To do business in Finland, it is vital to have a good understanding of its business or work culture. Making the right impression with the right people is the key to success in Finland, and it is important to back this up with the right research on the market and potential business associates.
As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about the Finnish work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Finland to start your expansion well-informed.
Work Culture in Finland
Foreign companies hoping to make their mark in the Finnish economy must have a thorough understanding of the country’s business culture if they want to succeed. Finnish workplace etiquette is largely in line with other Nordic nations, valuing workplace equality with a generally flat hierarchy.
Junior managers can be decision-makers and employers generally take employees’ opinions into account when planning projects at office meetings. Finns are straightforward, like to deal in facts, and do not need to conduct business based on personal relationships, but still consider restaurants a suitable location to initiate negotiations.
Family life is key for Finns, so flexibility in achieving the work-life balance is a big factor in employment practices.
- Punctuality: Meetings should be scheduled at least two weeks in advance and be sure to arrive on time – it is an indication of efficiency and respect. Exchanging an agenda for the meeting is also recommended. Opportunities for meetings from June to August will be restricted as this is the holiday season in Finland
- Languages: The official languages are Finnish and Swedish, but English is generally the ‘business language’. Nevertheless, making the effort to use Finnish and Swedish words and phrases will go down well in meetings.
- Business Relationships: Finns are direct, straightforward, and used to speaking out in their business relationships. This is not considered rude. Small talk is rarely on the agenda, and they avoid personal questions. First names are used in the workplace and office, whatever the status of the individual.
- Introductions and Greetings: A brief, firm handshake and nod with eye contact is the starting point. Finns usually introduce themselves with first name, then surname and continue to use first names thereafter unless it is a very formal setting or there is a significant difference in status.
- Gift-giving: Finland does not have a tradition of exchanging gifts between business counterparts, except maybe at Christmas after the relationship has been established. Small items, such as liquor or local souvenirs can be exchanged to celebrate sealing a deal.
- Dress Code: This is formal for men and women for meetings – dark business suits for men, while women wear dark colored business suits, trouser suits, or dresses.
- Meetings: Agendas are strictly adhered to, and Finns expect a clear presentation, detailing all the facts as they may not ask questions. Be prepared for silent interludes of a couple of minutes. Also, do not interrupt or be too talkative – it may signify nervousness.
- Business Meals: Finns are happy to discuss deals and negotiate over the lunch table. Who invites, pays the bill. Finns do not share the costs, or ‘Go Dutch’.
Finland Minimum Wage
Finland does not have a national minimum wage. Minimum levels of salary are determined by collective and union agreements and by sectors, which considers workplace responsibilities, workplace location, qualifications, age, skill levels and seniority. These are legally binding and apply to Finnish and foreign workers. The average salary per month is €1190 (US$1,400) at the lower and generally the average nationwide is €4690 (US$5,540) monthly.
Probation Periods in Finland
The probation or trial period is agreed between employer and employee, whether or not the contract is open-ended or fixed term before the start of employment. If the probation period is governed by a collective agreement this must be considered.
Legally, probation periods can be no longer than six months. Although either party can terminate the employment during this period, it cannot be on discriminatory or unjustifiable grounds.
Also, if an employee has been away from work due to illness, there can be an extension of one month for each 30 days of absence. For fixed term contracts, the trial period has to be less than 50% of the contract.
Working Hours in Finland
Daily working hours for Finland’s citizens, foreign nationals, contracted and public service employees are governed by the Working Time Act as well as collective agreements and written into the employment contracts.
Regular working hours should not exceed eight hours a day, and 40 hours a week; or, they should average 40 hours over four months with a maximum work week of 48 hours. Period-based working time allows for 80 hours per fortnight or 120 hours in three weeks if permitted by law or written into a national collective agreement. Hours may vary depending on collective agreements (of which there are around 160) over different sectors.
Flexi-work terms are generally in a written agreement between the employer and employee and allows the employee to decide when and where they work 50% of the time but must not average more than 40 hours per week over four months.
During a workday of more than six hours, employees are entitled to a minimum of an hour’s break which they can use to leave their place of work. A shorter break can be agreed between employer and employee but no less than 30 minutes. Breaks between daily shifts should be 11 hours and each week there should be at least 35 hours rest.
Overtime in Finland
Overtime is regulated by the Working Hours Act and collective agreements and is defined as hours over the maximum regular working hours – eight hours per day or 40 hours per week. The maximum overtime allowed is 138 hours in a four-month period or 250 hours in a calendar year. An extension of the 250 hours can be agreed but only to another 80 hours maximum over the year.
Overtime pay is 1.5 times the regular hourly rate for the first two hours and double time for subsequent hours. This can be given as a remuneration or time off in lieu.
