Last updated on: February 27th, 2023
The Labor Law in Finland is regulated mainly by the Working Hours Act. The Act governs the terms and conditions of employment such as working hours, rest periods, wages, overtime, and employment relationships. The other acts that govern employment relationships are Annual Holidays Act, Employment Contracts Act, etc.
Hours & Pay Regulations
The employee is entitled to 2.5 working days of leave for each full month of leave. However, if the employment relationship has continued continuously for less than one year by the end of the holiday year, the employee is entitled to 2 working days of leave for each full month of holiday. When calculating the length of the holiday, the part of the day is rounded to the full holiday.
Employees can earn annual vacation in three different ways:
- According to 14 day rule;
- According to 35 hours rule; and
- According to the ‘leave entitlement rule’.
An employee earns an annual holiday entitlement for working during the holiday credit year which is the period between April 1 and March 31 and the leave entitlement is based on the length of the employment relationship.
The 14-day rule applies to employees whose employment contract provides that they work at least 14 days every month. Employees shall be entitled to annual leave under this rule whether they work 1 hour or 8 hours per day.
The 35-hour rule applies to employees whose employment contract provides that they work a minimum of 35 hours for at least 1 month but do not come under the 14-day rule. In the calculation of full holiday credit month, such absences from work in which the employer is obliged to provide pay, are considered to be the working time of an employee. For example, if an employee is on maternity, paternity, sickness leave, etc. subject to the maximum number of days allowed by the legislation.
Additional Leave – If an employee has not earned at least 24 annual leave days because of absence from work due to sickness, accident, or medical rehabilitation, the employee shall have the right to additional leave days to supplement their annual holiday to the extent that the duration of the annual leave is less than 24 days. The entitlement to additional leave will terminate after 12 months of uninterrupted absence for the reasons mentioned above. If the employee returns to work and continues to work for a period entitling to a full leave-earning month, a new 12-month period of absence due to disability or rehabilitation will re-commence after such a period of work. The employee shall be entitled to a remuneration corresponding to their regular or average wage for the additional leave days.
Employees who are not covered by the rules on earning annual holiday (the 14 days or the 35 hours rule) are entitled to take leave equivalent to annual holiday (‘leave entitlement rule’).In this case, holiday compensation is paid to the employee. Under this rule, leave entitlement is based on the length of the employment relationship with the same employer. In all cases, employees are entitled to 2 weekdays of leave for each month during which they have been employed by the same employer during the holiday credit year. Thus, in employment relationships that have lasted for 12 months, the employee is entitled to 4 weeks of leave, for which he/she will be paid holiday compensation according to his/her earnings.
Employees who have worked for the same employer under repeated fixed-term employment contracts with short interruptions are also covered by the ‘leave entitlement rule’. In these cases, the maximum amount of leave is either 2 or 2.5 weekdays for each holiday credit month, depending on the total duration of the employment relationship. In such cases, employees are entitled to take leave calculated on the basis of the period for which they have not taken any holiday already.
Holiday Pay – An employee has a right to receive at least their regular or average pay (including fringe benefits) for the period of the annual holiday. Fringe benefits that are not available to the employee during the holiday are paid as monetary compensation instead. The system of calculating the holiday pay depends on the way the employee is paid such as whether the employee is paid monthly, weekly or hourly, etc.
Timing of payment of holiday pay – Compensation for vacation shall be paid before the start of the vacation period, however, if the annual leave is for a period not exceeding 6 days, an employee can be provided with the holiday pay during his/her normal payday.
Holiday Compensation – Employees not covered by the rules on earning annual holiday (14 days or 35 hours rule) are entitled to take leave equivalent to an annual holiday, for which they will receive payment in accordance with the rules on holiday compensation. Holiday compensation is paid:
- For the period of leave entitlement to employees who come under the ‘leave entitlement rule’, namely, to employees with fewer hours than the minimum required under the rules on the earning of the annual holiday; » to employees working at home, etc
- At the end of the employment relationship, for any holidays not taken; and
- If the employment relationship ends before the employee has earned any annual holiday entitlement
Calculation of Holiday Compensation:
Holiday compensation for employees who come under the ‘leave entitlement rule’ during their employment relationships – For an employee whose employment has lasted for at least 12 months, the holiday compensation is 11.5% of the pay given for the time worked during the holiday credit year. For employees with employment relationships of less than 12 months, the holiday compensation is 9% of the pay given for the time worked.
If during the holiday credit year, the employee has been on special maternity, maternity, paternity, or parental leave, the pay used as a basis for calculating the sum payable for the period of leave is adjusted for these periods of absence. No other calculated pay items are added to the payment used as a basis for calculating holiday compensation.
