Employment Law in Finland: A Comprehensive Guide

March 10, 2025 at 10:47 am

Employment Law in Finland – Comprehensive Guide for Employers

1. Overview of employment law in Finland

Employment law in Finland is designed to balance the rights and responsibilities of employers and employees and to ensure fair practices and workplace equality. With a well-regulated legal framework and extensive collective bargaining agreements (CBAs), Finland has one of the most structured labour markets globally. This guide provides an overview of key aspects of Finnish employment law that are relevant in practice for employers.

2. Key legislation governing employment in Finland

The legal foundation of employment relationships in Finland is built upon several statutes. These laws ensure that employees enjoy robust protection while enabling employers to manage their workforce effectively, including among others:

Employment Contracts Act (55/2001, as amended) – the cornerstone of employment law, governing employment contract formation, terms and termination.
Working Hours Act (872/2019) – regulates standard working hours, overtime, rest periods and flexible work arrangements.
Annual Holidays Act (162/2005) – defines employee rights to paid annual leave, public holidays and holiday pay.
Codetermination Act (1333/2021) – ensures employee participation in decision-making processes within larger organisations.
Occupational Safety and Health Act (738/2002) – establishes employer obligations to provide a safe and healthy working environment.
Equality between Women and Men Act (609/1986) – promotes gender equality and prohibits gender-based workplace discrimination.
Non-Discrimination Act (1325/2014) – provides broader anti-discrimination protection, including age, religion, disability, ethnicity and sexual orientation.

In addition to statutory regulations, collective bargaining agreements (CBAs) play a crucial role in shaping employment conditions. Many industries have generally binding CBAs, meaning they apply even if the employer is not a member of an employers’ association.

Employers must also consider international choice-of-law rules in cross-border employment relationships. The Rome I Regulation (EC 593/2008) applies to employment contracts signed after 17 December 2009 and allows parties to choose governing law, while ensuring minimum protections under Finnish labour law.

3. Termination of employment and redundancy in Finland

3.1 Grounds for termination

Employment termination in Finland is strictly regulated to ensure fairness and transparency. Employers must have justifiable grounds and follow proper legal procedures.

Employment contracts may be terminated based on, for example:

Personal grounds – serious misconduct, repeated breach of duties, failure to meet work expectations or other substantial contractual breaches.
Economic or production-related grounds – redundancies due to financial difficulties, reorganisation or reduced need for work. Employers must demonstrate that alternatives, such as retraining or reassignment, were considered before termination.

3.2 Notice periods

Notice periods vary depending on the duration of employment with the same employer:

Less than one year: 14 days
1–4 years: one month
4–8 years: two months
8–12 years: four months
Over 12 years: six months

Employees may also terminate their contracts, but must comply with the agreed notice period unless otherwise provided by law or contract.

3.3 Consultation obligations

Under the Codetermination Act, employers with at least 20 employees must conduct statutory consultation procedures before layoffs, redundancies or major contractual changes. These discussions allow employees or their representatives to express their views and influence the decision-making process.

4. Types of employment contracts in Finland

4.1 Indefinite and fixed-term contracts

Employment contracts in Finland can take several forms, offering flexibility to both employers and employees:

Indefinite contracts – the default form of employment, offering stability and security to employees.
Fixed-term contracts – allowed only for legitimate reasons, such as project-based work or temporary substitutions. Without valid justification, fixed-term contracts are deemed indefinite.

4.2 Written and oral contracts

While oral employment contracts are legally valid, written contracts are strongly recommended to prevent disputes. Employers must provide employees with written information on key employment terms, such as:

Names and domiciles of the employer and employee;
Job title and description of duties;
Start date and, for fixed-term contracts, the end date or justification for the term;
Working hours and remuneration details;
Holiday entitlements and applicable CBAs;
Notice periods and trial period (if any).

This information must be provided within a statutory timeframe after the commencement of employment.

4.3 Trial periods

A trial period of up to six months may be agreed upon. During the trial period, either party may terminate the contract with immediate effect, provided the termination is not discriminatory or otherwise unlawful.

5. Working hours and annual leave

5.1 Working hours

The Working Hours Act sets the framework for employees’ regular working hours, which are typically:

Regular hours: eight hours per day, 40 hours per week; and
Possibility for flexible arrangements, for example flexitime or other working time arrangements agreed under the Act.

Employees are entitled to statutory rest periods, including at least 11 consecutive hours of daily rest and 35 hours of uninterrupted weekly rest.

5.2 Annual leave

Employees accrue annual leave based on their length of service with the employer, typically:

Less than one year of employment: two days of leave per month of employment; and
Over one year of employment: 2.5 days of leave per month of employment.

The Annual Holidays Act ensures employees receive their salary during annual leave and guarantees compensation for unused leave when the employment relationship ends.

6. Employee salaries and fringe benefits

Salaries in Finland are typically agreed in the employment contract and must comply with the minimum standards set by applicable CBAs. Employers are required to pay salaries on time, usually on a monthly basis.

In addition to monetary compensation, many employees receive fringe benefits, for example:

Meal vouchers or subsidised lunches;
Company cars, laptops or mobile phones;
Occupational health care, insurance or wellness allowances.

Performance-based bonuses and commissions are also common, particularly in sales and senior positions.

7. Workplace equality and non-discrimination

Equality is a fundamental principle of Finnish employment law. Employers must ensure fair treatment and equal opportunities for all employees, regardless of gender, age, ethnicity, religion, disability, sexual orientation or other protected characteristics.

Key measures include:

Gender equality – the Equality between Women and Men Act mandates equal pay for equal work and promotes gender balance in the workplace.
Broader equality – the Non-Discrimination Act prohibits unfair treatment during recruitment, employment and termination processes.

Violations of these principles may result in legal sanctions, including compensation to affected employees.

8. Employee representation and collective agreements

Employees in Finland enjoy strong representation rights, particularly in larger organisations. The Codetermination Act grants employees the right to appoint representatives to participate in company decision-making processes.

Collective bargaining agreements often define sector-specific employment terms and conditions, and may:

Set minimum salaries and bonuses;
Regulate working time and overtime compensation; and
Include workplace dispute resolution procedures.

Employers are obligated to comply with generally binding CBAs where applicable.

9. Immigration and employment permits in Finland

Foreign nationals who wish to work in Finland must comply with immigration and residence requirements, for example:

EU/EEA citizens – no work permit is needed, but registration of the right of residence is required for stays exceeding three months.
Nordic citizens – enjoy simplified procedures and do not need a work permit.
Non-EU/EEA citizens – generally require an employee residence permit. Processing times vary, with fast-track options available in certain cases.

10. Get expert legal guidance on employment law in Finland

Navigating Finnish employment law can be complex, especially when balancing legal compliance with business needs. Whether you are hiring employees and need an employment agreement, restructuring your organisation, or a foreign company expanding to Finland, our team of experienced legal professionals is here to assist you.

For more information about our services, please contact our employment law specialists or call us at +358 40 672 4285.

About us | LKOS Law Office

LKOS Law Office is an internationally recognised, high-quality boutique business law office located in Helsinki, Finland. We provide legal services to foreign and domestic companies. Our NewLaw concept ensures that we serve all of our clients individually and strive to exceed their expectations regarding business law services. We are a reliable partner in a rapidly changing business environment.

If you are interested in hearing more about our services and personnel, please do not hesitate to contact us by email or visit the LKOS Law Office website for further information.

This article is for informational purposes only and does not constitute legal advice.