Is your business growing so fast that you can no longer handle everything on your own, and an extra pair of hands is urgently needed? That’s great news—it means it’s time to become an employer and hiring your first employee. But before you select the best and most skilled candidate for the job, let’s make sure everything is done correctly from the start. In this blog, you’ll find our tips on what to consider before hiring your first employee.
Employer Register
Do you need to register as an employer? If not, is there any advantage to registering voluntarily? These are some of the questions you might face when hiring your first employee and becoming an employer. The answers largely depend on whether you plan to hire one or multiple employees. If you intend to hire only one employee, your business is not yet classified as a regular employer under the Finnish Tax Administration’s definition. In this case, registering in the employer register is not mandatory.
However, if you plan to hire two or more employees at once, you must register as an employer. This also applies if you regularly pay wages to one employee but also occasionally (e.g., seasonally or on a fixed-term basis) pay wages to another.
Voluntarily registering in the employer register does not offer any particular benefit or drawback. However, it does come with the obligation to submit a monthly employer’s separate report, even if no wages were paid in a given month.
Employers who are not registered only need to submit reports for the months when wages are actually paid. You can find more details about the obligations of registered and unregistered employers on the Income Register’s website.
It is not advisable to register as an employer prematurely or just in case, as you can register at any time once wage payments transition from occasional to regular. If you are unsure whether your business qualifies as an occasional or regular wage payer, you can check the classification on the Finnish Tax Administration’s website. Registration can be done via the OmaVero service.
Occupational Health Care
Does your first employee need occupational health care? According to the Occupational Health Care Act, all employers are required to provide access to occupational health services for all employees, regardless of the nature or duration of their employment.
Occupational health care aims to maintain a safe working environment, support employees’ work ability, and prevent illnesses related to their job.
Statutory occupational health care must include:
- Health examinations based on workplace health risks
- Workplace assessments to identify occupational health hazards
- Recommendations for improving working conditions and promoting work ability
- Counseling, guidance, and information on workplace well-being and employee health
- Participation in activities that support work ability
- Monitoring employees’ health when their work ability declines, supporting their job performance, and providing rehabilitation guidance
- Workplace first aid readiness planning
In addition to statutory services, employers may offer extended occupational health services, which, if reasonable and customary, are tax-free benefits for employees and can also serve as a competitive advantage in attracting talent.
Occupational health care can be provided by either a public or private service provider. The provider, in collaboration with the employer, assesses the main health challenges of the workplace and determines the necessary scope of services. A written contract defining the extent of occupational health services is required, along with a written action plan for implementing occupational health care. Both the contract and workplace assessment report must be available for employees to review at the workplace.
Although the occupational health care process may seem complex, it is often completed in a single meeting with an occupational health nurse. This meeting covers workplace needs, available resources, and potential hazards or stress factors. Based on this discussion, the occupational health nurse prepares a plan and submits it to the employer.
Employers can apply for reimbursement from Kela for occupational health care expenses, provided that services meet legal requirements, a valid occupational health agreement is in place, and the action plan is up to date.
Mandatory (Statutory) Insurance Policies
Employee Pension Insurance (TyEL)
The TyEL insurance (employee pension insurance) is required for all employees aged 17 or older. Even your first employee must be covered. The upper age limit for TyEL insurance is 68–70 years, depending on the employee’s birth year. Employees older than this do not need to be covered.
For older employees, it’s important to note that even if an individual is officially retired, they must still be insured if they are working and have not exceeded the upper age limit. TyEL insurance must be arranged no later than the first wage payment before reporting to the Income Register.
The employer and employee share the cost of the insurance premium. The employer deducts the employee’s share from their salary and remits the total premium to the pension insurance provider. The insurance premium is paid monthly based on the wages paid. TyEL insurance is offered by providers such as Ilmarinen, Veritas, Varma and Elo.
Accident Insurance
The Workers’ Compensation and Occupational Disease Act requires employers to insure all employees against work-related accidents and occupational diseases. This insurance typically covers workplace and work-related travel accidents, work-related illnesses, medical expenses, and compensation in case of disability or death.
When selecting coverage, it’s important to consider the increase in remote work, as some limited policies may not cover accidents occurring during remote workdays.
The cost of accident insurance depends on the scope of coverage and the type of work performed. Billing cycles vary by insurance company, with some invoicing once a year and others more frequently. Accident insurance providers include Fennia, IF, LähiTapiola and Pohjola.
Note: Accident insurance is the only statutory insurance that must be in effect from the very start of employment.
Unemployment Insurance
All employees aged 18–65 are covered by unemployment insurance. Unlike other statutory insurances, unemployment insurance is handled by the Employment Fund (Työllisyysrahasto), a state-run organization. Employers do not need to purchase a separate policy, as invoices are automatically generated based on wages reported to the Income Register once per quarter.
The cost is shared between the employer and employee, but the employer is responsible for remitting the total amount to the Employment Fund. Employers are exempt from paying unemployment insurance contributions if their total payroll for the year is less than €1,300, but they must still deduct and withhold the employee’s share. If deductions were made but the total payroll remains under €1.300, the withheld amount stays with the company.
Unemployment insurance contributions help fund adult education allowances, unemployment benefits, and pension entitlements.
Final Steps: Are You Ready?
Handling statutory obligations and recruitment can feel like the most challenging part of hiring your first employee. Signing employment contracts may seem like the finish line, but there are still a few things to consider:
- Pre-employment medical examinations should be conducted during the probationary period, especially in physically demanding jobs. This benefits both the employer and employee by confirming suitability for the role.
- Onboarding is key to integrating a new hire into the company. While it requires an initial time investment from the employer, proper onboarding benefits both parties in the long run.
- Work and holiday scheduling becomes essential when a business transitions from a one-person operation to an employer with staff. Employers must plan and communicate work shifts and vacation schedules in advance.
NEW EMPLOYER CHECKLIST
Key steps to take when hiring your first employee:
- Determine if you need to register as an employer.
- Always draft written employment contracts.
- Arrange insurance coverage before employment starts (TyEL, accident, and unemployment insurance).
- Verify if a collective agreement applies to the job role.
- Set up occupational health care.
