Payroll in Finland

Mercans stands as your premier provider for top-tier payroll services in Finland, both Managed and SaaS, tailored specifically for the Finnish market. Our steadfast commitment to delivering exceptional payroll solutions is evident in our years of industry expertise, ensuring accurate and compliant payroll processing. Rely on Mercans as your payroll provider in Finland, for timely and precise payroll transactions, complete with the convenience of multi-currency payments, all supported by our dedicated team of local payroll specialists well-versed in Finnish regulations, providing comprehensive support for a seamless payroll experience aligned with your business requirements.

Everything you need to know before running payroll in Finland

Payroll Cycle, Working Hours and Overtime

Payroll Cycle 

In Finland, payroll is typically processed on a monthly basis, with salaries usually disbursed on the final day of each month.

Working Hours

In Finland, the standard working hours typically range from Monday to Friday, totaling around 8 hours per day or 40 hours per week. However, specific working hours may vary depending on the industry, employer policies, and collective bargaining agreements. Additionally, Finland has regulations regarding rest breaks and maximum working hours to ensure employee well-being and compliance with labor laws.

Overtime 

In Finland, overtime is regulated by the Working Hours Act, which stipulates that normal working hours should not exceed eight hours a day or 40 hours a week. Employees can work additional hours, but there are limits: a maximum of 138 overtime hours in a four-month period and 250 hours in a calendar year. Overtime pay is typically 50% for the first two hours and 100% thereafter, with additional provisions for weekly overtime. Payment can also be converted into time off if agreed upon. However, the Working Hours Act doesn’t apply to managers or employees working from home. Collective bargaining agreements may further regulate overtime, and there are statutory rest period requirements, including breaks and weekly rest, with some flexibility allowed based on agreements and exceptions for certain sectors and age groups.

Minimum Wages and 13th Month Salary

Minimum Wages

In Finland, there is no legally mandated minimum wage. However, to provide an understanding of wage levels, as of the second quarter of 2023, the average monthly wage is approximately 3,883 EUR, with high-skilled workers earning around 4,250 EUR per month and low-skilled workers earning about 1,980 EUR per month (all values converted from USD). It’s important to note that these figures are indicative and may vary across different sectors and regions.

13th Salary

There is no legal obligation to provide a 13th or 14th-month salary. However, it is a common practice to offer holiday bonuses, typically amounting to 50% of the holiday pay when provided.

Company Formation in Finland

• Choose a name for the company. To secure exclusive rights to the name, the founder(s) must submit it to the Trade Register maintained by the Finnish Patent and Registration Office (PRH).
• Opening a bank account is essential for the company to pay share capital, process payment transactions, and support accounting operations.
• Submit a start of the business notification. Establishing and registering a business involves filing a notification with the Trade Register and various Tax Administration registers. This can be completed using a single form (“Y form”).
• A limited liability company can be established online through the Business Information System online service. The founder(s) can also set up a workspace at My Enterprise Finland. These online services require logging in with your online banking credentials.

Payroll Taxes

Social Security in Finland

For employees taxed under the foreign expert tax regime, the Sickness Insurance premium is included in a flat 32% tax rate. These contributions are sent to the relevant insurance companies by the employer. However, employees’ Pension Insurance contributions are payable.

Personal Income Tax in Finland

In Finland, the 2024 budget proposal outlines adjustments to individual income tax brackets and rates aimed at easing the tax burden on labor and low- to middle-income earners. The revised state income tax brackets are structured as follows:

• Up to EUR 20,500: 12.64%
• Over EUR 20,500 up to 30,500: 19.0%
• Over EUR 30,500 up to 50,400: 30.25%
• Over EUR 50,400 up to 88,200: 34.0%
• Over EUR 88,200 up to 150,000: 42.0%
• Over EUR 150,000: 44%

Additionally, changes include raising the maximum amounts and income limits for deductions such as the basic deduction and work income deduction. Other tax adjustments encompass modifications to alcohol tax, tobacco tax, basic vehicle tax, and excise duty on motor fuels.

