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The labour market in Finland

Each labour market has some peculiarities. It may be tricky for foreigners to fully understand the payment methods, the taxes and other benefits related to them. In TalentUp, we are starting a series of different blog articles, one for each country. This article analyses the labour market in Finland.

General data about the Finnish labour market

Finnish minimum wage and maximum working hours disclosure. Data for January 2024. Source: https://www.papayaglobal.com/countrypedia/country/finland/

Payroll taxes in Finland

Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.

Share of contingencies applied to the gross salary. Data source: https://www.papayaglobal.com/countrypedia/country/finland/

Once contributions are paid, employees need to pay an income tax that varies depending on their gross salaries. 

Contingencies from self-employees

If you are self-employed, you pay personal income tax. The amount of tax you pay will be based on your business income.

Example of net salary in Finland

As a reference, we use the average salary of a software engineer. In Finland, on average, software engineers earn 65,300€ annually.

From gross to net salary of a software engineer in Finland.

The employer contributes 18,022.80€ to social security, and the employee contributes 6,928.33€.

After paying the income tax, the employee has a net salary of 52,462.94€, coming from a gross salary of 65,300€.

Unemployment regulation in Finland

If the employer terminates the contract, the notice period is as follows:

Notice periods in Finnish contracts. Data source: https://www.papayaglobal.com/countrypedia/country/finland/

If the employee terminates the contract, it is 14 days’ notice if they have been employed for less than 5 years and 1 month after that.

There is no statutory severance pay in Finland, and the probationary period cannot exceed 6 months.

Different kinds of leaves in Finland

Annual leave is calculated from April 1 to March 31, and vacation is typically taken between May 2 and September 30. 

Employees have 30 working days of vacation annually. Upon completing 15 years of service, the annual leave entitlement increases to 36 days. 

During vacation, Saturday is considered a working day, even if the employee does not usually work on Saturdays.

At least two weeks of the annual holiday must be taken as an uninterrupted period; however, the employer and the employee may agree on taking the holiday outside the holiday seasons, and they may also convert part of the holiday into shorter working hours.

If the holiday is longer than 6 days, it should be paid before the start of the holiday.

There are 10 public holidays.

Usually, sick leave is paid by the employer for 4 weeks. However, after the first 10 days, the salary is reduced to half of it.

Paid parental leave

Generally, family leave (maternity, paternity or parental) is unpaid, but this is stipulated within the employment contract or collective agreement.

A pregnant employee is entitled to 105 days of maternity leave. Working is allowed during maternity leave if it can occur without endangering the safety of the mother, fetus, or child. However, the mother cannot work while on maternity leave, two weeks before the due date and two weeks after giving birth.

Paternity leave lasts for 54 days, but only 18 can be taken at the same time as the mother. And it should be taken only if the kid is under 2 years old.

Parental leave may be taken part-time, reducing the working hours and the pay accordingly.

Other common Finnish benefits

Top 5 benefits offered by Finnish companies. Datasource: TalentUp’s database.

How to employ a Finnish worker

If you want to employ an individual in Finland, you should establish your own new legal entity for banking, accounting and payroll services in Finland.