Holiday compensation at the end of an employment relationship – In case, an employment relationship is terminated, the employee is entitled to receive holiday compensation equivalent to annual holiday pay for days for which the employee had not yet taken holiday or received annual holiday pay or holiday compensation.
Timing of annual holiday – Annual holiday is earned in the form of weekdays and is also taken as weekdays. Weekdays are considered as days other than Sundays, church festivals, Independence Day, Christmas Eve, Midsummer Eve, Easter Saturday, and the First of May. A full holiday week, therefore, consists of 6 days of holiday (i.e. including Saturday) even if the employee works a 5-day week.
The summer holiday, comprising 24 weekdays of the annual holiday, must be granted by the employer in such a way that it is taken during the holiday season (between May 2 and September 30). The rest of the holiday (winter holiday) must be given by the start of the following holiday season. Annual holiday must always be given in such a way that it includes an uninterrupted period of at least 12 weekdays.
If granting the annual holiday during the holiday season results in substantial difficulties for the employer’s operations in seasonal work, the summer holiday may be granted outside the holiday season during the same calendar year (either before or after the holiday season).
Incapacity to work during the annual holiday – If an employee is not able to work due to childbirth, illness, or accident and such incapacity last for more than 6 holiday days (waiting days), an employee can make a request in such cases to his/her employer to postpone the holiday for a later date. In any of such cases, the employee does not lose his/her right to a 4-week annual holiday.
Timing of annual holiday postponed because of incapacity for work – Any summer holiday postponed because of incapacity for work must be taken at a later date during the same holiday season. Correspondingly, a winter holiday not taken may also be postponed to a later date. The winter holiday must be granted before the beginning of the next holiday season. If it is not possible to provide the leave-in such periods, the employer shall provide the leave no later than by the end of that calendar year.
Carry forward annual leave – An employee has a right to carry forward his/her portion of vacation leave exceeding 24 weekdays. An employer and employee can also agree on carrying forward a portion of leaves exceeding 18 weekdays or taking the portion of the holiday exceeding 12 weekdays within a year of the end of the holiday season. Annual Holidays Act, No. 62 of 2005 (as amended), § § 4-6, 9, 11, 27.
There is no statutory minimum wage in Finland. The collective agreement determines the wages to be paid based on employment terms.
Maternity leave starts about 5 to 8 weeks before the birth of the child. The length of maternity leave is 105 working days. Maternity leave begins 30 working days before the calculated date of confinement and ends 75 working days after the calculated period of confinement.
If the pregnancy is over earlier than 30 weekdays before the estimated date of delivery, the right to maternity allowance starts on the next weekday following the pregnancy’s ending and expires when the benefit has been paid for 105 weekdays. Employees are not permitted to work two weeks prior to 2 weeks after the birth of the child.
If the child is born prematurely, maternity allowance will be paid immediately from the working day following the birth. The maternity allowance is normally paid for about 4 months. Employees are entitled to maternity benefits after 154 days of pregnancy.
A new Act reforming parental benefits came into effect on 1 August 2022. Employees will receive parental allowances under the new Act if the estimated date of birth of their baby is on or after 4 September 2022. If that is the case, the pregnancy allowance period will start on 1 August 2022 at the earliest. Also, a pregnancy allowance is paid for 40 working days. The pregnancy leave must, however, be started 14 weekdays before the expected due date at the latest.
If the child is born prematurely over 30 weekdays before the expected due date, the employee will be entitled to start the pregnancy leave from the time of the childbirth.
Pay – The allowances are paid for by social security (KELA). Employment Contract Act,(as amended 2021), Ch. 4; Health Insurance Act, No. 1224 of 2004 (as amended), Sec 5.
After the birth of a child, the father is entitled to take paternity leave, during which paternity allowance can be received for 54 working days. Employees can choose to take leave for up to 18 weeks days at the same time as the child’s mother and the rest of the paternity leave shall be taken after the parental leave, or employees can use their paternity leave (1-54 weekdays) after maternity and parental leave ends. In both cases, the entire paternity leave must be taken before the child turns 2 years of age and cannot be assigned to the other parent.
Pay – The allowances are paid for by social security (KELA). Health Insurance Act, No. 1224 of 2004 (as amended), ch. 11, § § 6-7.
Employees are entitled to 160 working days of parental leave. Parents have a total parental allowance entitlement of 320 working days. Hence if a child has two parents, the days are divided equally between the parents. The pregnant parent is entitled to an additional 40 days of pregnancy allowance before the payment of the parental allowance is set to begin. Parents can agree to give up as many as 63 days of their entitlement to the other parent or some other person who provides care for the child.
