1. Legal Framework
The Finnish social security system includes the following schemes:
- Social security
- Pension insurance
- Accident insurance
- Unemployment insurance
2. Required Contributions
The employer is accountable for both the employer’s and the employee’s part of the contributions and shall deduct the contributions from the employee’s salary.
- Social security; the employer is required to make social security contributions to the tax authorities. The amount of the social security contribution is 2.12 % of the employee’s gross salary in 2016.
- Pension insurance contributions; in Finland all employees shall be covered by a mandatory pension scheme which is, in general, arranged through a statutory pension insurance scheme. In 2016, the total pension insurance contribution is 24.6 % of the employee’s salary, of which the employee’s part is 5.70 % or for employees aged 53 or above 7.20 %. The pension insurance company of the employer accounts for both contributions.
- Accident insurance; the employer shall take out an accident insurance for all of its employees for industrial accidents and occupational diseases. In 2016, the amount of the contribution ranges between 0.1-9 %, and is accounted for by the accident insurance company of the employer.
- Unemployment benefit scheme; in order to prepare for unemployment, the employers are required to make unemployment contributions to the Finnish Unemployment Insurance Fund. In 2016, the amount of the contribution consists of the employee’s part which is 1.15 % of the employee’s salary, as well as employer’s part based on the total wage level so that the minimum is 1.0 % and the maximum is 3.9 %.
The mandatory insurances, which the employer is required to take out, are the above mentioned earnings-based pension insurance and accident insurance covering occupational accidents and diseases. In addition some collective bargaining agreements require the employer to take a group life insurance for its employees.
4. Required Maternity/Sickness/Disability/Annual Leaves
Under the Finnish Employment Contracts Act, employees have a statutory right to maternity, special maternity, paternity, parental and certain child-care leaves (all referred to as ‘family leaves’). The maternity leave is 105 days (including Saturdays). The parental leave that begins after the maternity leave is up to 158 days (including Saturdays) and it can be held either by the mother or the father. After the parental leave, the father can take paternity leave of up to 54 days (including Saturdays) (up to 18 days of which can also be held during the maternity leave). The employees do not have a statutory right to salary during these family leaves, but are entitled to certain allowances from the Social Insurance Institution (KELA). However, the collective bargaining agreement usually includes a clause on paid maternity (1-3 months) and/or paternity (1-3 weeks) leave. In addition, some employers voluntarily offer paid family leaves.
Employees enjoy special protection against dismissal during most family leaves, and are granted a statutory right to return to work after the family leave.
Employees, who are prevented from performing work due to illness or accident are entitled to full pay during illness in accordance with the Employment Contracts Act, or if a collective bargaining agreement is applicable, based on that agreement. If the employment relationship has lasted for a minimum of one month, the employee is entitled to full pay for the period of disability up to the end of the ninth day following the date of falling ill, but only up to the point at which the employee’s right to national sickness allowance under the Sickness Insurance Act (364/1963) comes into effect.
Temporary child-care leave
The employee is also entitled to temporary child-care leave, if the employee’s child under ten years falls sick.
Under the Annual Holidays Act, employees have a statutory right to two and a half weekdays of holiday for each full holiday credit month. Thus, the maximum length of paid holiday annually is in total 30 days. However, the entitlement is two weekdays of holiday for each full holiday credit month if, by the end of the holiday credit year, the duration of the employment relationship has been an uninterrupted period of less than one year. When the number of days of holiday is calculated, any fraction of a day is rounded up to constitute one full day of holiday. The holiday credit year runs from 1 April until 31 March and the holidays are to be used mainly during the holiday season (2 May–30 September) following the holiday credit year.
5. Mandatory and Typically Provided Pensions
The employer has to provide an earnings-based pension scheme for employees between 18 and 67 years of age, as already mentioned above.