Hire employees in Finland
What a foreign company needs to know before employing people in Finland: why the sector collective agreement sets your pay floor, whether you need a local entity, what an employee costs once pension, insurance and the holiday bonus are added, and how the 2026 reforms changed dismissal and fixed-term hiring. Written for CHROs, CFOs, General Counsel and founders.
Quick answers
The questions leadership teams ask first.
Do I need a local entity in Finland to hire?
No. There are three routes:
- Employer of Record. Dryft Global employs the person in Finland, applies the right collective agreement, arranges pension, accident and group life insurance and occupational health care, and reports every payment to the Incomes Register. You direct the work.
- Direct local entity. You register a limited company (Oy), then the Employer Register, pension insurance and payroll: one to three months before the first payroll.
- Independent contractor. Lawful only for genuinely independent work. Finland's light entrepreneurs who work like employees create retroactive contribution and tax exposure for the client.
When should I use an EOR instead of registering locally?
Use an EOR for your first engineers, researchers or sales staff in Finland, when you want to start in days and do not want to build the collective agreement, insurance and Incomes Register set-up yourself. Your own entity earns its keep for a sustained team, a sales office signing Finnish contracts, or access to Business Finland funding.
What does an employee actually cost beyond salary?
Statutory employer contributions come to about 20% to 21%: earnings-related pension (TyEL) at about 17.1%, health insurance at 1.91%, unemployment at 0.31% and accident and group life insurance at about 0.6%. Almost every collective agreement adds a holiday bonus of 50% of holiday pay, so the all-in figure is about 26% above base salary.
How difficult is termination in Finland?
Easier than it was. Since 1 January 2026, dismissal on personal grounds needs a "proper reason" rather than a "proper and weighty reason", usually after a written warning. Redundancy still needs a substantial and permanent reduction of work. Notice runs from 14 days to 6 months by tenure. There is no statutory severance, but unlawful dismissal costs 3 to 24 months' pay.
Can Dryft Global legally employ my team in Finland?
Yes. Dryft Global acts as the legal employer in Finland. We issue contracts that name the applicable collective agreement, collect tax cards, arrange TyEL, accident, group life and occupational health cover, report to the Incomes Register within five days of each payment, pay the holiday bonus, and manage notice and dismissal under the 2026 rules.
Hiring routes compared
Speed, set-up burden and liability differ by route.
| Factor | Direct local entity | Dryft Global EOR | Independent contractor |
|---|---|---|---|
| Time to first payroll | 1 to 3 months | Days to 2 weeks | Days |
| Local entity required | Yes, Oy or branch | No | No |
| Pension and insurance set-up | Your TyEL and insurer contracts | Handled by Dryft Global | Contractor's own |
| Collective agreement | You identify and apply it | Dryft applies it | Not applicable |
| Statutory liability | Direct corporate exposure | Assumed by Dryft Global | High if reclassified |
| Best fit | Sustained team, local sales | First hires, R&D teams | Short independent projects |
What an employee costs in Finland
Finland's employer cost is dominated by the earnings-related pension, set by the pension insurers each year, plus the holiday bonus that collective agreements add. The model below is a Helsinki software engineer on EUR 5,000 a month in 2026.
| Component | Employer share | Notes |
|---|---|---|
| TyEL earnings-related pension | ~17.10% | Average 2026; employee pays 7.30% on top |
| Employer health insurance | 1.91% | Paid to Vero with withholdings |
| Unemployment insurance | 0.31% | 1.23% on payroll above EUR 2.5 million |
| Accident insurance | ~0.58% | Office work; priced by risk class |
| Group life insurance | ~0.06% | Required by collective agreements |
| Statutory subtotal | ~20% to 21% | Above gross wages |
| Holiday bonus (lomaraha) | ~5% | 50% of holiday pay, near-universal |
| Occupational health and extras | ~0.3% to 1% | Mandatory preventive care plus common extensions |
| Total employer on-cost | ~26% | Above base salary |
For an employee on EUR 5,000 a month, budget roughly EUR 75,600 a year all-in before the EOR fee, about 26% over base. The employee's own deductions are 9.07% of gross for pension, unemployment and daily allowance, before income tax. Ask us for a cost model with current rates applied.
Payroll and tax
Salaries are paid monthly in euros. Every payment is reported to the Incomes Register within five days of the pay date, the employer's separate report is due by the 5th of the following month, and withheld tax and the employer health contribution are paid by the 12th. Pension, unemployment and accident insurance are invoiced by the insurers from Incomes Register data. Regular employers must join the Employer Register.
Tax card withholding
Each employee gives you a tax card (verokortti) showing a personal withholding percentage that combines progressive state tax (12.64% rising to 37.5% above EUR 52,100), municipal tax averaging 7.57% and, for church members, church tax. Without a tax card you withhold at 60%. Qualifying foreign experts earning at least EUR 5,800 a month can be taxed at a flat 25% for up to 84 months under the key employee regime.
No statutory minimum wage
Finland has no national minimum wage. Pay floors come from sector collective agreements, and you must apply the generally binding agreement for your main line of business even if you are not in an employers' association. Agreements also set annual increases: the ICT agreement added 2.9% from 1 July 2026. Many senior professionals fall under agreements without pay tables, but the holiday bonus and sick pay terms usually still apply.
Leave and mandatory benefits
- Annual holiday. 2 weekdays a month in the first year and 2.5 a month after that, so a full year earns 30 weekdays (Saturdays count): 24 summer days and 6 winter days. Salary continues during holiday.
