Guide: PEO Solutions in Finland: What Foreign Companies Need to Know Before Hiring

A Professional Employer Organization (PEO) can support companies that already have a Finnish legal entity or employer registration by managing essential payroll and HR processes. The client company remains the legal employer and continues to direct the employees’ day-to-day work.

What is a PEO in Finland?

A PEO provides outsourced payroll, HR administration and employer support to companies employing personnel in Finland. Unlike an Employer of Record, a PEO does not normally become the legal employer of the employees.

The client company remains responsible for the employment relationship, while the PEO can manage agreed administrative processes and provide local expertise.

A PEO solution in Finland may include:

• Payroll calculation and salary payments
• Tax withholding and employer reporting
• Pension and insurance administration
• Employment documentation
• Benefits administration
• Holiday and absence administration
• Occupational health care coordination
• Onboarding and offboarding support
• HR administration and local guidance

The exact division of responsibilities should always be clearly defined in the service agreement.

Who is the legal employer when using a PEO?

When a company uses a PEO in Finland, the client company remains the legal employer. This means that the company retains responsibility for the employment relationship and the employer obligations that cannot be transferred to an external service provider.

The PEO manages the payroll and HR services included in the agreement, but it does not replace the client company as the employer.

The client company also continues to manage the employees’ daily work, including their responsibilities, objectives, working methods and performance.

Does a company need a Finnish legal entity to use a PEO?

A PEO solution is generally intended for companies that already have a Finnish legal entity or an appropriate employer registration in Finland.

If a foreign company does not have a local entity or suitable employer setup, an Employer of Record solution in Finland may be more appropriate. With an EOR, the provider becomes the legal employer and employs the personnel on behalf of the client company.

The most suitable structure depends on factors such as:

• Whether the company has established a Finnish entity
• How many employees it plans to hire
• How long it expects to operate in Finland
• Whether the company wants to become the legal employer
• Its tax, registration and reporting obligations
• Its long-term plans in the Finnish market

What can a PEO manage in Finland?

A PEO can manage several recurring employer processes on behalf of the client company. The services are adapted to the company’s needs and may cover both payroll and broader HR administration.

Typical PEO services include:

• Collecting and processing payroll information
• Calculating salaries, taxes and deductions
• Preparing payslips
• Coordinating salary payments
• Reporting payroll information to the Finnish Incomes Register
• Administering employer contributions
• Coordinating statutory pension and insurance arrangements
• Managing holiday balances and absences
• Supporting employment contract administration
• Coordinating employee benefits
• Assisting with onboarding and offboarding
• Providing local HR and employment guidance

The client company remains responsible for providing complete and accurate information to the PEO and for making the employer decisions that remain within its control.

Payroll and reporting in Finland

Finnish payroll requires accurate calculations, timely reporting and coordination between several employer obligations. Salary information must normally be reported to the Finnish Incomes Register shortly after each payment.

Payroll administration may involve:

• Gross salary calculations
• Tax withholding
• Employee and employer contributions
• Pension contributions
• Insurance-related payments
• Holiday pay and holiday compensation
• Benefits in kind
• Expense reimbursements
• Deductions and adjustments
• Payroll reporting

A PEO can establish a structured payroll process and help ensure that information is collected, calculated and reported on time.

Pensions and social insurance

Employers in Finland are generally required to arrange statutory pension insurance and other applicable employee insurance. The exact obligations depend on the employment arrangement and the employee’s circumstances.

A PEO can help coordinate:

• Statutory earnings-related pension insurance
• Accident insurance
• Unemployment insurance contributions
• Group life insurance where applicable
• Other employer and employee contributions

International situations may require additional assessment, particularly when an employee works in more than one country or remains covered by another country’s social security system.

Occupational health care

Finnish employers are generally required to arrange preventive occupational health care for their employees. This obligation may apply even if the company only employs one person in Finland.

The statutory service focuses on preventing work-related health risks and supporting employees’ ability to work. Employers may also choose to provide additional medical services.

A PEO can support the company by coordinating an occupational health care provider and helping establish the necessary administrative processes.

Collective agreements in Finland

Collective agreements play an important role in the Finnish labor market. A generally binding collective agreement may apply to an employment relationship even if the employer is not a member of an employers’ organization.

Collective agreements can regulate matters such as:

• Minimum salaries
• Working hours
• Overtime compensation
• Evening, night and weekend supplements
• Holiday pay
• Sick pay
• Notice periods
• Other employment conditions

Before preparing payroll processes or employment documents, the company should determine whether a collective agreement applies to its employees.

