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Employment Laws and Best HR Practices in Finland

Finland’s employment laws are recognized for their strong emphasis on employee rights, fair working conditions, and maintaining a healthy work-life balance. For companies planning to hire in Finland, understanding and complying with these laws is critical not only for avoiding legal challenges but also for building a productive and motivated workforce. This article outlines key employment laws and offers insights into HR best practices that can help companies navigate Finland’s regulatory landscape effectively.

Employment Contracts in Finland

In Finland, employment contracts form the legal foundation of the employer-employee relationship. All employees must have a written contract that clearly outlines the terms of employment. Contracts typically fall into three main categories: permanent, temporary, and fixed-term contracts. Each must include specific mandatory details, such as:

  • Job description and the employee’s main responsibilities.
  • Salary and payment intervals.
  • Working hours and any applicable collective agreement terms.
  • Location of work, trial periods, and possible remote work conditions.

Trial Periods

Employers can set a trial period in a contract of up to six months, during which the contract may be terminated with shorter notice. However, this period must be agreed upon in writing and should not exceed the legal limit.

Employee Rights and Protections

Finland is known for its robust employee protections, which are designed to foster fair and safe working conditions. Employers must adhere to these provisions to ensure compliance and avoid potential disputes.

Working Hours and Overtime

In Finland, the standard workweek is 40 hours. Overtime is strictly regulated, and employers must compensate employees accordingly. Overtime pay is usually 50–100% higher than standard wages, depending on the number of additional hours worked. Many collective agreements further refine these rules, so it is essential for employers to review the specific agreements relevant to their industry.

Leave and Holidays

Employees in Finland are entitled to a minimum of 24–30 days of paid annual leave. Typically, employees accumulate two to two and a half days of holiday per month worked. Finland also offers generous parental leave policies, with both mothers and fathers eligible for paid leave following the birth or adoption of a child. In addition, employees are entitled to various forms of family-related leave, such as caring for a sick child.

Health and Safety Regulations

Employers must provide a safe and healthy working environment, adhering to Finland’s stringent occupational health and safety laws. This includes not only physical safety but also mental well-being. Employers are required to offer occupational health services, which typically cover regular health check-ups and psychological support​.

Termination and Redundancies

Employee Termination

In Finland, terminating an employee must be done with just cause, and the process is heavily regulated. Grounds for termination include misconduct, redundancy, or the employee’s incapacity to perform their duties. The notice period depends on the length of employment, ranging from two weeks for employees with less than one year of service to up to six months for those with more than 12 years of service.

Redundancy Laws

When laying off employees due to economic reasons, employers must follow the redundancy compensation framework. If a company is reducing its workforce significantly, it is legally required to consult with employee representatives to negotiate terms and ensure compliance with collective bargaining agreements. Failure to follow proper redundancy procedures can result in penalties​​.

Collective Bargaining and Trade Unions

Role of Collective Agreements

In many industries, employers are bound by collective agreements, which set minimum standards for salaries, working hours, and other employment conditions. These agreements are legally enforceable and must be followed by employers, even if they are not members of an employer’s association. It’s crucial for businesses to understand which agreements apply to them to avoid compliance risks.

Trade Union Participation

Finland has a high unionization rate, with trade unions playing a significant role in setting employment standards. Employers must collaborate with unions when drafting collective agreements and resolving disputes. This partnership ensures that employment conditions are both fair and legally compliant.

HR Best Practices in Finland

For companies to successfully operate in Finland, strong HR practices are essential. Compliance with legal requirements is only part of the equation. Businesses must also adopt practices that promote employee satisfaction and retention.

Recruitment and Hiring

Ensure non-discriminatory recruitment processes by providing equal opportunities regardless of gender, nationality, or age. Utilizing probationary periods and having a structured onboarding process can help identify the right candidates early on. Businesses should also comply with specific industry standards set out by collective agreements.

Employee Development and Retention

Finland places a high value on continuous professional development. Offering employees opportunities for learning and development, as well as maintaining a supportive work culture, can significantly boost retention. Companies should promote work-life balance by providing flexible working hours or remote work options, which have become particularly relevant in recent years.

Performance Management

Regular performance reviews and clear communication about expectations are vital for maintaining a productive workforce. Ensure that feedback is constructive and linked to professional development plans.

Diversity and Inclusion

Finland is known for its commitment to equal rights in the workplace. Businesses should actively promote diversity and inclusion, ensuring that all employees receive equal pay and opportunities for career advancement. Finnish law also encourages gender equality, and businesses must ensure compliance with any relevant diversity requirements​.

Conclusion

Compliance with Finland’s employment laws is crucial for businesses seeking to hire in this competitive and regulated market. Employers must ensure that they understand the intricacies of employment contracts, employee rights, and redundancy procedures. In addition to legal compliance, adopting best HR practices such as promoting diversity, fostering professional development, and ensuring a healthy work-life balance will not only help retain talent but also enhance business performance.

For businesses looking to establish themselves in Finland and navigate the complexities of employment law, Scandicorp is the ideal partner. With extensive expertise in company formation, HR management, and compliance across the Nordic region, Scandicorp offers tailored solutions that ensure businesses remain fully compliant while focusing on their core activities. Contact us today to explore how we can support your HR and legal needs in Finland and beyond.