As your business grows, there simply aren’t enough hours in the day — or enough hands — for the founder(s) to do it all. That’s when hiring employees becomes the next step. But with new hands come new rules and bureaucracy, which I’ll walk you through in this article.
You can either recruit the employee yourself or outsource it to a suitable partner. Once the right person has been selected, it’s time to sign an employment contract. The employment contract should always be in writing. An oral contract is also valid, but it is very difficult to prove what has been agreed.
Labour law sets out certain minimum requirements that must be set out in an employment contract. A simple employment contract template can be found, for example, on the website of the Occupational Safety and Health Administration. For employment contracts for employees and experts, I recommend using a more comprehensive employment contract template.
Payment of salary
The salary must be paid into the employee’s bank account; cash can only be paid for a very good reason. For hourly paid employees, the salary must be paid twice a month. For monthly paid employees, once a month.
The salary must be available to the employee on the day it is due (payday). If the payday falls on a weekend, the pay must be paid on the previous working day. An employment contract should always specify a payday and also a payday at the end of the employment relationship, examples of which are given below.
“The pay period is one calendar month. The salary shall be paid on the 15th day of the month following the month of employment or on the immediately preceding business day.”
“Claims due on termination of employment are paid when the salary is paid in the month following the month in which the employment relationship ends.”
Insurance
Employers must insure their employees. Compulsory insurance includes employee pension insurance (TyEL), unemployment insurance and accident insurance, with group life insurance.
The TyEL insurance obligation applies to workers aged 17-68. As the name implies, the insurance accumulates the employee’s pension cover.
Accident insurance is compulsory if your employer pays you more than €1200 in wages in a calendar year, and covers accidents at work.
Unemployment insurance is used to finance unemployment protection. TyEL insurance is provided by pension insurance companies such as Elo, Ilmarinen and Varma. Unemployment insurance was taken over by the state from insurance companies some years ago and is administered by the Unemployment Insurance Fund (TVR). Accident and group life insurance is sold by companies such as Fennia, IF, LähiTapiola and OP Vakuutus.
Occupational health
The employer must have an agreement on the provision of occupational health care. Services are provided by public health care providers and private medical centres.
A common misconception is that occupational health care must also include medical care, for example in the form of medical services for employees. It is up to the employer to decide what level of occupational health care to provide for its employees. Large private operators do not sell occupational health services that do not include the above-mentioned medical care. So if only the basic package is wanted, then usually the contract is with a public health care provider.
The organisation of occupational health care for employees and, on the other hand, occupational health care for the entrepreneur himself should be discussed in more detail.
Announcements
The wages paid to employees must be reported to various bodies. You should outsource these to an accountancy firm, which will make the necessary declarations to the tax authorities, the occupational pension insurance company, the accident insurance company and the unemployment insurance fund on your behalf. In addition, an accountancy office can take care of, for example, the settlement of trade union membership dues and any garnishment payments.
Temporary workforce
Hiring labour can also be a sensible alternative to hiring an employee if the need for labour is temporary or project-based. The worker is employed by the temporary agency and you pay for the work done, but you do not bear the risks of the employment relationship. Subcontracting, outsourcing and networking options should also be explored. You can read more about temporary agency work on the website of the Association of Employment Service Companies.
In addition to payroll services, we can also help you, for example, with drawing up an employee’s employment contract. Contact us, and let’s talk more!
