In Finland, overtime compensation is governed by the Working Hours Act and collective agreements. Employees are entitled to receive enhanced pay when working beyond regular hours: typically a 50% increase for the first two daily overtime hours and a 100% increase for additional hours. Weekly overtime (exceeding 40 hours) is compensated with a 50% increase. Employers must obtain consent for overtime, maintain accurate records of hours worked, and adhere to annual limits on overtime hours. Collective agreements may provide industry-specific variations to these general rules. All overtime compensation must be clearly documented on pay slips and properly taxed.
Understanding overtime compensation in Finland
Finland has comprehensive legislation governing working hours and overtime compensation. The primary framework is established by the Working Hours Act (Työaikalaki), which sets the foundation for how extra work should be compensated. This law works in conjunction with collective agreements that may contain industry-specific provisions.
For both employers and employees, understanding overtime rules is crucial. Employers must ensure compliance with legal requirements to avoid penalties and maintain good employee relations. Employees need to know their rights to receive fair compensation for extra hours worked beyond their regular schedule.
At Firmally, we regularly advise businesses on navigating these regulations, as proper overtime handling is a fundamental aspect of payroll management in Finland. The correct implementation of overtime rules helps create trust in the workplace and ensures that businesses operate within the legal framework.
What is considered overtime work in Finland?
Overtime in Finland is defined as work performed beyond the regular working hours established by law. According to Finnish employment legislation, standard working hours are 8 hours per day and 40 hours per week. Any work exceeding these limits is classified as overtime and requires appropriate compensation.
There are different types of overtime that employers and employees should be aware of:
- Daily overtime: Hours worked beyond 8 hours in a single workday
- Weekly overtime: Hours worked beyond 40 hours in a week, even if daily limits weren’t exceeded
- Emergency overtime: Work performed during exceptional circumstances that requires immediate attention
It’s important to note that some workplaces implement flexible working arrangements or averaging periods for working hours, which can affect how overtime is calculated. These arrangements must be clearly specified in employment contracts or follow applicable collective agreements.
How is overtime compensation calculated in Finland?
Overtime compensation in Finland follows a progressive structure that rewards employees more generously as overtime hours accumulate. For daily overtime, the first 2 hours beyond the regular 8-hour workday are compensated at a rate of regular hourly pay plus 50%. Any additional hours worked on the same day are paid at double the regular hourly rate (100% increase).
Weekly overtime is calculated differently. When an employee works more than 40 hours in a week but hasn’t exceeded the daily limits enough to account for all extra hours, the remaining hours are considered weekly overtime and compensated with a 50% increase.
Special rates apply for Sunday work and public holidays:
- Sunday work: Regular pay plus 100% (essentially double pay)
- Public holiday overtime: Follows the same principles as regular overtime but is calculated on top of the holiday pay rates
For example, if an employee with a regular hourly rate of €15 works 10 hours on a weekday, they would receive:
- Regular pay for 8 hours: €120
- First 2 overtime hours (+50%): €45
- Total: €165
Instead of monetary compensation, overtime can sometimes be compensated with time off, depending on agreements between the employer and employee.
What are employers’ legal obligations regarding overtime?
Employers in Finland have several legal responsibilities when it comes to overtime management. First and foremost, overtime work requires the employee’s consent in most situations. While employees cannot unreasonably refuse overtime during emergencies, regular overtime should be agreed upon beforehand.
Employers must maintain accurate records of all working hours, including overtime. These records should be easily accessible and preserved for at least two years after the end of each calendar year. The documentation must clearly show regular working hours and overtime hours separately.
There are strict limits on the amount of overtime that can be worked:
- Maximum of 138 hours over a four-month period
- Maximum of 250 hours per calendar year
- Additional 80 hours possible through local agreements, but never exceeding 330 hours annually
Non-compliance with overtime regulations can result in significant penalties. Employers may face fines, compensation claims, and damage to their reputation. At Firmally, we help businesses implement systems that ensure compliance with these requirements while maintaining operational flexibility.
How do collective agreements affect overtime rules?
Collective agreements play a significant role in determining overtime rules in Finland, often providing industry-specific variations to the general framework established by law. These agreements are negotiated between employer organizations and trade unions, and they can modify certain aspects of overtime compensation and working hour arrangements.
For example, some collective agreements might:
- Establish different thresholds for when overtime begins
- Modify the percentage increases for overtime compensation
- Create specific rules for shift work or irregular working patterns
- Provide additional compensation for evening or night work
Employees can check which collective agreement applies to their employment by consulting their employment contract, discussing with their HR department, or contacting their trade union. The applicable collective agreement should be mentioned in the employment contract, and employers are obligated to inform employees about which agreement covers their work.
Understanding the provisions of the relevant collective agreement is essential for both employers and employees to ensure correct overtime compensation.
Key takeaways about overtime compensation in Finland
Navigating overtime rules in Finland requires attention to both the Working Hours Act and applicable collective agreements. The most important principles to remember include:
- Clear definitions: Overtime is work beyond 8 hours daily or 40 hours weekly
- Progressive compensation: Higher rates apply as overtime hours accumulate
- Proper documentation: Employers must maintain detailed records of all working hours
- Consent requirement: Overtime generally requires employee agreement
- Annual limits: Strict caps exist on how much overtime is permitted
For employers, implementing reliable systems for tracking working hours and calculating overtime correctly is essential. At Firmally, we offer comprehensive payroll administration services that ensure accurate overtime calculations and compliance with all relevant regulations. Our expertise in Finnish employment legislation helps businesses avoid costly mistakes while ensuring employees receive fair compensation for their extra work.
Whether you’re an employer seeking to implement compliant overtime practices or an employee wanting to understand your rights, recognizing these fundamental principles will help ensure that overtime compensation is handled correctly under Finnish law.
