What are Employee Benefits?
Employee benefits are the additional perks offered to the employees apart from their regular pay. These perks can be monetary or non-monetary, as stated in the company’s benefits policy. The primary objective of providing employee benefits is to motivate the employees and keep them with the organization for a long time.
All companies in Finland offer both mandatory and supplementary benefits to their employees. The compensation package in Finland depends on the industry standards, the budget, and the organization’s size.
Most mandatory benefits are governed by the Government or collective bargaining agreements. These benefits also include the leaves that the employees can take during their employment. Some expected mandatory benefits are overtime payments, maternity leaves, health insurance, etc.
When developing your compensation and benefits policy in Finland, you must consider the various compensation rules established by the government.
Compensation Laws in Finland
Several compensation laws govern the benefits offered to employees in Finland. Some of these laws include:
- As per the Employment Contract Act, the companies must specify how to end the contract employment.
- The Collective Agreements Act defines the people with authority, like union leaders and several NGOs working for workers’ rights, etc., to draft a collective bargaining agreement.
- During the probation period, both parties can terminate the contract at any time, as per the Employment Contract Act.
- According to Sec 4 of the Employment Contracts Act, the employee must deliver a notice either electronically or physically if they decide to part ways with the company.
- Under the Hours of Work Act, employees must work eight hours a day and 40 hours a week.
- An employee cannot work overtime for more than 138 hours in 4 months.
- Employees similarly earn their paid leaves to how they earn their salary under the Annual Holidays Act of 1973.
How to Design an Employee Benefits Program for Employees in Finland?
A compensation package in Finland should include all the benefits the government decides, and the policy should dictate their terms and conditions.
Let’s review some steps you must consider while choosing employee compensation and benefits in Finland.
Step 1: Decide on the budget and the objectives
The first step in creating a benefits plan is deciding on a budget. This keeps you in check to ensure you are not going overboard with the benefits. Once you have a budget, you can decide on your plan’s objectives.
Some common objectives for a benefits plan include:
- Keeping your workforce motivated and attracting new employees for different roles in the organization
- Staying within the budget while picking the benefits for the employees
- Complying with all the federal regulations and adhering to the collective bargaining agreements governing the benefits
Step 2: Know your employees’ expectations and the industry standards
You must know what your employees are expecting from a benefits plan. While in-hand salary is a great motivator, benefits add to the level of motivation of employees. To understand employees’ expectations, you should invite them to take a survey. You can use the results of the survey to pick the best benefits.
Apart from knowing the employees’ expectations, you must also be aware of the current industry standards. Research to find out the kind of benefits your competitors and peers are offering so that you can benchmark your benefits against them.
Step 3: Add flexibility to the structure
Flexibility is the most critical aspect of any benefits plan. You must consider the different needs of your employees while creating a benefits plan to provide flexibility. Before you finalize the workers’ compensation in Finland, you must factor in the diversity of all the employees. You can use the results of the survey taken in step 2 to customize benefits for the employees.
You can better meet the various needs of your employees if you have a flexible compensation plan. Additionally, it provides flexibility in case federal laws or internal corporate policies change.
Step 4: Ask people for feedback
Before you release the benefits plan, you must ask for feedback from different stakeholders. When the plan’s first draft is ready, you should ask employees to review it and give feedback. You can record their feedback and incorporate them before releasing the plan.
Also, when you seek feedback, you might realize that some benefits will remain unused. You can save some money by removing those benefits altogether.
Step 5: Analyse the plan and bring it to action
You must review all the parts of the benefits plan before you release it to the employees. You must consider the dynamic business environment and create a plan that survives all kinds of changes. You must also have some flexibility to make changes to the plan if a federal law or policy changes.
Also, you must ensure that the employee compensation policy in Finland is accurate before you release it. You must develop a few measures and performance metrics to evaluate the plan’s effectiveness and the entire activity. You can track the implementation and make changes to the plan in real-time.
Types of Guaranteed Benefits in Finland
The Ministry of Labor, trade unions and collective bargaining agreements governs several guaranteed employee benefits in Finland.
- Minimum wage
- As per the Labor law of Finland, there is no standard minimum wage for the country.
- However, multiple collective agreements decide the minimum wage for a sector, and the companies must adhere to them.
- Working hours and overtime
- The Working Time Act governs the working hours of employees in Finland. The employees should work 8 hours daily or 40 hours a week across 52 weeks.
- The employees should take an hour’s break after every 6 hours of continuous working.
- Employees who work beyond 40 hours a week are entitled to overtime pay.
