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Hiring employees

When you first hire an employee, the biggest financial questions are the real costs of hiring and whether hiring someone makes financial sense.

When you become an employer, you also have to pay a number of employer’s contributions: pension, health insurance and unemployment fund contributions, as well as accident and group life insurance premiums. A good rule of thumb here is that regardless of sector, the employer’s contributions themselves cost around 20–25 % in addition to the salary you pay.

In addition to compulsory employer’s contributions, you should also consider other costs caused by paying salary. These include annual holiday pay, possible holiday bonus, and salary to be paid for public holidays falling on weekdays. In addition, costs may arise from recruitment, employee orientation, training, clothing, equipment and facilities for the new employee, as well as increased accounting and payroll costs.

As an employment relationship progresses, costs may also arise from occupational health services, sick leave, substitution costs and various voluntary employee costs.

Generally speaking, multiply the employee’s gross wages by 1.5-1.6 to work out your actual costs.

The wage calculator on member pages helps you estimate the costs of the new hire for your business It will also help you work out your actual costs as an employer.

In certain cases it is possible to receive external support for recruiting and hiring an employee, as well as for the resulting costs. As a Suomen Yrittäjät member you can contact our advice service and get help on drafting an employment contract, for example. Contact us if this matter is on your mind!

Advice for members by phone on legal questions

Counselling services

Free legal advice and expert assistance as a member service
Weekdays 08.00–18.00

Find crucial and useful information and guidance on the member service.

Sector-specific collective agreements (FI)
Contract of Employment, Non-compete agreement and Non-disclosure Agreement
Checklist of an employer’s obligations when hiring, or when you have 10, 20 or 30 employees.
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Guide to hiring your first employee

Hiring the first employee is a big step for any business owner. It is both a big opportunity and a big responsibility. This guide provides with a lot of information and you can enquire further by contacting Suomen Yrittäjät.

Contract of Employment

An employment contract confers the rights and obligations under the Employment Contracts Act on both the employer and the employee.

Contract of Employment

Employee orientation

When a new employee enters a company, good orientation is essential for the employee to become a member of the work community and get caught up in the job.

Employee orientation

Incomes Register

Employers file salary information with a centralized Incomes Register for official needs.

The Incomes Register enables automated payroll data filing. As an employer, you file data with the Incomes Register, which shares them with different users. You need to file with the Incomes Register within five days of every salary payment and with details of each recipient.

Help for information sharing from technology

The recommended and easiest way is to use the Income Register’s technical interface to file salary data. This means that there is an electronic connection built between your payroll system and the Incomes Register, allowing reliable and automatic data sharing between the two systems. This reduces manual work stages. If you want to automate salary data filing, ensure that a technical interface is built between your payroll system and the Incomes Register.

Your accounting firm and the Tax Administration can provide further information about the technical interface.

File income data as accurately as possible

The Incomes Register enables many things. Each employer decides on how much information to file with the Incomes Register and on how it affects his or her day-to-day work. You can report just the obligatory information to the Incomes Register, in accordance with the minimum requirements. As an employer, however, it may be worth your while to provide as much information as possible when paying salary, as it could make clarifying matters afterwards easier. As an employer, you should assess what the best solution for your business is.

The voluntary or supplementary data which you can file with the Incomes Register are data needed for decisions on benefits, client fees and compensation processing. When you apply for benefits yourself as an employer, that occupies your time. On the other hand, when your employee applies for benefits, that is an indirect burden on your time, as the employee may need to ask you for a payslip, or the benefits issuer may ask you for clarifications. When you file supplementary data when paying salary as an employer, there are fewer searches for past documents and manual investigations.

Only file with the Incomes Register on paper for a special reason

Online filing is a basic requirement for using the Incomes Register. Information can only be filed on paper if there is a special reason for doing so. Such a special reason could be considered a situation in which a natural person, estate, casual employer or foreigner does not have the opportunity to provide data electronically. You cannot file with the Incomes Register over the phone. Data must be provided in set formats.

You can learn about electronic payroll and data filing on palkka.fi, a free service especially aimed at small business owners and households. It is a statutory government service. You can use palkka.fi to calculate a business’s salaries and report data directly to the Incomes Register.

Failure to file carries penalties

If you are obliged to file incomes data, the Tax Administration can set you a negligence penalty if

  • a filing is incomplete or incorrect and
  • the filing has not been corrected, in spite of an order to do so, or an acceptable explanation for the error has not been given by the deadline.

The Tax Administration may waive or reduce the negligence penalty if there was a justified reason for the error. Depending on the number of faulty or incomplete filings, the negligence penalty can range from €100 to €1,000.


Probation is a discretionary period at the start of employment which gives the employer and employee the right to cancel an employment contract immediately during probation, without specific grounds for terminating employment. However, probation cannot be ended on inappropriate or discriminatory grounds.

A clause on probation can be included in both a permanent and fixed-term employment contract.

Under the Employment Contracts Act, probation at the start of a permanent contract may be no longer than six months. If an employee is away from work due to work incapacity or family leave during probation, the employer has the right to extend probation by a month for each 30-day period of work incapacity or family leave period.

The employment contract must contain a clause on probation if either party wants to make a claim based on it. Referring to the collective bargaining agreement is not enough, even if it contains a term on probation.

Probation and fixed-term employment

When a new fixed-term contract immediately follows a previous fixed-term contract, the new contract cannot include probation unless the duties have changed substantially. A probation period can be agreed in the middle of employment if the employee’s duties change substantially. If you as an employer invoke this probation clause when your employee changes duties, the employee then returns to his or her previous duties.