Are you considering expanding your business to Finland? With its vibrant economy and skilled workforce, Finland offers promising opportunities for foreign employers. However, navigating the complexities of Finnish employment regulations can be tricky. This blog will help you to walk through the steps to successfully hire employees in Finland by registering as a foreign employer (see previous blog about setting up a legal entity vs. registering as a foreign employer).
Before diving into the registration process, it is essential to grasp the fundamentals of Finnish employment law. In Finland, all employers, regardless of their legal status, must adhere to certain regulations concerning employment contracts, working conditions, and taxation. Make sure that you understand the procedure or appoint someone who will help you throughout the process.
You will subsequently need to appoint a representative who resides in Finland. This individual will serve as your point of contact for official communications and legal matters related to your employees.
Registering with Relevant Authorities
Acquiring a tax number, or Y-tunnus, from the Finnish Tax Administration is the initial step. This unique identifier is indispensable for tax reporting and administrative tasks.
Subsequently, registration with Kela (Kansaneläkelaitos), Finland’s social insurance institution, is imperative. This step guarantees coverage for your employees under Finland’s social security system, encompassing healthcare and other benefits including employment pension insurance, accident insurance, group life insurance, unemployment insurance contribution, and social insurance premium.
In Finland, hiring new employees starts with a trip to the Department of Social Insurances at the Ministry of Labour and Social Insurances. Employers fill out a registration form detailing the new employee’s personal information and duties. Once submitted, the Department reviews the form and notifies the employer of the employment’s approval or denial.
Compliance with Employment Laws
Fulfilling employer obligations is mandatory and adherence to Finnish employment laws, encompassing minimum wage standards, working hours regulations, and employee rights, is crucial.
In Finland, although there are no strict guidelines for the format of employment contracts, it’s standard procedure to have them documented in writing. However, it’s crucial to include essential employment terms, such as the contract duration, probation period, applicable collective agreement, salary, working hours, and notice period.
Tax Withholding Obligations
As an employer in Finland, withholding taxes from employee wages is obligatory. Registration for tax withholding ensures compliance with Finnish tax regulations and fulfils your obligations effectively.
Efficient Market Entry
Registering as a foreign employer offers a gateway to the Finnish market without prolonged commitments. This approach enables insights into market dynamics before considering extensive expansion plans and it is a viable option for market entry. By adhering to outlined steps and ensuring compliance with Finnish employment regulations, successful employee recruitment becomes feasible.
Professional guidance is recommended to navigate complexities and optimize your venture in Finland. Internago stands as your trusted partner, facilitating market entry and offering comprehensive international and local payroll, along with bookkeeping services.
Interested in learning more? Please visit Internago or our Payroll Portal. For further inquiries, contact us at info@internago.com