When should an employee be insured?

​​​Finnish legislation regulates earnings-related pension insurance. It prescribes that employers must take out TyEL insurance for all employees working in Finland.

As a general rule, employees are always insured in accordance with the legislation of the country of employment. There are, however, some exceptions to this rule.

TyEL insurance and EU and ETA countries, Switzerland and social security agreement countries

In EU and EEA countries, Switzerland and social security agreement countries the employee is covered by just one social security system, usually that of the country of employment. If there is no social security agreement in place it is possible that social insurance needs to be taken out in both countries.

 An employee is insured in the country of employment in accordance with the legislation of the country in question. This general rule is subject to a few exceptions. People working in Finland are usually insured in Finland and people working abroad are insured in the country of employment.
 
In these countries

  • An employee is covered by social security in his or her country of employment under the same conditions as those applied to the nationals of the country.
  • He or she is only insured in one country.
  • There is usually no need to pay contributions to two countries.
  • When calculating insurance years and qualifying periods, employment in other agreement countries is taken into account if required.

The exceptions to this rule include, for example, posted workers and people working simultaneously in several countries.


​A foreigner working in Finland

Arranging insurance for a foreign worker

Foreign workers are generally insured in Finland according to Finnish earnings-related pension laws. Earnings-related pension contributions are, in this case, paid according to the usual system.

The employee accrues pension in Finland, which he/she can apply for on retirement.

And then for the exceptions. The main exception is employees arriving from EU and ETA countries, Switzerland or a social security agreement country and who hold a certificate of posting.

They are insured in the country from where they are posted.

If the employee is not insured in Finland, the employee must have a certificate of posting.

In a nutshell

  • The employment and payroll information for foreign employees are reported together with the payroll information for other employees.
  • The employee's portion of the insurance contribution is withheld from the employee's pay. 
  • Instead of the social security number, the employee's birth date and gender can be reported. 
  • The employee can apply for a social security number from the Local Register Office or the Finnish tax office. 
  • Pension which is earned in Finland is paid to the employee once he/she reaches the age of retirement as part of the person's total pension, regardless of nationality or country of residence.

When the employee has a certificate of posting

When employees arriving from EU and ETA countries, Switzerland and social security agreement countries have a certificate of posting, they are insured in the posting country, provided that all of the following conditions are met:

The employee

  • works in Finland for a maximum period of 24 months or for a period defined in the social security agreement,
  • is covered by the social security system of the posting country at the time of departure,
  • receives a certificate of posting from the posting country which states that he/she is covered by the social security system of that country.

If a person works in many countries, in which country is he/she insured?

If an employee works in several EU or EEA countries, or in Switzerland, he/she is insured in his/her country of residence if he/she she performs a significant proportion of his/her work there.

Otherwise he/she is usually insured according to the legislation of the employer's domicile.

What about TyEL insurance for leased employees?

The principle rule remains the same. The legislation of the country of employment is applied in social security insurance.

If a foreign temporary work agency domiciled in an EU or EEA country leases its employees to Finland and the employment relationship with the foreign company is retained, the temporary work agency must insure their employees in Finland.

If a company domiciled in an EU or EEA country supplies employees to a company in Finland, the Finnish company must insure the employees in Finland.

And then for the exception. The exception is employees who hold a certificate of posting. They are insured in the country from where they are posted.

What about subcontracting work?

The principle rule remains the same. The legislation of the country of employment is applied in social security insurance.

Employees who are employed by a subcontractor domiciled in an EU or EEA country must be insured in Finland for work performed in Finland.

The exception is employees who hold a certificate of posting from the country from which they are posted.

The Act on the Contractor's Obligations and Liability when Work is Contracted Out requires that the contractor establish, for example, that the earnings-related pension insurance of the employees has been arranged in compliance with the law.

How are employees arriving from countries other than the EU and ETA countries, Switzerland or social security agreement countries insured?

When the employee is employed by a Finnish employer

If the employee signs an employment contract with a Finnish employer, he/she is covered by Finnish earnings-related pension and accident insurance immediately from the start of employment.

The Finnish employer pays the social security contributions and the employee is subject to Finnish labour legislation in the same way as Finnish employees are.

When the employee is employed by a foreign employer

If a foreign employer sends an employee to work in Finland from a country other than an EU or ETA country, Switzerland or a social security agreement country, the employee is not required to be insured under TyEL.

There are two conditions:

  • employment in Finland does not exceed two years, and
  • the employee is in the service of the same employer.

If these prerequisites are not met, the employer must take out TyEL insurance for the employee in Finland.

Exemption from the obligation to insure

Work that continues in Finland for more than two years does not have to be insured according to TyEL if the Finnish Centre for Pensions gives the posting employer exemption from the obligation to insure. This exemption is granted for a maximum of five years from the start of employment in Finland.

A prerequisite for receiving the exemption is, for example, that the posting employer can show that he/she has organised pension cover for the period that the employee works in Finland.

Key facts concerning foreigners working in Finland

In addition to earnings-related pension insurance, foreign employees require further arrangements to be made.

  • A tax number is required for foreign construction workers, which can be attained from the Finnish tax office. 
  • The tax office can simultaneously provide a social security number for the foreign employee. 
  • The Finnish tax office and Social Insurance Institution (Kela) provide guidance on social security contributions and taxation issues. 
  • Information about health insurance can be obtained from Kela. Kela's benefits are based on residence in Finland and generally enter into force four months after moving to Finland. 
  • Accident insurance and unemployment insurance are handled by non-life insurance companies.

Further information online

» Vero.fi

» Kela.fi