Payment liability for unemployment insurance contributions

Every employee between the age of 17 and 64 is obliged to make unemployment insurance contributions. As an employer, you are liable to pay unemployment insurance contributions if you pay your employees a total of more than EUR 1,300 in salaries during a calendar year.

You are not liable to pay if:

  • you are an entrepreneur in accordance with section 3 of the Self-Employed Persons' Pensions Act
  • you are an agricultural entrepreneur or their family in accordance with sections 3–5 of the Farmers’ Pensions Act
  • your employee is under the age of 17 (payment liability begins at the beginning of the calendar month following the birth date)
  • your employee has turned 65 (payment liability ends at the beginning of the calendar month following the birth date).

The liability to pay unemployment insurance contributions is provided for in the Act on the Financing of Unemployment Benefits.

An employment relationship exists when:

  • Contract of employment has been made for the work ( The Contract of employment can be written, verbal or “silent”)
  • The work is done personally on the employer’s behalf
  • The employer has the right to manage and supervise the work
  • Remuneration is received for the work

Other matters of note in relation to the liability to pay

You must always deduct unemployment insurance contributions from the salaries paid to employees who are liable to make contributions, even if you do not pay salaries of more than EUR 1,300 in a year. If your total payroll during the calendar year does not exceed EUR 1,300, you can retain the deducted withheld portion.

If an employee is retired and still working, the employee’s salary is within the scope of the liability to pay. Remember that the liability to pay ends when the employee turns 65.

If you are an entrepreneur, an agricultural entrepreneur or a member of a their family and you are employed by another party in addition to your entrepreneurial work, you are liable to make payments from the salary you receive for working for the other party.

Frequently asked questions about the liability to pay

If you hire a renovation worker or household help at home and make a contract of employment with the employee, you will become an employer. As an employer, you are also obliged to take care of unemployment insurance contributions.

If you purchase the service from a company or entrepreneur, you are not liable to pay unemployment insurance contributions.

If you hire a childminder at home, you are an employer and you are obliged to take care of unemployment insurance contributions. Even if the wages consist entirely or partly of a home care allowance from Kela, your obligations as an employer include paying unemployment insurance contributions from the portion paid by Kela. If the childminder is under 17 or has turned 65 years old, no unemployment insurance contributions are deducted nor paid from their wages. If the salary paid during the calendar year does not exceed EUR 1,300, the employer is not liable for unemployment insurance contributions but the employee’s payment should be deducted from employees who are liable to pay, and the employer can retain the deducted payment.

If you set up a childcare or cleaning collective with other households, you must also take care of the unemployment insurance contributions.

If only one contract of employment has been made with the childminder/cleaner, one member of the collective should submit the reports and payments in his/hers own name. In this case, the group is a single employer, and its members are jointly liable for the payments.

The parties who order the work are jointly and severally employers of the employee if:

  • they have jointly concluded a single contract of employment with the employee,
  • the management and supervision of the employee cannot be specified for each individual orderer and
  • the characteristics of an employment relationship are met with respect to every orderer.

If each member of your collective concludes a separate employment contract with the employee, you are each individually responsible for the unemployment insurance contributions and other obligations.

Payment liability of part-owners

Part-owners of a company pay a reduced unemployment insurance contribution in comparison to that of employees. It is important that you report the part-owner’s payroll details to us correctly. For 2018 and preceding years, details about part-owners must be reported to the Employment Fund. Information on wages being paid in 2019 will be reported to the Incomes Register. Information about part-owners will be reported to the Incomes Register as additional information along with the income information. Find out more about reporting income information to the Incomes Register.

The definition of a part-owner is provided in the Act on Unemployment Security (1290/2002) in Finnish.

If you are not in a leading position in a company but you work in the company or organisation, you are considered a co-owner if even one of the following applies to you:

  • you own at least 50% of the company's or organisation's share capital, votes or other means of control.
  • your family members own at least 50% of the company's or organisation's share capital, votes or other means of control.
  • you, together with your family members, own at least 50% of the company's or organisation's share capital, votes or other means of control.

