Hiring and residence permits
Hiring and residence permits
This section contains some of the information included in the guide to international recruitment produced by the Course towards Finland project coordinated by the ELY Centre Southwest Finland. Here are the key points related to hiring an employee from abroad and residence permits the employer should know.
Employee selection and conclusion of employment contract
Making a recruitment decision is always challenging for the employer. In international recruitment, the situation poses additional challenges, as you often have to consider issues that are not related to work. For example, you need to consider how a new employee fits into the work community or how they will enjoy living in a new country.
Once the recruitment decision is taken, it is important to communicate it properly. The role of applicant communication is emphasised in the international recruitment situation, as it helps to build a good employer image. At its best, excellent communication with applicants is timely, relevant, and informative. This should be remembered not only when informing the selection decision but also throughout the process. When informing about the decision, it is good to contact all applicants and, as far as possible, also provide constructive feedback.
When concluding an employment contract, it should be borne in mind that the employer usually has experience with Finnish labour law, unlike the prospective employee. It is good to go through the basics in detail. Review at least the type of contract, the probationary period, the salary and payment terms, and the grounds for termination. The rights and obligations of the employee should also be reviewed with the new employee when signing the contract. In an international context, it is best to write the employment contract in a language both parties understand.
When negotiating an employment relationship, it is advisable to state clearly, e.g.:
- How long is the employment relationship?
- How is the salary determined?
- What deductions are made from wages (taxes and other contributions)?
- What are the working hours, and how is the annual holiday determined?
- What collective agreement is applied in the working sector?
The conclusion of an employment contract in writing is vital in an international context, as an agreement is often also needed in dealings with the Finnish Immigration Service and other authorities.
Salary and benefits
The collective agreement usually determines the salaries. If there is no collective agreement, the salary can be agreed upon with the employee. However, the salary must be normal and reasonable, and the wage level in the employee’s home country cannot be used as a basis.
The international expert should also be informed at an early stage about the Finnish tax system and other expenses withheld from salary and the acquisition of a tax card. It is also a good idea for employers to clarify their own obligations if the employee is covered by social security in another country.
Employee benefits and related tax considerations should also be explained to the employee. Employee benefits can play a vital role in the employee’s willingness to apply for a job, so it is good to explain the employment benefits already in the application notice.
The benefits offered as installation services are discussed in more detail later, under Establishment services. It is important to note, however, that for example, if the employer covers the costs of moving to Finland from abroad, 50 % of the moving expenses are considered taxable income. Tax practices are complicated, so you should verify them in the Income Tax Act or with the experts in tax administration.
Employee rights and obligations
When signing an employment contract or at the latest when the employment relationship begins, it is advisable to review the rights and obligations of both the employer and the employee. It is a good idea to explain the employer’s legal obligations as a foreign employee is rarely aware of Finnish labour legislation. Verbalising the statutory obligations often increases the employee’s confidence and improves the employee’s image of the employer.
For example, the practices of sick leave differ from one country to another. It is wise to explain that the employee is not expected to come to work if they are ill, and at the same time tell them about the sick leave practices, occupational health services and so on. For candidates with a family, it is also good to mention time out of work when children are ill.
When it comes to rights and obligations, it is good to start with the basics. What do the employer’s right of management mean in practice and what does the duty of loyalty signify. Working time monitoring and access control should also be reviewed from the point of view of employee protection, not just as a rule imposed by the employer.
In some cases, it is also necessary to review the obligations relating to trade secrets and non-competition clauses, stressing that these obligations are not limited to working time alone.
According to the Employment Contracts Act, the employer and the employee may agree on a probationary period of up to six months (or up to half of the length of the fixed-term contract). The concept may be strange to a foreign employee and its logic should be clearly explained to the employee. It is good to tell that the probationary period is also a safeguard for the employee, and the employer is not allowed to end the employment during the probationary period for discriminatory or inappropriate reasons.
The employer should also provide the employee with basic information about Finnish working life and its practices. For example, social security, tax deductions, health care services and pension systems are issues that an employee, in one way or another, will also encounter outside of work.
The basic principles of collective bargaining in the sector should be repeated even before the employment contract is signed, so that the employee can assess the criteria for determining wages, working hours, determining leave and other practices before signing the contract.