Pay – The allowances are paid for by social security (KELA). Health Insurance Act, No. 1224 of 2004 (as amended), ch. 11, § § 7.
Employees are eligible for child care leave beginning after parental leave and lasting until the child reaches the age of 3. A child care benefit is payable for this period by the Social Insurance Institution.
The entitlement to unpaid childcare leave of the parent of an adopted child continues for at least 2 years following adoption, but not beyond the time when the child starts school. The minimum period for childcare leave is 1 month. This leave may only be taken by one of the parents or guardians of a child at a time. The leave can be taken in one or two periods of at least one month unless the employee and the employer agree on more than 2 periods or a period shorter than 1 month. Employment Contract Act,(as amended 2021) Sec 3 (Chap 4).
Employees are legally entitled to a total of 9 workdays of paid sick leave during each working year. Holidays are not counted as workdays. If the employment relationship has lasted for at least one month, the employee will be paid full wages for the said period. If the employment relationship has lasted for a period shorter than one month, half of the wages will be paid for the same period. Health Insurance Act, No. 1224 of 2004 (as amended), ch. 11; Employment Contracts Act, No. 55 of 2001 (as amended), Ch. 2 § 11
Unpaid Study leave is available to employees whose full-time employment with the same employer has lasted for one year in one or more periods. The maximum length of study leave is two years over a period of five years in one or more installments. If the employment has lasted for less than a year but at least three months, the maximum length of study leave is 5 days.
If the study leave is interrupted due to sickness, maternity, accident, etc, and such incapacity to work has lasted for more than 7 days, in such case, the employer can at the request of the employee postpone the leave and grant the remaining study leave to some other days. Study Leave Act, No. 273 of 1979 (as amended), § § 4-6.
Job alternation leave is an arrangement enabling an employee to take a temporary leave of absence from work lasting from 100 to 180 calendar days. The compensation for leave is not paid by the employer but is paid via an unemployment fund or the Social Insurance Institution of Finland (Kela).
Employees are eligible for job alternation leave when they have an employment history of at least 20 years. The maximum age to qualify for alternation leave is 60. Act on Job Alternation Leave, No. 1305 of 2002 (as amended), § § 2-7.
An employee who has been employed by the same employer for a period of at least 6 months in the previous 12 month calendar period is entitled to unpaid leave in order to take care of the child until the child finishes the second year of school, or, if the child has to start school one year earlier than normal, until the end of the third school year.
In the case of parents of a disabled child or a child with a long-term illness in need of particular care and support may be granted partial child-care leave until the child turns 18. Both the parents are entitled to such leave during the same calendar year but they cannot take the leave simultaneously.
The length of the leave and its time are determined by the employee’s presentation. Partial care leave is then granted by reducing the daily working time to 6 hours. Part-time work must be uninterrupted, except for rest breaks. If working time is organized on average, it should be reduced to an average of 30 hours per week. Employment Contract Act,(as amended 2021) Sec 4 (Chap 4).
Adoptive parents are entitled to unpaid parental leave for a period of 233 days calculated from the date of the child’s birth. Employees are entitled to an allowance from social security. However, the parental allowance is paid for at least 200 workdays. If the child is received later than 54 weekdays after the child’s birth, parental allowance is paid for 200 weekdays. Adoptive parent’s paternity leave must be taken during the two years following the date the child is taken into care. Health Insurance Act, No. 1224 of 2004 (as amended), ch. 11, § § 8-10.
The parents of children under the age of 10 have a right to a 4 working days’ temporary unpaid child care leave in case of a sudden illness of the child. The employee must inform the employer of the temporary care leave and its estimated duration as soon as possible. Employment Contract Act,(as amended 2021) Sec 6 (Chap 4).
An employee shall be entitled to a temporary absence from work if their immediate presence is necessary for an unforeseeable and compelling reason affecting their family due to illness or accident. The employee must inform the employer of the absence and the reason for it as soon as possible. At the request of the employer, the employee must provide a reliable explanation of the reason for the absence.
If the employee’s absence is necessary for the special care of a member of his family or another person close to them, the employer shall endeavor to arrange the work so that the employee may be absent from work for a specified period. The employer and the employee agree on the duration of the leave and other arrangements. Employment Contract Act,(as amended 2021) Sec 7 – 7a (Chap 4).
The employees are entitled to receive time off their work in order to attend to a position of trust in the municipal government. Section 18 (418/2015) of the Employment Contract Act.
If an employee is prevented from performing his or her work due to a fire, exceptional natural occurrence, or similar cause beyond their control, the employee shall be entitled to pay for the period of the impediment, up to a maximum of 14 days. Employment Contracts Act, No. 55 of 2001 (as amended), Sec 12.