Operating a Business

Finland: Operating a Business

In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources

Legal Forms of Companies

Toiminimi (The Sole Proprietorship): Number of partners: 1 partner
Capital (max/min): No minimum capital required
Shareholders and liability: Undefined
Osakeyhtiö ou Oy (Private Limited Company): Number of partners: Minimum 1 person
Capital (max/min): No minimum capital required
Shareholders and liability: Liability is limited to the amount contributed.
Julkinen osakeyhtiö, Oyj (Public Limited Company): Number of partners: Minimum 1 person
Capital (max/min): EUR 80,000
Shareholders and liability: Liability is limited to the amount contributed.
Co-operative: Number of partners: Minimum 3 founders
Capital (max/min): Decided by the founders, no minimum capital. Participation shares must be of equal value.
Shareholders and liability: Undefined
Avoin yhtiö, Ay (General Partnership): Number of partners: Minimum 2 general partners
Capital (max/min): No minimum capital
Shareholders and liability: General Partner is personally liable and without limitation for the company's debts and obligations.
Kommandiittiyhtiö, Ky (Limited Partnership): Number of partners: Minimum 1 general partner + 1 limited partner
Capital (max/min): No minimum capital. At least 1 limited partner with financial input.
Shareholders and liability: At least 1 of the general partners is liable for the debts and obligations of the company.

Business Setup Procedures

Setting Up a Company	Finland	OECD
Procedures (number)	3.00	5.21
Time (days)	13.00	9.47

Source: Doing Business - Latest available data.

The Competent Organisation: National Board of Patents and Registration of Finland (NBPR)
For Further Information: Doing Business, to know about procedures to start a Business in Finland.
Finnish Patents and Registration Office

Financial Information Directories

Dun & Bradstreet - Worldwide directory with financial information on businesses

Recovery Procedures

Principle: Business reorganization (corporate restructuring) is a legal procedure with the purpose of rehabilitating companies that have fallen into financial difficulties. Normally, business reorganization is an alternative to bankruptcy. The aim of business reorganization proceedings is to arrive at a better outcome than bankruptcy from the point of view of both the business’ creditors and its owners.
Minimum Debt-to-Capital Ratio Triggering Liquidation: Not defined
Bankruptcy Laws: The Bankruptcy Act.
Reorganization and Rehabilitation Laws: Finnish law relating to the supervision of bankrupt estates is codified in the Act on the Supervision of the Administration of Bankrupt Estates. See more information on the Office of Bankruptcy Ombudsman website.

The Active Population in Figures

	2018	2019	2020
Labour Force	2,742,645	2,748,960	2,765,434

Source: International Labour Organization, ILOSTAT database

	2017	2018	2019
Total activity rate	76.64%	77.79%	78.15%
Men activity rate	78.27%	79.34%	79.65%
Women activity rate	74.96%	76.20%	76.60%

Source: International Labour Organization, ILOSTAT database

Employed Persons, by Occupation (% of Total Labour Force)	2015
Human health and social work activities	16.6%
Manufacturing	13.5%
Wholesale and retail trade; repair of motor vehicles and motorcycles	11.7%
Education	7.3%
Professional, scientific and technical activities	7.0%
Construction	6.9%
Transportation and storage	5.6%
Administrative and support service activities	4.4%
Information and communication	4.3%
Public administration and defence; compulsory social security	4.3%
Agriculture, forestry and fishing	4.2%
Accommodation and food service activities	3.6%
Arts, entertainment and recreation	2.5%
Financial and insurance activities	2.0%
Real estate activities	1.0%
Electricity, gas, steam and air conditioning supply	0.5%
Water supply; sewerage, waste management and remediation activities	0.5%
Mining and quarrying	0.2%

For Further Statistics: Statistics Finland

Working Conditions

Opening Hours
Legal Weekly Duration: Normal working hours are eight hours per day and 40 hours per week.
Maximum Duration: Daily overtime begins after the first eight hours and weekly overtime after the first 40 hours, unless lower thresholds have been negotiated in collective agreements. The maximum possible overtime in any four-month period is 138 hours; in one calendar year it is 250 hours. Exceptions to the ceiling are allowed in certain cases.
Night Hours: From 11.00 pm. until 6.00 am.

Working Rest Day: According to the Working Hours Act, employees must be allowed a minimum weekly rest period of 35 consecutive hours once a week. It must include Sunday, in part or in whole, whenever possible.
Paid Annual Vacation: Employees have the right to 2 weekdays of paid annual holiday per full holiday entitlement month (during which the employee has worked for at least 14 days or at least 35 hours) for the first year of employment. This rises to 2,5 weekdays of holiday per full holiday entitlement month if employment has continued for at least one year before the end of the holiday entitlement period (the period begins on April 1st and ends on March 31st).
Retirement Age: Employees can retire with a pension between the ages of 63 and 68.
Child Labour and Minimum Age For Employment: The law prohibits children under age 16 from working more than six hours per day and from working at night.
Informal Labour Market: Informal labor is not particularly developed.

