Hiring in Finland means navigating one of the most structured employment frameworks in Europe. Finnish employees are protected by a combination of statutory law, sector-level collective agreements, and a robust social insurance system. If you’re managing Finnish employees as a foreign employer, understanding exactly what’s required, and what employees typically expect beyond the legal minimum, will save you from costly compliance gaps.
Annual leave (vuosiloma)
Finland’s annual leave rules are governed by the Annual Holidays Act (Vuosilomalaki), and they work differently from most leave systems. The accrual year runs from April 1 to March 31, not the calendar year, which catches many international employers off guard.
How leave accrues
The rate depends on how long an employee has been with you:
- Less than 1 year of service: 2 weekdays of leave per month, totalling 24 weekdays per year
- 1 or more years of service: 2.5 weekdays of leave per month, totalling 30 weekdays per year
One critical detail: Saturday counts as a working day for leave purposes in Finland. That means one full week of annual leave uses up 6 holiday days, not 5. This is a common source of confusion when Finnish employees start calculating their leave balance.
Summer and winter holiday
Finnish law divides annual leave into two portions:
- Summer holiday: at least 24 weekdays must be taken between May 1 and September 30
- Winter holiday: any remaining days must be taken between October 1 and April 30 of the following year
Employers schedule leave, but they must give employees at least 24 weekdays of summer holiday within the May–September window unless the employee agrees otherwise.
Public holidays during leave
Public holidays that fall within a leave period don’t count as leave days. Finland has 12 public holidays per year: New Year’s Day, Epiphany, Good Friday, Easter Monday, May Day (Vappu), Ascension Day, Midsummer Eve and Day, All Saints’ Day, Independence Day (December 6), Christmas Eve, Christmas Day, and Boxing Day. If any of these fall during a scheduled leave period, those days are added back to the employee’s balance.
Holiday bonus (lomaraha)
The holiday bonus isn’t set by statute, but it’s effectively standard practice across most sectors via collective agreements. The typical rate is 50% of holiday pay, paid when the employee’s leave begins. Budget for it as a near-certain cost when employing anyone covered by a collective agreement.
Sick leave
Employer obligations
When an employee is sick, you’re responsible for paying their full salary for the first 9 working days: the day illness begins plus the 8 days that follow. There’s no waiting period before this obligation kicks in.
Kela sickness allowance
From day 10 onward, Kela (the Social Insurance Institution of Finland) takes over with a sickness allowance of approximately 70% of salary, covering up to 300 working days. This significantly limits your direct financial exposure for longer illnesses, though many collective agreements require you to top up Kela’s payment to bring the employee back to full salary for a defined period. Check the relevant collective agreement for your sector before assuming your liability ends at day 9.
Parental leave
Finland’s parental leave system was substantially reformed in 2022, and the new structure is fully in effect for 2026. It’s worth understanding in detail, as the rules are more generous and more flexible than many employers expect.
How the entitlement works
The total entitlement is 320 working days per child (Monday to Saturday, excluding public holidays). This is split equally between parents:
- Each parent receives 160 working days
- Each parent can transfer up to 63 of their days to the other parent or a guardian
- Single parents receive the full 320 days
For twins, the total increases by 84 days, giving each parent 202 days.
Pregnancy allowance (raskausraha)
Before parental leave begins, the birthing parent is entitled to an additional 40 working days of pregnancy allowance. This can start between 14 and 30 working days before the estimated due date.
Flexibility and timing
Parental leave doesn’t have to be taken in one block. Employees can split it into multiple periods until the child turns 2, and partial leave is available for employees who want to continue working up to 5 hours per day while drawing partial leave pay.
Who pays and what you need to do
Kela pays the parental allowance directly, not the employer. Some employers advance salary and then claim reimbursement from Kela; your payroll setup determines which approach applies. What you must ensure is that you receive at least 2 months’ notice before the leave starts. After the 320 days of paid leave are exhausted, employees can take unpaid childcare leave (hoitovapaa) until the child turns 3.
Occupational healthcare (työterveyshuolto)
Occupational healthcare is mandatory for every employer in Finland, regardless of company size. At minimum, you must arrange preventive occupational healthcare services for all employees. This typically covers workplace health assessments, return-to-work support, and health surveillance.
Many Finnish employers go further and provide primary care services through the same occupational health provider, covering GP visits and basic treatment. While this isn’t a legal requirement, it’s a competitive expectation in the Finnish labour market. Kela reimburses employers for a significant portion of occupational healthcare costs, generally between 50% and 60%, so the net cost is lower than the headline figure.
Pensions (tyel)
Finland’s earnings-related pension is funded through the Employees Pensions Act (TyEL). Both employer and employee contribute:
- Employer contribution: approximately 17.10% of gross salary
- Employee contribution: approximately 7.30% of gross salary
The employer collects the employee’s contribution via payroll and remits the combined total. These rates can shift slightly each year, so confirm current rates with your payroll provider or pension insurer when setting up.
Collective agreements (tes)
Collective agreements cover the majority of the Finnish workforce and sit above the statutory minimums in almost every area. Most sectors have their own agreement, and if one applies to your employees, it almost certainly sets higher standards: more leave days, longer sick pay top-ups, better parental leave supplements, or additional benefits. If you’re not sure whether a collective agreement applies to your business, assume one does until you’ve confirmed otherwise. The cost of getting this wrong tends to be higher than the cost of checking upfront.
Using an EOR to manage finnish employment
If you’re hiring in Finland without a local entity, an Employer of Record (EOR) handles employment compliance on your behalf, including leave administration, statutory contributions, collective agreement obligations, and occupational healthcare setup. Rather than building this infrastructure yourself, you contract with the EOR, who becomes the legal employer in Finland while you retain day-to-day management of the worker.
When evaluating your options, it’s worth comparing EOR services to find a provider with direct experience in Nordic markets.
FAQ
Does the holiday bonus (lomaraha) have to be paid by law?
No, it isn’t statutory. But it’s included in the collective agreements that cover most Finnish employees, so in practice you’ll almost always be required to pay it. The standard rate is 50% of the employee’s holiday pay, paid when the leave period begins.
Can an employee carry over unused annual leave?
Yes. If an employee can’t take their full summer holiday entitlement (the 24 weekdays between May and September) due to illness or other qualifying reasons, those days can be carried over to the following year. Carry-over rules for remaining leave days vary and may be set by collective agreement.
What happens if an employee is sick during their annual leave?
If an employee falls ill during a scheduled leave period and notifies you, the sick days don’t count as annual leave. The employee is entitled to have those days restored, and sick leave rules apply from the first day of illness.
Does Finland’s parental leave apply to non-citizen employees?
Eligibility for Kela benefits is primarily based on residency in Finland, not citizenship. Employees who are resident in Finland and insured under the Finnish social insurance system are generally entitled to the same parental leave benefits regardless of their nationality.