If you are in a leading position in a company but you are not an entrepreneur, you may, pursuant to the Unemployment Security Act, be considered a co-owner if you work in the company or organisation and even one of the following two applies to you:

  • you own at least 15% of the share capital, votes or other means of control.
  • your family members or you together own at least 30% of the share capital, votes or other means of control.

The Act on Unemployment Security defines a part-owner of a company as a person who works for a company or corporate body in which

  • they hold at least 50% ownership or 50% of the voting rights or other controlling power or
  • their family member holds at least 50% ownership or 50% of the voting rights or other controlling power or
  • the person, together with their family member(s), holds at least 50% ownership or 50% of the voting rights or other controlling power.

Private entrepreneur is not liable to pay unemployment insurance contributions. A person is a private entrepreneur or a farmer if he meets Insurance Terms and Conditions mentioned in Self- Employed Persons’ Pensions Act section 3 or Sections 3 to 5 of the Farmers' Pensions Act.

If a person is not a private entrepreneur or a farmer he may meet the definition of a part-owner. A part-owner of a company is a person who works for a company or corporate body in which

  • they hold at least 15% ownership or 15% of the voting rights or other controlling power or
  • the person’s family member(s), or the person together with their family member(s), hold at least 30% ownership or 30% of the voting rights or other controlling power.

In addition to a limited company, the company or corporate body may be, for example, a partnership, a limited partnership, a co-operative, a housing company, or a private entrepreneur.

Payment liability in various types of companies since 2016

From the tables below you can check payment liabilities in various types of companies and who are considered to be part-owners.

Key terms 

Senior management position: Managing Director, Chairman of the Board, Member of the Board, or holds a similar position.A deputy member of the Board holds a senior position only if they participate in Board meetings so often that, in practice, they are considered to have decision-making power similar to that of any actual member of the Board.

Family member: spouse and cohabitant and relatives living in the same household who are direct ascendants or descendants (ie. children, parents and grandparents)

Ownership/number of votes   Senior position  
    Yes No
Alone less than 15 % employee employee
  15-30 % part-owner employee
  over 30 % no payment liability because the person is an entrepreneur* employee
  50 % no payment liability because the person is an entrepreneur* part-owner
  over 50 % no payment liability because the person is an entrepreneur* part-owner
Together with family member (the person also owns shares) less than 30 % employee employee
  from 30 % to less than 50 % part-owner employee
  50 % part-owner part-owner
  over 50 % no payment liability because the person is an entrepreneur* part-owner
Family member’s own shares  (but the person does not) less than 30 % employee employee
  from 30 % to less than 50 % part-owner employee
  50 % or more part-owner part-owner

*) The current YEL (self-employed person’s pension insurance) came into force on 1 January 2011, containing transitional provisions, on the basis of which anyone owning 50% or less may be covered by the Employees’ Pension Act (TyEL) until the end of 2013 and may therefore be a part-owner.

 

Type of company   Unemployment insurance contribution
Private entrepreneur The entrepreneur him/herself no payment liability
  Entrepreneur’s spouse no payment liability
  Other family member living in the same household who receives wages and is in an employment relationship part-owner
Partnership Partner* no payment liability
  Partner’s family member** part-owner
Limited partnership General partner* no payment liability
  Partner's family member** part-owner
  Silent partner, who is not a family member of a general partner employee
  Silent partner, who is a family member of a general partner** part-owner

*) From 1 January 2016, the definition of entrepreneur in the Act on Unemployment Security will change so that it is no longer tied to the obligation to take out YEL or MYEL insurance. A person who meets the conditions specified in Section 3 of the Self-Employed Persons’ Pensions Act (YEL) or Sections 3–5 of the Farmers’ Pensions Act (MYEL) is an entrepreneur or a farmer and is not liable to pay unemployment insurance contributions.

 **) If the controlling power of a partnership's partner, or limited partnership's general partner, has been limited by the articles of association, this has an effect on whether a family member living in the same household is considered a part-owner.

Indirect ownership affects the liability to pay

Note that any indirect ownership – ownership via a second company (an intermediary company) – may affect your liability to pay.