Personal identity code and taxation
A personal identity code is often needed for an employment contract and a tax card is often needed at the latest when paying the salary. HR systems often require a personal identity code, without which an employment contract cannot be concluded. The official personal identity code must be applied for as soon as possible upon arrival in the country. In some cases, the personal identity code can be replaced by a temporary personal identification number, and, for example, a foreign personal identification number can be accepted in the Incomes Register.
The Finnish tax system sometimes seems difficult even for someone who has lived here their whole life, so the importance of explaining the principles of the system for an employee who has moved to the country cannot be emphasised enough. This is particularly important because the Finnish tax system focuses on the taxpayer’s own action (request for a tax card, various declarations, etc.).
The first step is to find out the employee’s tax liability. Whether the employee is subject to general or limited tax liability in Finland. Secondly, it is a good idea to go through the deductions that are made from the employee’s salary and why. Thirdly, it is important to inform the employee about their obligation to provide the employer with a tax card and to explain how to obtain the tax card.
There must be a reason for a person’s stay in Finland. The nationality of a person and the grounds for residence together determine the type of permit required to stay in Finland and work in Finland.
- Nordic citizens do not need a permit to move to Finland or live in Finland. However, if the stay lasts for more than 6 months, they must register in person with the Digital and Population Data Services Agency. Permits and notifications for Nordic citizens — Suomi.fi
- Citizens of a Member State of the European Union may reside, study and work freely in Finland without a separate residence permit for three months. A stay longer than three months requires the registration of an EU citizen at the Immigration Service. There must be grounds for registration such as work or study. Registration of the right of residence | Finnish Immigration Service (migri.fi)
- In the case of nationals of Iceland, Liechtenstein, Norway or Switzerland, there is also no requirement for a residence permit and registration is sufficient.
In the case of other countries, working in Finland is usually subject to a residence permit even though it would be possible to travel to Finland without applying for a residence permit:
- Travelling to Finland or another EU country from visa-free countries is possible for a total of 90 days during a 180-day period. Visa-free entry does not, however, give the right to work in Finland.
- From countries subject to visa requirements, you can travel to Finland in the manner shown by the given visa. Also, when travelling with a visa to Finland, a person usually does not have the right to work in Finland. Visa to Finland — Ministry for Foreign Affairs
The residence permits required to work are as follows:
Regular work permit
- Usually granted to a specific sector
- Requires a valid passport
- Usually includes an economic needs test carried out by the TE Office (In practice, it is an assessment of the availability of labour)
- Usually granted for the duration of the employment relationship, but for a maximum period of four years.
- Certificate for seasonal work (visa-free country, less than 3 months of work)
- Seasonal work visa (country subject to visa requirement, less than 3 months of work)
- Residence permit for seasonal work for 3-6 months
- Residence permit for seasonal work for 6-9 months
There are dozens of permits for particular activities or work. Here are some of the most common reasons to apply for a residence permit.
- Start-up entrepreneur
- Person graduated in Finland
The processing times for residence permits are often quite long, but in some cases, it is possible to obtain a permit under the accelerated procedure in up to two weeks:
You can apply for the accelerated procedure
- as an expert
- as an expert with an ICT residence permit
- as a holder of the EU Blue Card
- as a start-up entrepreneur
A list of all work-based residence permits can be found on the Finnish Immigration Service website Applications | Finnish Immigration Service (migri.fi)
Right to work
The right to work and the work permit are often confused, but they are two completely different things.
A work permit is a right of residence, whereas the right to work is about whether the person has the right to work.
The work-based residence permit always includes the right to work, but the right to work is also linked to other types of residence permit. For example, a person who has arrived in Finland through the asylum procedure or, for example, a spouse who arrived in Finland with a permit based on family ties have the right to work.
In 2022, applicants for temporary protection from Ukraine and beneficiaries of protection also have the right to work. On the other hand, for example, the right to work for asylum seekers starts only three or six months after the asylum application, depending on whether the applicant has a passport (3 months) or not (6 months).
The right to work may be unlimited or limited. An unlimited right to work means that the right to work is not limited to a particular sector of activity. When entering the country with a work permit, the sector of activity is often limited, but for example, a spouse arriving through family reunification is allowed to work in any sector (unlimited right to work).
The employer has the obligation to check the employee’s right to work.