• Insights

4 year-end tips for employers in Finland

Written by
Dittmar & Indrenius, a leading Finnish law firm focused on creating exceptional added value to demanding corporate clients.
In order to ensure that 2020 starts off the right way, here are some tips on topics organisations could pay attention to at the year-end.

Reviewing and updating incentive schemes and employer policies

Many organisations establish their incentive schemes annually but in the meantime they may not review their benefit and other employer policies. Even if reviewing of such policies annually is not mandatory, it is generally good practice to do so in order to keep them up to date.

New Working Hours Act

The new Working Hours Act will enter into force on 1 January 2020.

The revised Act introduces new tools for flexible working hour arrangements. The Act also tightens regulation in some respects, for example regarding rest periods. The location of work is no longer crucial to the calculation of working hours, since remote work and work performed outside the office will also be governed by the new Act. Following the reform, organisations may need to revise their working hours practices. Revision should be done before the year’s end to ensure that the employer has time to discuss with employees if changes are needed to the organisation’s working hours arrangements.

Social security contribution rates for 2020

The social security contributions for the employers and employees for the year 2020 have been confirmed as follows:

The employees’ employment pension insurance contribution for employees aged 17-52 years is 7.15% of wages. The employees’ pension insurance contribution for employees who are 53-62 years old is 8.65% of wages. For employees aged 63-68, the employee’s employment pension insurance contribution is 7.15% of wages. The employees’ contribution percentages were increased in comparison to 2019. In 2020, the employers’ employment pension insurance contribution is on average 16.95% of wages. The employer’s rate was lowered compared to 2019.

Employers’ sickness insurance contribution for the year 2020 is 1.34% of wages paid for employees between the ages of 16 and 68. The employees’ sickness insurance contribution is 1.18% of wages, if the employee’s annual income is at least EUR 14,574. Compared to 2019, the rate was increased for the employer and lowered for the employee;

The unemployment insurance contributions cover employees between the ages of 17 and 64. Employer’s unemployment contribution is 0.45% of wages up to EUR 2.1255 million and 1.70% of wages exceeding that amount. The employee’s unemployment insurance contribution is 1.25% per cent of the wages. The rates for both employees and employers were lowered compared to 2019.

Review of mandatory plans

In Finland, there are some mandatory plans that employers with a certain number of employees must maintain. It is good practice to annually review the validity of these plans and assess the need for amendments. These plans include, for example, the personnel and training plan, equality plan and gender equality plan.

Personnel and training plan

Employers who regularly employ at least 20 people must prepare a personnel and training plan annually and handle it in co-operation negotiations.

Equality plan

Employers who regularly employ at least 30 people must prepare a plan on necessary actions to foster equality. These measures and their effectiveness must be discussed with the personnel or their representatives. The law does not set a timeline for the reviewing the equality plan, however, it is good practice to prepare it regularly, for example, every two years or annually, in order to keep it up to date.

Gender equality plan

Employers who regularly employ at least 30 people must implement measures that promote gender equality as set out in a gender equality plan that deals particularly with pay and other terms of employment. The employer must prepare the gender equality plan at least every two years. The gender equality plan must be prepared in co-operation with an employee representative.