Notice Periods in Finland
Notice periods are usually agreed mutually and written into the employment contract unless there is a collective agreement in place. Otherwise, statutory notice periods are below and are based on length of employment:
- Up to 12 months - 14 days’ notice
- One to four years - one month
- Four to eight years - two months
- Eight to 12 years - four months
- More than 12 years - six months
Similarly, if the employee gives notice and there is no collective agreement or contractual agreement, it is based on employee’s length of service:
- Up to five years - 14 days’ notice
- More than five years - one month
Employees are generally paid their full salary plus benefits even if they are put on garden leave, or they can be paid in lieu of the notice period.
Redundancy, Termination / Severance in Finland
There is no statutory requirement for severance payments, unless covered by collective agreements in the case of mass redundancies or the employer chooses to pay them.
Pension Plans in Finland
Finland has a two-tier system where the schemes complement each other.
- Tier I: The earnings-related pension is funded by salaries and entrepreneurial activities. Employers must have a pension insurance policy for all employees and pay their premiums as a percentage of earnings. Self-employed pay their own premiums.
- Tier II: National and guaranteed pensions are for pensioners without an earnings-related pension.
Public Holidays in Finland
Employees in Finland are entitled to around 11 paid public holidays each year:
- New Year’s Day - January 1
- Epiphany - January 6
- Good Friday - March / April
- Easter Monday - March / April
- May Day - May 1
- Ascension Day - 40th day of Easter
- Midsummer’s Eve - June, varies
- Independence Day - December 6
- Christmas Eve - December 24
- Christmas Day - December 25
- Boxing Day - December 26
Sick Leave in Finland
If an employee is unable to perform their duties due to illness or injury, they are entitled to paid time-off (as long as the incapacity wasn’t self-inflicted or due to negligence). Provided that the employee has been working for one month, they are entitled to their full salary for up to nine days, starting from the date the employee became unfit for work (10 days in total). This is paid by the employer.
After this, under the Sickness Insurance Act 2004, the employee is entitled to national sickness allowance of 100% of the salary for up to 300 days. Employees who have worked for less than one month are entitled to 50% of the basic pay and the employer is also recompensed, for the salary already paid after the initial 10 days, by the Social Insurance Institution (Kela).
Vacations / Holidays in Finland
Holiday entitlement runs from April 1 to March 31 and comes under the Annual Holiday Act. Collective agreements also apply. During the first year, the employee receives two days paid vacation for every month. In subsequent years, the employee is entitled to two-and-a-half days per month - giving annual paid leave of 30 days or five weeks. Plus, there are around 11 national holidays every year when employees should be given time off in lieu. Of the annual leave, at least 24 days should be taken during the ‘holiday season’ between May 2 and September 30.
Part-time workers who work less than 14 days per month or less than 35 hours a month, do not accrue holiday leave but they are still entitled to paid time-off. Also, if a contract is terminated any accrued leave should still be paid.
Maternity / Paternity Leave in Finland
Parents who are covered by health insurance are entitled to the following:
- A tax-free Maternity Grant of €170 is paid to the mother or as a childcare package, for instance clothes or baby products, after the fifth month of pregnancy and on presentation of a medical certificate.
- Maternity Leave: This can begin 50 working days before the baby is due (at the earliest) or 30 days before (at the latest) and lasts 105 working days. Maternity Allowance (äitiysraha) is paid by Kela, which is the Finnish Social Insurance Institution, for all 105 days of the Maternity Leave. Under special circumstances, employees can apply for a Special Maternity Allowance, which will extend the leave period.
- Paternity Leave: This can be taken by the employee after the child has been born for 54 workdays maximum, which can be used in a maximum of 3 separate periods. The employee is also entitled to use a maximum of 18 days off while the mother is also on maternity leave, in which during this time they are paid a Paternity Allowance (isyysraha).
- Parental Leave: This can be taken by either parent, and starts after maternity leave finishes. Parental Allowance (vanhempainraha) is paid for 158 days.
If during the Maternity, paternity or parental leave the employer or employers continue to pay salaries, then Kela will reimburse the employer/s.
Bonuses in Finland
Bonuses in Finland are discretionary but may be attached to productivity or as an incentive. However, this cannot be discriminatory as covered by the Employment Contracts Act.
Similarly with any Equity Incentive Schemes, which is a share issue system for employees to attract talent particularly in developing companies and start-up ventures. New rules were introduced in January 2021 to explain any uncertainties.
Car Allowances in Finland
The allowance for 2021 is 44 cents per kilometer. However the allowance can vary , depending on whether the vehicle is owned by the employer or employee.
Don’t suffer Culture Shock, Call Us!
To expand into Finland smoothly, an understanding of the business culture is vital for success. With Bradford Jacobs’ Professional Employer Organization (PEO) expertise and knowledge we remove the mysteries of all these issues. Our on-call HR advisers help with adjusting to the workplace environment and understanding a new culture – giving you happy and productive staff. Contact us to find out more!