Criteria for indirect ownership

In order for ownership via an intermediary company to affect your liability to pay unemployment insurance contributions, one of the following must apply to you:

Limited liability companies

  • You, a member of your family or you together with a member of your family own at least half of the share capital of the intermediary limited liability company OR
  • The number of votes carried by the shares you own is at least half of all of the votes carried by shares

Other forms of company

  • You, along or together with a family member, hold one of the following positions in the intermediary company:
    • Partner in a general partnership
    • General partner in a limited partnership acting as an intermediary company OR
    • Entrepreneur acting as an intermediary company

You can be considered as an owner of an intermediary company even if you do not work for the intermediary company.

Entrepreneur via indirect ownership
In order for a person to meet the definition of an entrepreneur via indirect ownership, the person must own more than 50% of the intermediary company, either alone or together with family members. In addition, the conditions regulated in section 3 of the Self-Employed Persons’ Pensions Act must be met.

You are a part-owner via indirect ownership if one of the following criteria are met in addition to the foregoing criteria:

  • You are in a senior management position and you own a total of 15% directly or via an intermediary company and you own at least half of the intermediary company yourself.
  • You are in a senior management position and you own a total of at least 30% together with your family members, or your family members own a total of at least 30% directly or via an intermediary company.
  • You own at least 50% alone or together with your family members, or your family members own at least 50% directly or via an intermediary company.

In addition to owning shares in a limited liability company, ownership refers to the number of votes carried by the shares.

Government agencies’ unemployment insurance contributions

The liability to pay unemployment insurance contributions of government agencies is different to that of companies, corporate bodies, and private persons.

Government agencies’ unemployment insurance contributions

A government agency as an employer deducts the employee’s unemployment insurance contribution from each employee’s salary when the salary is paid.

Government agencies are not liable to pay employers’ unemployment insurance contributions. The liability of the personnel of government agencies to pay employees’ unemployment insurance contributions is based on the Act on the Financing of Unemployment Benefits (555/1998).

Employment relationships subject to unemployment insurance contribution include the following:

  1. Public-service employment relationships pursuant to the Public Servants Act (750/1994)
  2. Public servants as referred to in the Act on Parliamentary Civil Servants (1197/2003)
  3. Public servants of the President’s Office, the Parliamentary Ombudsman, and the Deputy Parliamentary Ombudsman
  4. Other employment relationships subject to public law

The payroll sum used as the basis for an employee’s unemployment insurance contribution and the settled payment are reported to the Employment Fund quarterly. The settlement declaration form is used for reporting. When you are filling in the settlement declaration, note that the reported payroll sum and the settled payment must match up (payroll sum/100 x 1.90% = settled amount).

tilitysilmoitus-2018.pdf

Submit the settlement declaration by encrypted email to: vakuutusmaksut@tyollisyysrahasto.fi

Notifications to the Incomes Register for 2019

From 2019 onwards, government agencies will make pay declarations to the Incomes Register.

Liability to pay unemployment insurance contributions in international cases

As a rule, when employees are working internationally, they are insured in accordance with the legislation of the country where they are working.

For further information on unemployment insurance contributions for employees working internationally, contact our customer service team. Consult Finnish Centre for Pensions for advice on international employees.

In principle, your employees will be insured in Finland and unemployment insurance contributions will be paid in accordance with Finnish legislation.

The exceptions to this are employees posted from EU and EEA countries, Switzerland or countries with which Finland has signed a social security agreement, as well as people who work in two or more EU or EEA countries. Note that not all bilateral social security agreements necessarily have provisions on unemployment insurance contributions.

Furthermore, under certain conditions, a foreign employer will not be liable to pay unemployment insurance contributions for short-term work performed by a person residing in Finland.

Employees posted to Finland from EU or EEA countries or countries with which Finland has signed a social security agreement

Employees posted to Finland for a temporary work assignment from an EU/EEA country or Switzerland are usually insured in the country from which they are posted. An employee posted for a temporary work assignment in the EU area can be covered by social security in the posting country for 24 months. In such a case, an A1 certificate for a posted employee is required.

