Foreign employer in Finland – it is crucial to take into account the obligations concerning posted workers
The legislation regulating posted workers in Finland contains many provisions that foreign companies must comply with when starting a business in Finland or posting employees from abroad. When a foreign company sends employees here, the foreign company must make sure that it takes into account the obligations under Finnish law in the conditions of employment and other procedural obligations.
Posted workers – i.e., employees who work temporarily in Finland under an agreement with the foreign company – are subject to the Act on Posting Workers. A posted worker can work in Finland under his or her employer's Finnish business agreement, in which case the company uses its own personnel in Finland. It can also be a question of an internal transfer or posting a temporary agency worker to Finland. The posting company must take care of its obligations in Finland in all these situations. An internal transfer means that the employee will come to Finland to work at the location of another company within the same group of companies.
The employer of posted workers must, among other things, ensure a reasonable level of pay and compliance with the other terms of the applicable collective agreement and labor laws, keep records of working hours and annual holidays, and take care of employees' insurance coverage, occupational safety, and occupational healthcare. In addition, the employer has obligations related to the appointment of a representative and notifying occupational safety and health authority. The foreign company must also ensure that the employees have the right to work in Finland and keep certain work-related documents in written form for the entire duration of the posting and for two years after the end of the posting. These include information on the posting company and its responsible persons, the identification details of the posted workers, written information on the employment conditions applicable to the work and information about the basis of the posted workers’ right to work.
The obligation of the posting company to appoint a representative and notify occupational safety and health authority
When a foreign company has employees in Finland, the employer must appoint a representative in Finland, provided that the duration of work in Finland is more than ten days. If the company has several posting periods in Finland, all other periods in the four months preceding the end of the posting are taken into account when calculating the duration of the posting of workers. The representative must be available for the posted workers and the authorities at all times during the posting.
The employer's representative in Finland may be, for example, a company providing financial management or tax advisory services to the company, with which the foreign company enters into an agreement to act as a representative. At the same time, it can be agreed that the representative will help the foreign company to fulfill its obligations under Finnish law and to keep the documents, which according to Finnish law must be kept in Finland even after the posting of workers.
A company that posts workers to Finland must notify the occupational health and safety authority before work is commenced in Finland. A notification is not required for short-term internal transfers related to non-construction work. Short-term employment is a period of no more than five working days, and in addition to the period of posting in question, all other periods in the four months preceding the end of the posting in question are taken into account. In the case of construction work, the notification must always be made. It can be agreed with the representative appointed in Finland that the representative will also take care of the notification on behalf of the company. The notification should also be updated if there are significant changes in the information, such as changes in working hours or the number of employees.
Tax liabilities of a foreign company in Finland
The foreign company must comply with the obligations under Finnish tax legislation in Finland. Depending on the situation, the tax liabilities of a foreign company may include income taxation related liabilities (permanent establishment), value added tax related liabilities or obligations related to acting as an employer.
In the best case, a foreign company can get comprehensive advice on obligations under Finnish law from a service provider that agrees to represent the employer, in which case the foreign company does not have to rely on the assistance of several parties to comply with its obligations.
Fiscales acts as a representative for foreign employers and provides a wide range of services related to the company's financial management, payroll and taxation. In cooperation with its partners, Fiscales can also help with issues related to labor law.