Are you considering hiring an employee in Finland? If so, you’re likely wondering how much it will cost. Hiring an employee in Finland is a great investment for employers, as it can bring a wealth of knowledge and experience to your business. However, the question remains — what is the true cost of hiring a Finnish employee for employers?
Hire Talent from Finland
When it comes to expanding an organization's workforce, hiring a Finnish employee can be a great option for employers. Finland is one of the most highly educated nations in Europe. Of course, there are several other factors that make Finland an attractive destination for employers looking to hire employees.
Finnish employees are known for their strong work ethic, reliability, and excellent education. Additionally, the Finnish government provides a strong social welfare system that includes healthcare, childcare, and other benefits. This means that employers do not need to provide these benefits themselves, which will help reduce costs in the long run.
There are many reasons why hiring Finland is an excellent choice when expanding one’s workforce internationally. However, it is important for employers to be aware of the costs associated with hiring Finnish employees.
Required Costs of Hiring from Finland
The Basics: Income, Paid Time Off, Pension
The required costs of hiring in Finland include salary, vacation time, paid leave, and pension contributions. Unlike most countries, there is no minimum wage in Finland. This way, employers need to focus on the average wage, which stands at €3681/month (USD$ 3880) when hiring in Finland. However, many industries have collective bargaining agreements that set higher wages.
Employees are entitled to at least 24 days of vacation per year, 12 public holidays, and holiday bonuses. They also receive up to 60 days of paid sick leave and up to 158 days of parental leave.
Generally, a holiday bonus amounts to 50% of the pay for the annual holiday. Employers pay this bonus either before or after the annual holiday, depending on the collective bargaining agreement.
Employers are also obliged to pay a pension contribution at the rate of up to 24.4% of the total salary and wages for all employees in Finland. The amount of the contribution varies based on the employee's salary, industry, and age. Employees aged 63 or older may be eligible for early retirement with reduced benefits, depending on individual circumstances and employer agreement.
Based on these requirements, the total cost to employers for hiring a Finnish employee can vary. However, a rough estimate would be around €3,500-€4,500 (USD$ 3800-$5000) per month for an employee earning the average salary in Finland.
Overtime
Employees may receive a higher rate of pay for any overtime hours worked. This depends on whether it is daily or weekly overtime or overtime in the context of period-based work, as well as the number of overtime hours worked.
Alternatively, employers may compensate employees for overtime by offering paid time off instead of monetary compensation, with the amount of time off determined based on the applicable increment percentages for overtime pay. However, unless otherwise agreed, any paid time off given instead of monetary compensation must be taken within six months from the date on which the overtime hours were worked.
For instance, if an employee receives 50% extra pay for one overtime hour, they would be entitled to 1.5 hours of time off. Employers must consider any provisions regarding overtime compensation that may differ from those in the Working Hours Act, as stated in collective agreements.
Optional Costs of Hiring in Finland
In addition to the required costs, employers may also choose to provide optional benefits to their Finnish employees. These benefits can include health insurance, fitness memberships, or other perks such as company cars or mobile phone plans.
While these benefits are not required by law, they can be an important way for employers to attract and retain top talent. That being said, it is important for employers to carefully consider the costs and benefits of providing these optional benefits.
Health insurance is particularly important in Finland, as it provides access to quality healthcare services and medications. Health insurance can vary from company to company and will depend on the size of the workforce and the type of plan chosen. While some employers may choose to provide their employees with a basic health insurance plan for free, others may require their employees to pay for part or all of the costs associated with their coverage.
As Finland recognizes the importance of promoting physical well-being among their staff, gym memberships are becoming increasingly popular. These memberships usually come at an additional cost (of approximately USD$ 41.43) to both employer and employee, but many companies opt for discounted rates, which makes them more affordable. Employees may also receive discounts at select fitness centers or be allowed to use facilities provided by their employer during working hours.
Other optional costs that employers may consider include bonuses related to performance or length of service, training programs and professional development opportunities that help employees stay up-to-date with industry trends and other types of fringe benefits such as subsidized meals or childcare services.
The true cost of hiring a Finnish employee depends heavily on what kind of additional benefits are offered by the employer. By considering these optional costs when planning their budgets, employers can make sure they are providing a comprehensive package that takes care not only of present needs but also future ones which could arise during employment.
More On Average Salary vs. Gross Salary in Finland
When considering the average salary for a Finnish employee, it is important to note that the country has some of the highest wages in Europe. The average salary in Finland varies by industry, but the overall average gross salary is around €3,800 (USD$ 4200) per month. The top industries in Finland include technology, healthcare, education, manufacturing, and finance. In the technology sector, for example, the average gross salary is around €5,400 (USD$ 6000) per month.
Other high-paying industries in Finland are IT/telecommunications (€3,945 per month), finance/banking (€3,878 per month), and healthcare (€3,719 per month) after tax. Similarly, financial advisors and banking professionals typically earn around €4–4.5K per month after taxes. In the healthcare sector, registered nurses can expect to earn on average €2.7-3K a month after taxes.
Keep in mind that employers must also pay an employer's health insurance and pension contributions, which are based on their total payroll costs. The total amount deducted from an employee’s salary also includes any additional benefits, such as bonuses or overtime payments, that have been agreed upon by both parties.
Employers should keep in mind that these deductions could significantly reduce an employee’s net salary, so it is important to include them when calculating wages for potential hires. This will help make sure that a job offer is attractive enough to attract and retain highly qualified personnel while still considering all applicable taxes and deductions.
Estimated Costs to Employer of Hiring from Finland
Estimating the cost of hiring an employee in Finland is no small task. It requires employers to consider wages, taxes, social security contributions, and other deductions such as health care contributions. Additionally, optional benefits such as bonuses or overtime payments should be factored in to make a job offer attractive enough to potential hires. Taking all of these factors into consideration, employers can expect to pay €3,500-€6,000 (USD$ 3800-6600) per month.
The true cost of hiring a Finnish employee depends on the optional benefits offered by the employer, which can help attract and retain highly qualified employees in Finland.
Avoid Surprises and Hire from Finland with Borderless
While hiring Finnish employees can be beneficial for employers, it is important to be aware of the costs and requirements associated with hiring in Finland.
By carefully considering these factors and working with an EOR like Borderless, employers can make sure that they are making informed decisions about their hiring practices and providing a fair and competitive package to their employees while meeting compliance requirements. Book a demo today!
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
