Calculate the costs of the employee

When planning to recruit an employee, you should calculate the actual costs incurred by the employee and their impact on profitability as accurately as possible.

When considering different options, calculate whether using a temporary agency worker is more profitable than hiring a worker. When assessing the costs, note that your company also does not have to pay the associated administrative costs from payroll, for example.

The temporary agency pays the employee's salary and takes care of all its obligations as an employer, such as organising occupational health care. The company pays the temporary agency company the invoice it sends. The amount of the invoice is determined by the terms and conditions of the customer agreement.

Temporary agency workers have the right to use your company's services and common arrangements on the same terms as other employees, unless different treatment is justified. These include the use of shared recreational facilities and workplace canteens. However, your company is not obliged to provide financial support for the temporary agency workers' use of such services and facilities. These terms of employment other than those laid down in the collective agreement may be agreed between the employer and the employee.

An apprentice is in an employment relationship with your company, so the costs are the same as when hiring an employee. Apprentices must be paid a salary in accordance with the collective agreement.

You can choose whether to pay the student a salary during the theoretical periods. If you do not pay, the student may, under certain conditions, receive financial benefits or students’ social benefits. For apprentices, such benefits include daily allowance, family allowance, accommodation allowance and travel allowance.

In unpaid traineeships, the costs may be

• the necessary workwear and protective clothing and tools
• the benefits provided and the compensation paid in cash, such as meals at the workplace, benefits in kind, staff benefits and travel comparable to commuting.

The salary is a compensation for the work performed, i.e. the time your employee works at the workplace or another location directed by your company. In addition, working hours often include travel and training related to work assignments as well as time spent on carrying out trade union tasks.

The law requires that a reasonable normal remuneration be paid for the performed work. The Finnish legislation does not lay down a minimum wage. The salary is based on a collective agreement.

• If your company belongs to an employers’ association that has concluded a collective agreement, you must comply with the salary regulations of the said collective agreement.
• If your company does not belong to an employers’ association, you must comply with the salary regulations of your industry’s universally binding collective agreement.
• If your company is not obligated to comply with any collective agreement, you may use the salary regulations of a non-universally binding collective agreement as a guideline when determining the salary and agreeing on it.

Instead of a monthly or hourly pay, pay can also be defined as a performance-based contract wage or commission, as long as this does not fall below the wage minimum of the collective agreement.

The amount of the employer's health insurance contribution varies annually. The contribution percentage is the same for all employers. In 2026, it is 1.91 % of all salaries paid.

You do not have to pay the employer's health insurance contribution if you pay a maximum of 1,500 euros in salaries per year.

In unpaid traineeship

• the employer does not have to pay social insurance contributions for the trainee
• the educational institution takes out a worker’s compensation insurance for the trainee.

As a rule, a foreign employee working in a Finnish company is subject to the same terms of employment as Finnish employees.

If an employee from an EU/EEA country holds an A1 certificate from the country of origin, the statutory social insurance contributions must be paid to the country that issued the A1 certificate.

The Finnish Centre for Pensions' Social Insurance contributions in international work situations serviceOpens in a new window. allows you to check which social insurance contributions you must pay.

If you hire a person on old-age pension who has already reached the highest retirement age, you do not need to pay an earnings-related employment pension insurance.

The insurance obligation ends as follows:

• Employees born in 1957 or earlier: when the employee is aged 68 or over
• Employees born in 1958–1961: when the employee has reached the age of 69
• Employees born in 1962 or later: when the employee has reached the age of 70

The obligation of a foreign employer to pay statutory social insurance contributions varies in different situations.

Check the Finnish Centre for Pensions' Social Insurance contributions in international work situations serviceOpens in a new window. to find out what social insurance contributions must be paid to Finland.

During the employment relationship, the employee will be absent from work for various reasons. According to the law, you must pay for that period in some situations. In addition, collective agreements and employment contracts in different sectors may contain provisions on pay, even if the law does not oblige them to do so.

For example, an employee on annual leave has a statutory right for pay. Parental leave or temporary child-care leave is only paid if agreed in the collective agreement or employment contract. If an employee falls ill, the statutory obligation to pay the salary only applies to the personal liability period.

Before recruiting an employee, find out what kind of pay obligations the employee will incur to your company during absences. In addition, you may need to acquire a substitute for the duration of the employee's absence. Therefore, take into account the indirect wages paid during absences when calculating the total cost of the employee.

The employer must arrange at least statutory, or preventive, occupational health care for all employees.

Costs of preventive occupational health care per employee are approximately EUR 450 per year. However, the costs of occupational health care are affected by the size of the workplace. In small workplaces, the average costs are lower than in larger workplaces.

If you want to organise more comprehensive occupational health services than preventive occupational health care for your employees, the price is usually determined according to the scope of the service purchased. In addition, the amount of use affects the price. Some providers of occupational health services can also offer a fixed-price service.

Prices can vary widely, so it is a good idea to ask service providers for a quote and compare different options. Remember to also request an offer from your wellbeing services county.

Other costs affecting profitability include, but are not limited to:

• labour acquisition
• protective equipment and workwear
• tools
• personnel training
• staff benefits, such as workplace meals.

Read more about employee benefits.

When calculating whether you can afford to hire an employee, please note that:

• you have to reserve time for the induction of the new employee, during which you are not available for other tasks
• a new employee may not be immediately fully productive after starting work.

Please note that the company's income may be lower during the induction period.

You can use the Palkka.fi payroll calculator (in Finnish and Swedish) of the Finnish Tax AdministrationOpens in a new window. to calculate the wage costs, including their indirect costs. The general rule is that in addition to gross wages, it is a good idea to add 40 to 50 per cent for other costs.

For help in calculating the costs incurred by the employee or making profitability calculations, consider also contacting:

• your accountant or accounting firm
• Enterprise Finland advisory service
• Yrittäjän talousapu counselling service.

Regional Enterprise AgenciesOpens in a new window. or development companiesOpens in a new window. also provide advice for calculating the costs.

A regional business mentorOpens in a new window. can support you if you have business challenges or want to develop your operations.