Foreign Employees in Finland

A Finnish employer has to insure a foreign employee working in Finland in accordance with the Employees Pensions Act (TyEL) in the same way as it has to insure Finnish employees. A foreign employer is usually also liable to arrange pension provision under TyEL for its employees who work in Finland. A foreign employer may be exempted from the obligation to insure employees posted to Finland.

An employee posted from an EU/EEA country, Switzerland, the United States, Israel, Chile, Canada, Quebec or Australia to Finland may be covered by the insurance in the sending country, which means that insurance contributions are paid only there. In such cases, a posted employee's certificate on the application of the legislation of the sending country (for instance Certificate A1 within the EU) has to be presented.

A Finnish earnings-related pension is paid out to a foreign employee residing in any country. The pension contributions are not returned when the person moves form Finland, but in due course, he or she will receive an earnings-related pension.

Exemption from the obligation to take out insurance

TyEL does not apply to employees whom the foreign employer sends to Finland on a short assignment which has begun after 1 January 2009 and which lasts for a maximum of two years. The following preconditions apply:

  • the employee is not covered by Finnish social security when the assignment starts
  • the Finnish legislation is not applied to the employee on the basis of the EU provisions on social security or the provisions of a social security agreement.

The above does not apply to posted employees for whom provisions on insurance are laid down in the EU provisions on social security or in a social security agreement (e.g. posted employees from other EU-countries to Finland).

If the assignment in Finland exceeds two years, the Finnish Centre for Pensions may exempt (on application) the foreign employer from the obligation to take out insurance under TyEL.

Exemption is granted for a maximum of five years, calculated from the start of the employment in Finland. The precondition for exemption is that the employer presents documentation stating that it has arranged pension provision for its employee in some other way.

If the work in Finland continues for more than five years, the employee should be insured under TyEL after this five-year period.

Exemption is applied for with the Finnish Centre for Pensions on a separate form. As a rule, it is assumed that the employer sends the Finnish Centre for Pensions a certificate on pension provision arranged elsewhere, confirmed by relative authorities. The employer should also attach to the application a statement signed by the employee, stating that the employee is aware of pension provision arranged for him by the employer and of the fact that the employer is applying for exemption from the obligation to take out pension insurance under TyEL.

Assignments which have begun before 1 January 2009 are subject to the provisions which were in force before this date. In such cases, the Finnish Centre for Pensions may exempt the foreign employer from the insurance obligation if reasonable pension provision has been arranged for the employee in some other country for the period of work in Finland and if the other preconditions for exemption are also met.

Further information

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20.12.2011