- For the first extra 2 hours, they receive an additional 50% of their regular salary. If the overtime is more than 2 hours a week, the employees are paid an additional 100% of their regular salary.
- Paid leaves
- The employees of Finland are entitled to 24 to 30 days of leave benefits in Finland annually once they complete a year with the company.
- However, employees who are yet to complete a year with the organization are entitled to a mandatory 2.5-day leave per month for their first year.
- Public holidays
- There are 11 public holidays in Finland, and the employees get a paid-time-off on these holidays.
- Employees working on a public holiday are entitled to a payment of 200% of their regular salary.
- Sick leaves
- As per the Employment Contracts Act, employees in Finland can take unlimited sick leaves.
- However, the employer pays a 100% salary to the employees on sick leave for the first nine days.
- The employees must apply to Kela for sickness benefits if the sick leave goes beyond nine days for up to 300 days.
- Maternity leaves
- Female employees can take maternity benefits in Finland for 50 days before their due date.
- They receive maternity benefits from Kela, Finland’s Independent Social Security Institute, for up to 105 working days.
- The female employees receive a tax-free lump sum of €170 during their maternity leave.
- Parental leaves
- For 158 days, Kela provides a parental allowance. Parents can work part-time or stay at home and are entitled to a partial allowance during this period.
- Annual bonus
- There are no laws that mandate an annual bonus payment in Finland.
- However, a few collective agreements have introduced the provision of a holiday bonus where employees are paid 50% of their salary.
- Health insurance
- All employees in Finland are entitled to health insurance coverage.
- Employees injured on the job or contracting a disease may be eligible for benefits such as survivors’ or disability pensions, daily allowances, handicap payments, or burial grants in the event of deaths.
Employee Benefits for Expatriates
The ex-pats working in Finland enjoy similar benefits offered to the resident employees. They have access to both primary and secondary health insurance policies. The ex-pats can also avail of car services from the company and any other regular benefits that are a part of the employee’s benefits and compensation in Finland.
Some additional benefits offered to the ex-pats are:
- Accommodation cost
- Relocation cost
- Parking fees
- Meal expenses
- Mobile expenses
These perks differ by company, and the terms and conditions of all of these benefits are stated in the benefits plan.
How are Employee Benefits Taxed in Finland?
Most employee benefits in Finland are taxed as per the income tax rates applicable in Finland. The Tax Administration of Finland annually issues a guideline on how to value the fringe benefits and calculate taxes on them. If the benefit you provide to your employees does not have a taxation method, it is taxed as similar benefits.
However, suppose the company provides a non-recurring benefit to the employees, like appointing a nurse to take care of the employee’s child. In that case, these kinds of benefits do not attract any taxes.
Restrictions for Finland Benefits and Compensation
Like other economies, most benefits are taxable in Finland. To determine how much tax an employee owes, you need to know how much these benefits are worth. The employer must schedule all required monthly tax payments to the nation’s tax authorities.
Before deciding on a compensation structure, ensure your company was legitimately incorporated in Finland and that you have the authority to do business there. The remuneration and perks must also comply with Finland’s labor legislation. Employees that put in extra time to help your business must receive overtime compensation.
Supplemental Benefits for Employees in Finland
Finland is an employee-friendly country that offers multiple supplemental benefits to employees working across organizations. These employee compensation and benefits in Finland are extrinsic motivators and keep your employees enthusiastic about their work at the company. Below are some of the standard supplemental benefits offered across organizations.
Voluntary occupational pensions
These benefits can be accessed by the executives working in an organization. To avail of the voluntary occupational pension benefits, employees must contribute 3% of their income. The employer also contributes to these plans based on the nature and the clauses governing them.
Flexible working hours
The employees in Finland can choose their working hours based on their availability. This allows them to manage other errands while working full-time for a company.
Supplemental health insurance
Despite having access to healthcare and health insurance, Finnish employees’ primary insurance does not include dental and eye care coverage. The employer may choose to offer specific health benefits to its workers.
How Multiplier Can Help with Benefits Management in Finland
When you set up a business in Finland, you need to reach out to talented people who will help you grow the business. Offering outstanding benefits as a part of the compensation is a great way to attract talent and retain them. You can create a benefits plan that includes every detail about the benefits offered to the employees. If you need help with the process, you can reach out to a global PEO platform like Multiplier.
Multiplier offers the infrastructure to employ the best talent from Finland without setting up a business entity in the country. You can test new markets while attracting talent at cheaper costs.