Payroll Compliance in Finland

In Finland, employers are obligated to submit the following statutory filings. Mercans assists you in completing the necessary filings as per the Finnish local laws.

Statutory Filings & Contributions

Employee Benefits in Finland

Employee benefits in Finland can be broadly categorized into mandatory benefits and supplementary benefits.

Mandatory Employee Benefits

• Compulsory Health Insurance (CHI): Financed by taxation, CHI covers all citizens.
• Mandatory Accident Insurance: Provides coverage for accidents occurring during working hours.
• Employment Pension Insurance (TyEL): Offered by employers through a TyEL insurance contract, providing earnings-related benefits.
• Unemployment Fund: Entitles unemployed individuals to an allowance for 300 days.
• Occupational Health Coverage: Employers are obligated to provide professional-level occupational health services to prevent work-related health risks.
• Statutory Leaves and Allowances: Including annual leave, sick leave, maternity, parental leave, and childbirth allowance.
• Additional Days Off: Mandated by labor law, granted for work on weekends or public holidays.

Supplementary Employee Benefits

• Group Life and Disability Insurance: Offers financial protection to employees’ dependents in case of death, typically ranging from 2-4 times the base salary.
• Group Travel Insurance: Covers both business and leisure travel for employees.
• Group Medical & Dental Insurance: Provides comprehensive medical coverage, including EAP services, telemedicine, and dental care.
• Supplemental Pension: Contributions vary but generally range between 5-25% of an employee’s base salary, with various structures available.
• Supplemental Accident Insurance: Extends coverage to leisure time and remote work situations.

Common Perks

• Mobile Phones: Provided by around 97% of multinational companies.
• Meal Vouchers: Given by over 75% of multinational companies, with a typical monthly value of €12.70 per working day.
• Workplace Canteens: Found in large employers, offering catered lunches.
• Well-being and Sports Allowance: Tax-free benefit for gym memberships and other wellness activities.
• Company Cars: Provided to executives or employees requiring extensive travel for work.
• Bonus: Incentive pay provided by 80% of employers, with holiday bonuses comprising 50% of salary.
• Stock Purchase Plans and Options: Offered by a significant percentage of employers, especially for senior executives.

Additionally, employers may establish personnel funds tied to employees’ salaries, accessible through loans and withdrawals upon exiting the company.

Leave Entitlements in Finland

Paid Time Off (PTO) in Finland

Vacation Quota (Annual Leave)

In Finland, employees are entitled to 5 weeks of paid vacation annually, typically consisting of 4 weeks during the summer and 1 week in the winter.

Employees accrue paid vacation at a rate of 2.5 days per month, totaling 25 days annually. Saturdays are considered workdays, adding up to 30 days of paid vacation in practice.

Additionally, employees have 13 days off for public holidays.

• Eligibility: Vacation entitlement depends on the number of working days or hours and is determined by regulations such as the 14-day, 35-hour, or leave entitlement rules.
• Accrual Rate: Employees accrue vacation days at a rate of 2.5 days per month for those working 35 hours or 14 days monthly.
• Taking a Leave: Vacations, mainly taken from May 2 to September 30, are determined by the employer but can be agreed upon with the employee.
• Carry Over: Employees can carry over unused vacation, typically one week, with employers needing justifiable reasons to deny the transfer.
• Payout: Vacation pay equals 100% of regular earnings, provided before leave begins. Employees may also receive a vacation bonus, typically 50% of standard pay.
• Payment of Unused Vacation on Termination: Unused vacation days are paid out based on the same rules as vacation pay calculations.
• Sick Leave in Finland: Employees in Finland have unlimited sick leave, with up to 300 working days paid.
  Initially, employers pay for the first 9 days of sick leave, after which the government provides sickness allowance through Kela, Finland’s social insurance agency. The sickness allowance covers up to 300 working days, calculated based on the employee’s yearly earnings.

