Finland: Operating a Business

Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labor | Management of Human Resources

Legal Forms of Companies

Types of Companies and Capital (Max/Min)	Number of Partners/Shareholders and Liability
The Sole Proprietorship (Toiminimi) No minimum capital	1 partner Undefined
Co-operative Decided by the founders, no minimum capital. Participation shares must be of equal value.	Minimum 3 founders Undefined
General partnership (Avoin yhtiö, Ay) No minimum capital	Minimum 2 general partners General Partner is personally liable and without limitation for the company's debts and obligations.
Limited partnership (Kommandiittiyhtiö, Ky) No minimum capital. At least 1 limited partner with financial input.	Minimum 1 general partner + 1 limited partner At least 1 of the members is liable for the debts and obligations of the company.
Private limited company (Osakeyhtiö, Oy) EUR 2,500	Minimum 1 person Liability is limited to the amount contributed.
Public limited company (Julkinen osakeyhtiö, Oyj) EUR 80,000	Minimum 1 person Liability is limited to the amount contributed.

Enterprises Federation: The Federation of Finnish Enterprises
The Confederation of Finnish Industries
Search a Company or a Financial Report: NBPR, National Board of Patents and Registration of Finland

Business Setup Procedures

Setting Up a Company	Finland	OECD
Procedures (number)	3.00	5.60
Time (days)	14.00	13.80

Source: Doing Business.

For Further Information: Consult Doing Business Website, to know about procedures to start a Business in Finland.
Trade Register
The Competent Organization: National Board of Patents and Registration of Finland (NBPR)

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

	2010
Labor Force	2,680,000

Source: CIA - The world factbook

	2009	2010
Total activity rate	-	60.90%
Men activity rate	64.90%	-
Women activity rate	57.00%	-

Source: UN - United Nations

Employed Persons, by Occupation (% of Total Labor Force)	2005
Agriculture and forestry	4.8%
Manufacturing	19.2%
Construction	6.6%
Trade, hotels and restaurants	15.7%
Transport and communications	7.2%
Activities auxiliary to financial intermediation, insurance and business services	13.4%
Public and other services	32.9%
Industry unknown	0.2%
Total	100.0%

Source: Statistics Finland

For Further Statistics: Statistics Finland
For Further Information About the Labor Market: Information on Finnish working culture

Working Conditions

Opening Hours
Legal Weekly Duration: Normal working hours may not exceed 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, and in one calendar year, 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 Labor 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 Labor Market: Informal labor is not particularly developed.

The Cost of Labor

Pay

Minimum Wage: Minimum wages are based on collective agreements; there is no standard minimum wage in Finland. An employer, as a member of the employer organisation which has concluded a collective agreement applicable in the sector, follows the collective agreement. An employer, as a non-member of the employer organisation, is also required to follow the generally binding collective agreement applicable in the sector.
Average Wage: The average wage per hour is 13.80 EUR.
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: A private employer’s social security contribution varies being 2,951%, 5,151% or 6,051%. The health insurance contribution of a private employer is 2.05% of salaries and the old-age pension contribution is 0.901%, 3.101% or 4.001% depending on the payment class.
Contributions Paid By the Employee: - Health insurance contribution: medical treatment contribution 1.28% and daily allowance contribution 0.75;
- Unemployment insurance contribution: 0.58%;
- Pension insurance contribution: 4.3% for those aged under 53 years and 5.4% for those aged 53 years or more.
Competent Organization: The Social Insurance Institution of Finland (KELA)

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 became 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; the representation of fixed term contracts (including part-time fixed term contracts) is 13,6%. 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, or such essential changes in the conditions necessary for working related to the employee’s person;
- or the work has diminished substantially and permanently for financial or production-related reasons, or for reasons arising from reorganization of the employer’s operations.
Other Possible Methods: Resignation, canceling the employment contract (very exceptional)
Labor Laws: A portal for Finnish public sector online services

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 labor 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 labor 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: Approximately 80% of Finns are members of a trade union. The International labor Organisation (ILO) recently ranked Finnish unions as amongst the most effective in the world. Finnish unions are occupation-based. There are about 70 trade unions in Finland and they organize employees in all types of work. These unions are affiliated to one of Finland’s three labor confederations, SAK, STTK and AKAVA.
Unionization Rate: The level of Finnish employees’unionisation is among the highest in the industrialized world; 75% of employees belong to a trade union.
Unions: The Central Organization of Finnish Trade Unions (SAK)
Confederation of Unions for Professional and Managerial Staff in Finland (AKAVA)
The Finnish Confederation of Salaried Employees (STTK)
Regulation Bodies: Ministry of Employment and the Economy
The Confederation of Finnish Industries
The Central Organisation of Finnish Trade Unions (SAK)
International labor Organization

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