Employment contracts and local documentation

Employment contracts in Finland should reflect Finnish employment legislation and any applicable collective agreement. Written contracts are strongly recommended because they provide both parties with a clear record of the agreed terms.

An employment contract may cover:

• The employer and employee
• The start date
• The place of work
• The employee’s duties
• Salary and benefits
• Working hours
• Holiday entitlement
• The applicable collective agreement
• The probationary period
• The notice period
• Conditions for remote or hybrid work

A PEO can support the preparation and administration of employment documentation. However, the client company remains the legal employer and must approve the employment terms.

Onboarding and offboarding employees

A structured onboarding process helps ensure that payroll, benefits, insurance and employment information are in place before the employee begins working.

PEO onboarding support may include:

• Collecting employee information
• Reviewing payroll and tax details
• Registering the employee in relevant systems
• Coordinating pension and insurance arrangements
• Establishing occupational health care
• Administering employment documentation
• Setting up benefits and expense procedures

When an employee leaves the company, the PEO can assist with final payroll, holiday compensation, certificates and the administrative closure of benefits and insurance.

The client company remains responsible for making and documenting employment decisions, including decisions concerning termination.

What is the difference between PEO and outsourced payroll?

Outsourced payroll normally focuses on calculating salaries, producing payslips and completing payroll-related reporting.

A PEO solution can cover a broader range of employer processes, including payroll, HR administration, benefits, pensions, insurance, occupational health care, employment documentation and ongoing local support.

The appropriate solution depends on how much of the local employer administration the company wants to manage internally.

What is the difference between PEO and EOR in Finland?

The principal difference concerns which party is the legal employer.

With a PEO solution, the client company is the legal employer. It normally has a Finnish legal entity or an appropriate employer registration. The PEO manages the agreed payroll, HR and administrative services.

With an EOR solution, the EOR provider becomes the legal employer. The EOR manages the formal employment, including payroll and agreed compliance obligations, while the client company directs the employee’s day-to-day work.

A PEO may be appropriate for companies with an established presence in Finland. An EOR may be more suitable for companies that want to employ people in Finland without establishing a local legal entity immediately.

When is a PEO solution suitable?

A PEO solution may be suitable when a company:

• Has a Finnish legal entity or employer registration
• Wants to remain the legal employer
• Needs local payroll and HR expertise
• Wants to outsource recurring employer administration
• Is hiring its first employees in Finland
• Has a small local team without an internal Finnish HR function
• Wants coordinated support across several Nordic countries
• Is transitioning employees from an EOR to its own entity

The company should review its employment structure, registrations and responsibilities before selecting a PEO provider.

Moving employees from an EOR to a Finnish legal entity

A company may initially use an EOR to enter Finland and later establish its own legal entity. Once the entity is ready, the employees can be transferred to the new company, which then becomes their legal employer.

The transition normally includes:

• Establishing and registering the Finnish legal entity
• Completing the necessary tax and employer registrations
• Setting up payroll and accounting processes
• Preparing new employment agreements
• Transferring relevant employee and payroll information
• Establishing pensions, insurance and occupational health care
• Transferring benefits and holiday information
• Coordinating the final EOR payroll with the first company payroll

The process should be planned carefully to avoid interruptions in salary payments, benefits, insurance or statutory reporting. After the transfer, a PEO can provide ongoing payroll and HR support to the Finnish entity.

Can the same PEO provider support several Nordic countries?

Using one provider across Sweden, Denmark and Finland can simplify the administration of a Nordic workforce.

A Nordic PEO provider can help coordinate:

• Payroll processes
• Employee administration
• Employer reporting
• Benefits
• Pensions and insurance
• Local employment documentation
• Monthly reporting to the parent company

Each country still has its own employment, tax, payroll and reporting rules. The service must therefore be adapted locally rather than applying one identical process across all Nordic countries.

PEO services from BTR Group

BTR Group provides PEO services to companies with local legal entities or appropriate employer registrations in Sweden, Denmark and Finland.

We can support your company with:

• Local payroll administration
• HR administration
• Employer reporting
• Employee benefits
• Pensions and insurance
• Occupational health care coordination
• Employment documentation
• Onboarding and offboarding
• Ongoing local employer support

Your company remains the legal employer and continues to manage the employees’ daily work. BTR Group manages the agreed administrative processes and provides local support to help your company operate efficiently in Finland.