A posted employee can remain covered by the posting country’s social security by special permission for a period longer than 24 months if the duration of the work in another EU country does not exceed five years.

Employees of public bodies

Employees and officials, as well as persons regarded as officials working for a public body and posted to Finland from an EU or EEA country or Switzerland, are covered by social security, without a time limit, in the employer’s home country. No unemployment insurance contributions are paid for them in Finland.

Finland’s binding social security agreements

If a bilateral social security agreement that is binding on Finland includes provisions on unemployment insurance, payment liability is decided on the basis of the said provisions.

Social security agreements between Finland and China and between Finland and South Korea took effect on 1 February 2017. Both of the agreements include provisions on unemployment insurance contributions.

Countries with no agreement refers to countries other than the EU or EEA countries, Switzerland, and those countries with which Finland has an agreement on social security that includes provisions on unemployment insurance. The principal rule regarding the insurance obligation for employees from countries with no agreement on social security is to insure the employees in the country in which they work. Employees from a country with no agreement must be insured in Finland for the work they do in Finland, regardless of the duration of the work, the country of residence, or the employer’s nationality.

Posted employee
An employee from a country without an agreement may also be a posted employee.

Payment liability for employees from countries without an agreement
Unemployment insurance contributions will not be paid for the work performed in Finland by employees from countries with which Finland has no social security agreement, if

  • the work is a transportation job that the employee performs mostly outside Finland, or
  • the employee is in Finland for a meeting or performance, or
  • the employee is on a different short-time visit for a purpose related to the employee’s work abroad.

An additional requirement in the foregoing cases is that the employer is not domiciled in Finland and the employee does not live in Finland.

Seasonal workers from third countries
Seasonal workers from third countries who are subject to the Seasonal Work Act are not covered by the liability to pay unemployment insurance contributions (the Act took effect at the beginning of 2018).

The Seasonal Work Act (Act on the Prerequisites for the Immigration and Residence of Citizens of Third Countries for the Purpose of Working as Seasonal Workers) applies to seasonal workers from third countries. Citizens of third countries are citizens other than European Union citizens and citizens of Iceland, Liechtenstein, Norway and Switzerland, which are considered equivalent to European Union citizens.

Seasonal workers reside in the country legally or temporarily for the purpose of working. Seasonal workers are not permanently resident in Finland. Instead, they visit Finland to work for a season for one or more consecutive years.

The Seasonal Work Act only applies to employees in an employment relationship.

For more information on the Seasonal Work Act and the application of the Act, see the Finnish Immigration Service’s website.

The principal rule on insurance is that an employee is insured in the country where the work is done, according to that country’s legislation. However, exceptions to the principal rule apply, for example, to posted employees and persons who work in several countries at the same time.

When an employee is posted to work abroad, the obligation to insure is affected by the following:

  • The duration of the work assignment
  • Whether the country where the work is done is an EU or EEA country
  • Whether the country where the work is done has signed a social security agreement with Finland
  • Whether the employee is covered by Finnish social security based on residence

Employees leaving Finland to work in EU or EEA countries, Switzerland and countries with a social security agreement

When an employee leaves Finland to work in an EU or EEA country or Switzerland, as a rule, the employee is insured in accordance with the laws of the country of employment.

An exception to this are posted employees, who can still be insured in the country of departure, namely in Finland. In such a case, unemployment insurance contributions are also paid to Finland. A posted employee must have an A1 certificate granted by the Finnish Centre for Pensions. A posted employee can be covered by social security in the posting country for 24 months.

Note: With special permission, an employee posted for a work assignment can remain covered by social security in the posting country at most for five years. In Finland, matters involving special permission are managed by the Finnish Centre for Pensions.

Employees of public bodies
Posted employees and officials, as well as persons in corresponding positions, working for a public body, are covered, with no time limit, by social security in the employer’s home country when working in the EU or EEA or Switzerland.

Finland’s binding social security agreements
If a bilateral social security agreement that is binding on Finland includes provisions on unemployment insurance, payment liability is decided on the basis of said provisions.

