turns two years old.
Find out everything you need to know about maternity leave in other European countries.
Social Security tax for Finland EOR/PEO employers
What are the primary social security contributions in Finland? And more importantly, what is the amount of the social security contribution that is accounted to the Finland PEO/EOR employer?
The total primary contribution in Finland for the employer is from 27.69% to 29.24% and 11.86% for the employee.
Social contribution in Finland includes:
- Employer’s health insurance contribution: 1.34% ;
- Employer’s pension insurance contribution: 25.85% ;
- Employer’s unemployment insurance contribution: 0.50% for the first EUR 2,169,000 of gross salaries and 1.9% for the portion of the gross salaries exceeding EUR 2,169,000 (no cap), only for employees between 17 and 64 years old;
- Group life insurance premium: 0.07% (on average, no cap);
- Accident insurance premium: 0.8% (on average, no cap).
To learn more about the social security tax in Europe, we invite you to read this article on Social Security Tax Rates for Employers Across Europe.
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CCO & VP of HR Outsourcing