The Cost of Labour

Pay

Minimum Wage: There is no standard minimum wage in Finland. Minimum wages are based on collective agreements. Employer organisations to which employers are members, work together to conclude a collective agreement applicable in the sector. An employer who is not a member of the employer organisation is also required to follow the generally binding collective agreement applicable in the sector.
Average Wage: The median gross monthly salary in 2020 was EUR 3,228 (Statistics Finland, lastest available data).
Other Forms of Pay
Pay For Overtime: The bonus paid for overtime on weekdays and Saturdays is 50% for the first two hours and 100% for the reminder. Sunday pay is double the regular pay.
Pay For Rest Days Worked: If an employee has had to work during a weekly rest period, he or she must be allowed compensatory paid reduction of working time equivalent to the weekly rest period lost or the employee must be paid a sum equivalent to the ordinary rate of pay as compensation for the weekly rest period.
Pay For Night Hours: Some percentages higher than normal wage. Different standards depending on the industry; wages are agreed on a trade union level.
Pay For Overtime at Night: According to the overtime pay standard.

Social Security Costs

The Areas Covered: In Finland, an employer must take out pension insurance for all his/her employees if the minimum monthly salary paid by the employer to the employee is 46.08 € per month. The statutory contributions of the employer also include employment accident insurance contribution, unemployment insurance contribution, employee’s group life insurance contribution and social security contribution.
Contributions: Contributions Paid By the Employer: Pension insurance: 7.15% (8.65% for employees aged 53 to 62)
Unemployment insurance: 1.51%
Health insurance contribution: 0.53% (1.71% for employees earning at least EUR 15,128 per annum)
Contributions Paid By the Employee: Disease and maternity contribution: 1,71%; occupational pensions: between 7,15% and 8,65% depending on the age ; unemployment: 1,40%.

Management of Human Resources

Recruitment

Method of Recruitment: The recruitment process takes place more and more via internet. Selection is made on the basis of a job interview.
Recruitment Agencies: Public Employment Offices are traditional recruitment agencies. Employment offices offer services to unemployed, those who are currently working or entering the working life as well as employers. The employment offices have over 200 outlets all over Finland. However, private recruitment agencies have become more and more popular in Finland.
Recruitment Websites: The Employment Office
Monster.fi
Adecco

The Contract

Type of Contract: Contracts can be either permanent contracts that remain valid for the time being or for a fixed term (specified in the contract). Permanent contracts (including permanent part-time contracts) represent 86% of the jobs where else the representation of fixed term contracts (including part-time fixed term contracts) is around 14%. The number of people working under fixed term contracts is growing rapidly.

Breach of Contracts

Retirement

There are two complementary pension systems in Finland: earnings-related pensions linked to past employment and national pensions linked to residence in Finland. Both systems include a wide range of retirement benefits for specific contingencies:
- old-age / early old-age pension;
- disability pension / rehabilitation subsidy;
- individual early retirement pension (for persons born before 1944);
- unemployment pension (for persons born before 1950).

Dismissals

Employment contracts made for an indefinite time are usually terminated by one of the parties giving notice. The notice will be followed by a period of notice agreed upon by the parties, or defined by the collective agreement or by law. During a trial period, either party may cancel the employment contract, in which case there will be no period of notice. Fixed-term employment contracts expire, without giving notice and without any period of notice at the end of the fixed term or when the agreed work is completed.

The employer must not terminate an indefinitely valid employment contract without proper and weighty reason. Such reasons can be:
- serious breach or neglect of obligations of the employee;
- such essential changes in the conditions necessary for working related to the employee’s person;
- the work has diminished substantially and permanently for financial or production-related reasons; or
- for reasons arising from reorganisation of the employer’s operations.

Other Possible Methods

Resignation, canceling the employment contract (very exceptional)

Labour Laws

A portal for Finnish public sector online services
Consult Doing Business Website, to obtain a summary of the labor regulations that apply to local entreprises.

Dispute Settlement

Conciliation Process

Legal Framework: If the matter cannot be solved between the employees and employer, negotiations will then continue between the employer and the shop steward representing the trade union. If the negotiations still do not produce a solution, the matter will be forwarded to be negotiated between the employer and the wage and salary earners’ unions. If no solution can be found at this level, either one of the unions may take the matter to the Labour Court.
Procedure: The central provisions governing employment relationships are contained in the Employment Contracts Act, the Working Hours Act and the Annual Holidays Act. The most important contracts are the employment contract and the collective agreement. Generally binding collective agreements have the most far-reaching effects. They determine the minimum terms of employment in employment relationships in the given sector.

Judicial Structures

Legal Framework: The Labour Court has jurisdiction in disputes on collective agreements and collective civil service agreements. Disputes on individual employment relationships are heard by the general courts and disputes on individual civil service relationships by the administrative courts.
Competent Legal Body: District courts (general courts) and regional administrative courts (administrative courts)

Social Partners

Social Dialogue and Involvement of Social Partners: Unions in Finland are occupation-based. There are around 70 trade unions in Finland and they organise employees in all types of work. Finland’s three labour confederations are SAK, STTK and AKAVA. SAK represents around 1,100,000 wage-earners from industries such as manufacturing, private sectors, transport, local and state sectors. STTK represents around 650,000 employees from industries such as nurses, engineers, police officers and secretaries. AKAVA represents around 350,000 professionals and managerial employees.
Unionisation Rate: The level of Finnish employees’ unionisation is among the highest in the industrialised world. 69% of employees belong to a trade union in the country (OECD data).
Labour Unions: Confederation of Unions for Professional and Managerial Staff in Finland (AKAVA)
Finnish Confederation of Salaried Employees (STTK)
Regulation Bodies: Ministry of Economic Affairs and the Economy
The Confederation of Finnish Industries
International Labour Organisation

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