Hire Contractors in Finland

Finland has become a preferred country for businesses seeking to hire for contract jobs in Finland or hire contractors online. 

This country presents a highly skilled, adaptable workforce for short-term or project-based work, as nearly 14% of its workers are self-employed. 

On the other hand, Finnish labor laws draw strict lines between employees, contractors, independent contractors, and freelancers—each has different rights, obligations, and tax treatments. 

Employees are entitled to statutory benefits like paid leave, social security, and unemployment insurance, while contractors and freelancers operate with much independence, handling their taxes and benefits. 

Whether you're hiring contractors online or directly employing workers in Finland, it is very important to understand the differences. 

This guide looks at key aspects of hiring contractors in Finland—from compliance and payroll management to drafting agreements and taxes—so you can confidently build your remote or hybrid team. 

We will also look at how specialized agent-of-record solutions can simplify the process of hiring contractors in Finland.

How to Hire Contractors in Finland

One may either hire contractors directly or via an AOR platform, like Skuad.

Here's a simple two-step process to hire contractors in Finland directly:

Step 1: Define the contractual relationship:

• Define clearly the scope of work, payment terms, IP rights, and confidentiality clauses of the contract. 
• Ensure that the conditions that should be met before a party can end the agreement are included, as well as the preferred mode of resolution in case of a dispute, which may include mediation or arbitration. 

Further, you may use this independent contract template for reference.

Step 2: Set up a payroll system:

• Contractors registered for VAT in Finland will normally charge VAT on their invoices. 
• You can check and pay the VAT registration details through bank transfer or international payment services. 

How to pay contractors in Finland

Here are some options to pay contractors:

• Set up an in-house process flow if you have an established presence or local business entity.
• Use digital payment platforms from services like Payoneer to enable quick and seamless payments.
• Leverage currency-friendly platforms so that global or non-EU businesses can choose platforms with favorable exchange rates for payments in euros.

However, managing payroll in Finland can become complicated when working with multiple contractors. 

You may require compliant record-keeping and performance tracking. 

Alternatively, you can work with an Agent of Record in Finland to simplify legal and administrative compliance. 

Contractor software like Skuad can track payment milestones, invoices, cross-border payments, and tax compliance.

Hiring contractors through Skuad AOR

Skuad AOR, a niche service under the umbrella of Employer of Record (EOR), simplifies contractor hiring and management in Finland. 

With the use of Skuad AOR, businesses can significantly lower compliance and administrative costs compared to traditional hiring methods.

The AOR platform handles everything about contractor engagement in Finland, including payroll processing, tax withholdings, and full compliance with local labor regulations. 

More importantly, Skuad AOR provides the flexibility of converting from contractor to employee salary, i.e., transitioning valued contractors into full-time employees, without requiring businesses to set up a legal entity in the country.

How to hire independent contractors in Finland

You can follow the above steps to hire independent contractors. 

But if you’re wondering which of the following is a characteristic of independent contractors, here’s a quick summary: 

• Independent contractors are self-employed. They control how and when they perform their work and are responsible for their taxes, insurance, and benefits. 
• Although they are commonly treated as freelancers, independent contractors are self-employed and have a registered sole proprietorship or private limited company structure. 
• Further, regular contractors differ from independent contractors as they may be employed through agencies or staffing firms, follow agency rules, and work temporarily.

How to hire overseas contractors

You can easily hire contractors online and use employer-of-record in Finland to draft contracts and track work schedules, project milestones, invoicing, and payroll. 

If you’re registered in the USA, you must comply with IRS requirements withholding via Form W-8BEN (for individuals) or Form W-8BEN-E (for entities).

Hiring contractors directly vs. Hiring contractors via Skuad

Here’s a comparison summary of hiring contractors directly vs hiring via Skuad:

For further reading, here’s a quick-point checklist for avoiding misclassification of employees as independent contractors in Finland.

How Much Does It Cost to Hire a Contractor in Finland?

There is no prescribed minimum wage by law in Finland. Employee salaries are typically negotiated by collective agreements or arrive at a reasonable salary based on the sector.

For reference, in 2022, full-time private-sector employees in Finland earned a median salary of €3,630 and an average salary of €4,050 per month.

Contractor fees can vary based on work experience, skill set, industry, and project complexity. 

Other hiring costs, such as contract negotiation, drafting agreements, and communication and collaboration tools, should also be considered expenses.