- Holiday bonus. 50% of holiday pay under virtually every collective agreement, paid around the summer holiday.
- Public holidays. 13 a year, plus Midsummer Eve and Christmas Eve as customary days off.
- Sick pay. Full pay for the day of falling ill and the next nine working days, then Kela pays a sickness allowance. Collective agreements often extend full pay to between 28 days and three months.
- Family leave. 160 working days of parental leave per parent (up to 63 transferable) plus pregnancy leave, paid by Kela. Agreements often add employer pay for the first weeks.
- Occupational health care. Mandatory preventive care for all employees, partly reimbursed by Kela; most employers extend it to general medical care.
- Working time. 8 hours a day and 40 a week, often 37.5 under agreements. Overtime pays 50% for the first two daily hours, 100% after, and 50% for weekly overtime.
- Common extras. Lunch, sports and culture benefits, which are tax-efficient and expected in tech roles.
Termination and notice periods
Probation can last up to six months. After that, the statutory notice an employer must give depends on tenure, unless the collective agreement or contract sets different periods.
| Length of employment | Employer notice |
|---|---|
| Up to 1 year | 14 days |
| 1 to 4 years | 1 month |
| 4 to 8 years | 2 months |
| 8 to 12 years | 4 months |
| Over 12 years | 6 months |
- Lower threshold for personal grounds. Since January 2026 a "proper reason" is enough, such as ignoring instructions, neglect or unjustified absence, usually after a written warning. Some collective agreements keep the old stricter test.
- Redundancy is unchanged. Work must have diminished substantially and permanently, and you must offer any other suitable work.
- Co-operation duties scale with size. Full change negotiations apply at 50 or more employees; 20 to 49 have lighter duties; under 20 have none.
- No statutory severance. Unlawful dismissal costs 3 to 24 months' pay. A negotiated termination agreement is the common clean exit.
- Re-employment duty. Since June 2026 the duty to re-offer work after redundancy applies only to employers with 50 or more employees.
Can I use independent contractors?
Only for genuinely independent work. Finland has many light entrepreneurs who invoice through billing services, but the billing service is not their employer and the classification turns on how the work is done: someone working personally, under your direction and supervision, for pay, is an employee. Getting it wrong means retroactive pension and unemployment contributions, the employer health contribution, withholding liability, tax increases and collective agreement claims including holiday compensation. Clients using staffing suppliers must also run the Contractor's Obligations Act checks. For anyone who works like an employee, an EOR is the compliant route.
The legal framework in brief
Finland is a civil law Nordic system where statute sets the frame and collective agreements set most practical terms. The instruments you will hear most:
- Employment Contracts Act 55/2001. Written terms, probation, fixed-term rules (first contracts up to a year without justification from June 2026), sick pay, notice and dismissal.
- Working Hours Act 872/2019 and Annual Holidays Act 162/2005. Hours, overtime, rest and holiday accrual.
- Co-operation Act 1333/2021. Change negotiations, scaled by employer size since July 2025.
- Collective agreements. Generally binding agreements set pay floors, the holiday bonus and sick pay length, and bind every employer in the sector.
- Pension and social insurance. TyEL pension, unemployment, accident and health insurance, all reported through the Incomes Register.
- Data protection. GDPR, the Data Protection Act 1050/2018 and the Act on the Protection of Privacy in Working Life, which limits employee data to what is directly necessary and regulates monitoring, drug testing and email.
- Immigration and right to work. EU nationals work freely. Others use the employed person permit (EUR 1,600 a month minimum), the Specialist permit or EU Blue Card (EUR 3,937), with a 14-day fast track for specialists and managers.
- Authorities. Vero, the Incomes Register, the pension insurers, the Employment Fund, Kela and Migri.
Where the talent is
About 5.7 million people and a labour force of 2.9 million. Unemployment was 10.5% in September 2026, among the highest in the EU, which means experienced engineers and specialists are available. Finland ranked second in the world for English proficiency in 2025, and its engineering heritage in telecoms, gaming, health tech, clean tech and semiconductors runs deep. Time is UTC+2 (UTC+3 in summer), and Finland is in the EU, Schengen, the eurozone and NATO.
| Region | Talent and industry concentration |
|---|---|
| Helsinki, Espoo, Vantaa | Software, gaming, fintech, Aalto University, Nokia and startup ecosystem |
| Tampere | Industrial technology, automation, health tech, Tampere University |
| Turku | Maritime, life sciences, pharma |
| Oulu | Wireless, 6G research, electronics and embedded systems |
Finland Implementation Kit
This page tells you the rules. The kit tells you what to do, in what order, and what goes wrong when you skip a step.
- Step-by-step checklist, from route selection to first payroll
- Collective agreement identification guide by sector
- TyEL, accident, group life and occupational health set-up sequence
- Incomes Register and Vero reporting calendar (5th and 12th)
- Holiday accrual and holiday bonus calculator
- Warning, notice and termination pack under the 2026 rules
- Every official Finnish authority with direct links
This guide is general information, not legal, tax or immigration advice. Pension, unemployment and health insurance rates are reset each January, collective agreement increases apply on their own dates, and several 2026 employment law reforms are new. Confirm current figures with a qualified adviser or with Dryft. Last reviewed November 2026.
Ready to hire in Finland?
Tell us who you want to hire and where they sit. You will get a cost model and a compliant route within a day, from a person who has done this before.