Maternity and Paternity Leave

• Pregnancy Leave: Lasting 40 working days, pregnancy leave starts approximately 30 weekdays before the estimated delivery date.
• Parental Leave: Both parents are entitled to 160 days of parental leave each, totaling 320 working days, typically taken in alternating periods.
• Child Care Leave: Employees can take two periods of child care leave until the child turns 3, with the option for partial child care leave with reduced working hours.

Benefits of Payroll Outsourcing in Finland

• Compliance with Complex Regulations: Outsourcing payroll services in Finland ensures meticulous adherence to intricate labor laws and regulations. Expert professionals adeptly navigate these complexities, minimizing the risk of errors or penalties due to non-compliance, providing peace of mind for businesses.
• Scalability and Flexibility: Payroll outsourcing offers unparalleled scalability and flexibility to meet the evolving needs of businesses. Whether expanding its workforce or adapting to changes in employment regulations, outsourcing providers seamlessly adjust their services to meet these demands.

• Access to Advanced Technologies and Expertise: Leveraging cutting-edge software solutions, outsourcing providers streamline processes, enhance data security, and improve efficiency in payroll management. Additionally, professionals possess extensive knowledge of tax regulations, deductions, and reporting requirements, ensuring accurate and timely processing.

• Cost Savings and Competitive Pricing: Outsourcing payroll leads to significant cost savings by eliminating the need to hire and train in-house staff. Furthermore, providers often offer competitive pricing models tailored to the specific needs of businesses, optimizing cost-effectiveness while maintaining quality service.
• Supporting Business Growth: Overall, outsourcing payroll services in Finland enables businesses to focus on core objectives while benefiting from accurate, compliant, and cost-effective management. With specialized expertise, advanced technologies, and scalability, providers play a crucial role in supporting the growth and success of businesses.
• High Safety Standards: Incorporating industry-leading security measures to safeguard sensitive data, along with ISO 27001 and ISAE3402 certifications, ensures stringent adherence to information security protocols.
• Adequate and Sustainable Performance: Ensuring consistent and sustainable performance that meets the dynamic demands of payroll services.
• Flexibility and Scalability: Offering flexibility and scalability to accommodate evolving client needs and adapt to changing business environments.
• Collaborative Cloud Tool: Utilizing a Cloud-based platform that facilitates collaborative work, promoting efficiency and accessibility across teams. These certifications signify a commitment to the highest standards of information security and operational integrity.

Payroll Solutions in Finland

Unlock the potential of seamless payroll processing in Finland with Mercans’ Global Payroll Solutions. Our adaptable models guarantee local compliance, facilitate multi-currency transactions, and integrate seamlessly with global Human Capital Management (HCM) and Enterprise Resource Planning (ERP) systems. Ensuring accurate payments has never been easier.

Discover Our Versatile Models:

• SaaS (Software as a Service): Customized for enterprise businesses managing payroll across multiple countries with intricate complexities stemming from diverse data points, locations, currencies, and languages. Our SaaS model optimizes operations for maximum efficiency.
• Managed Services: Tailored for mid-sized and large enterprise businesses, our Managed Services model addresses the needs of those handling multi-country payroll. It delivers on-demand HR expertise, ensuring security, reliability, and compliance at every step.
• HRMS (Human Resource Management System): Ideal for mid to large businesses in expansion mode, our HRMS model provides a comprehensive suite of functionalities, including payroll and benefits. Companies can choose the specific features they require, ensuring a personalized and effective solution.

Streamline Payroll with Mercans’ Technology and Integrations

• Technology: Explore the forefront of innovation with Mercans’ cutting-edge technology that powers our global payroll solutions. Learn more about our technological prowess here
• Integrations: Seamlessly integrate your Human Capital Management (HCM) systems with Mercans’ solutions, enhancing efficiency and connectivity. Discover the power of integrationhere.
• Recognitions: Join a partner recognized for excellence. Mercans has earned accolades for its commitment to delivering exceptional payroll services. Explore our awards and recognitions here.