How to Convert a Contractor into an Employee in Finland

You can convert a contractor into an employee in Finland using two common methods:

1. Set up a legal entity in Finland

• Choose an appropriate legal structure and complete the required registration process.
• If the contractor is a foreign national, you must sponsor their work visa and secure a residence permit.
• Draft a detailed employment contract specifying terms and conditions, working hours, employee benefits, and termination policies.
• While Finland does not have a national minimum wage, you must comply with collective agreements, social security contributions, and tax withholding obligations when transitioning from contractor to employee status.

2. Use an Employer of Record in Finland

• Alternatively, you can outsource the conversion process to an Employer of Record (EOR) specializing in Finnish labor laws.
• The EOR manages onboarding, employment contracts, converting from contractor to employee salary, and other payroll benefits, ensuring compliance with local regulations.

Challenges of Hiring Contractors in Finland

Compliance isn't just about following the rules—it protects your reputation and gives you a competitive edge. When you hire in Finland, you should: 

• Ensure fair competition by operating legally.
• Provide workers with the benefits and protections they deserve.
• Avoid legal risks that could hurt your business financially.

Let’s look at the top compliance challenges to hire contractors in Finland: 

1) Workplace inspections

Hiring international contractors requires you to follow strict legal obligations to avoid penalties and ensure fair labor practices. Here is what you need to know:

• The OSH Division carries out routine inspections to ensure adherence to employment laws. In 2023, more than 2,400 inspections focused on businesses hiring international workers in Finland, both locally registered and abroad.
• Worker misclassification in Finland as self-employed contractors rather than employees will lead to legal disputes, fines, back pay, social security, and benefits.

2) Statutory contractor rights

In Finland, the state manages all statutory benefits, such as independent contractor maternity leave. 

As an employer, you shall ensure that:

• The contractors make mandatory social security and pension contributions to qualify for the benefit.
• Supplying any required employment or income verification documents to back their benefit claims.
• Following Finnish labor laws to avoid misclassification and ensure proper handling of contractor rights.

3) Payroll challenges

Payroll management of contractors in Finland needs a detailed approach to managing social security contributions, VAT compliance, and cross-border payments. Here's what you need to watch out for:

• Even if you hire independent contractors, Finnish law may require you to manage pension contributions or insurance coverage, depending on the nature of the contract.
• Contractors with an annual turnover of 15,000 euros must add VAT (usually 25.5%) to their invoices. You’re responsible for verifying that contractors are properly registered for VAT and that invoices comply with Finnish VAT laws and reporting requirements.
• Contractor management, when hiring outside Finland, has additional challenges, including currency exchange fees, international transfer costs, and compliance with local tax regulations.

4) Visa implications

Finland currently does not offer a specific digital nomad visa, which can make it challenging for you to hire remote contractors or freelancers who wish to live and work in Finland. 

Moreover, talented remote workers may avoid relocating to Finland due to visa complexities.

In such cases, you must support them with additional paperwork for a self-employment visa. There are constant legal risk implications if contractors work without the proper permits.

Here’s why you need a dedicated solution to regularly review your hiring practices and payroll systems, stay up-to-date, and maintain records to prove compliance with Finland’s evolving regulations. 

Connect with an agent of record in Finland, like Skua, to handle legal employment requirements for hiring contractors.

Hire Contractors in Finland with Skuad

Skuad's AOR solution streamlines the hiring of contractors in Finland and worldwide. 

We manage localized onboarding, cross-border payroll, compliance, and much more, making it easy to create and manage globally distributed teams in 160+ countries.

Leverage our secure EOR services to seamlessly transition dedicated contractors into full-time employees while ensuring full compliance.

Book a demo today to get started!

FAQs

1. Can I hire an independent contractor from another country?

Yes, you can hire independent contractors or freelancers from another country. However, you must be aware of local employment compliance and taxation regulations. 

2. How do you get an employment contract in Finland?

To obtain a contract in Finland, an employment draft should be produced with content aligned with all the job terms, such as salary and benefits provisions, in the labor legislation and collective bargaining agreements. Employees should be registered with the tax and pension authorities. If hires from abroad are needed, residence permits should be applied for. Alternatively, an EOR like Skuad can help manage contracts, payrolls, and compliance.

3. How do I pay a foreign contractor?

The most popular way to pay a foreign contractor digitally is through Payoneer, which handles currency conversion charges easily. While direct bank transfer is the most obvious solution, you may incur additional costs. Alternatively, you can use contractor software for payroll in Finland when handling multiple contractors, as it simplifies tracking invoices and compliance. 

4. What does zero contract mean in Finland?

In Finland, a zero-contract employment arrangement is a contract for casual work. Employers enjoy the flexibility of not guaranteeing a minimum number of hours and are paid for only their work hours.