Social security agreements between Finland and China and between Finland and South Korea took effect on 1 February 2017. Both of the agreements include provisions on unemployment insurance contributions.

Employees working in a country that has not signed a social security agreement
An employee posted to work temporarily in a country that has not signed a social security agreement is obligated to have unemployment insurance.

Employees working in two or more EU or EEA countries
As regards employees who work within two or more EU or EEA countries, the legislation of the employee’s country of residence or the employer’s domicile applies. The employee is only covered by social security in one country at a time. The employee is liable to pay unemployment insurance contributions in the country in which they are covered by social security.

The legislation of the country of residence is applied if the employee carries out a substantial part of their activities in the country of residence. A substantial part means at least 25% of all work.

If the employee does not carry out a significant part of their work in the country of residence and has:

  • only one employer, or the domiciles of all the employers are in the same member state - the legislation of the employer’s/employers’ domicile is applied
  • several employers whose domiciles are in the person’s country of residence and in one other member state
  • the legislation of the foreign employer’s domicile is applied
  • several employers whose domiciles are in at least two member states other than the employee’s country of residence --> the legislation of the employee’s country of residence is applied
All persons working in two or more countries must have an A1 certificate. In Finland, the A1 certificate is issued by the Finnish Centre for Pensions.

Why are unemployment insurance contributions paid out of the salary?

Salary, performance-related bonuses and other remuneration is included in the pay used as a basis for the unemployment insurance contribution. 
In addition, remuneration paid by a bankruptcy estate, an authority in charge of pay security, or another substitute payer is regarded as salary.

An entrepreneur’s salary is not taken into consideration in unemployment insurance contributions.
Employer´s and employee´s unemployment insurance contributions are based on the same payroll amount. As of 2019, the employer must report the gross pay, deducting tax and the employee’s pension contribution and unemployment insurance contributions to the Incomes Register. The annual payroll amount for 2018 should be reported separately to the Employment Fund.

Payroll amount should always be reported to the Incomes Register as subject to an unemployment insurance contribution liability if the unemployment insurance contribution is deducted from the salary. An employer is liable to pay unemployment insurance contributions if it pays total salaries of more than EUR 1,300 to its employees during a calendar year. If there is no unemployment insurance contribution liability, the Incomes Register information is reported using the insurance waiver type “no insurance liability”. Read the instructions for reporting to the Incomes Register at https://www.vero.fi/en/incomes-register/ 

Salaries also include remuneration paid for the job, agreed to be compensated partially or in full in the following ways:

  1. Gratuities or donations from the public
  2. A daily allowance paid to the employee by a sickness fund, as referred to in the Insurance Fund Act, instead of salaries laid down in legislation or a collective agreement or other agreement
  3. A private day-care allowance, as laid down in the Act on Child Home Care and Private Day Care Allowances, or a similar allowance paid by the State or the municipality

Types of income affecting unemployment insurance contribution

  • Time-rate pay
  • Accommodation benefit
  • Car benefit
  • Bonus pay
  • Complementary wage/salary paid during benefit period
  • Emergency work compensation
  • Evening work compensation
  • Evening shift allowance
  • Treatment fee for municipal veterinarian
  • Saturday pay
  • Extra work premium
  • Holiday bonus
  • Other compensation
  • Working condition compensation
  • Commission
  • Telephone benefit
  • Meal benefit
  • Wages paid by substitute payer: employer pays for employer's social insurance contributions (earnings-related pension, health, unemployment, and accident and occupational disease insurance)
  • Wages paid by substitute payer: employer pays for employer's social insurance contributions (earnings-related pension, health, unemployment, and accident and occupational disease insurance)
  • Sunday work compensation
  • Performance bonus
  • Monetary compensation from a working time bank
  • Compensation for accrued time off
  • Supplementary daily allowance paid by employer-specific health insurance fund
  • Employer-subsidised commuter ticket, tax-exempt share
  • Employee stock option with a subscription price lower than market price at the time of issue
  • Contract pay
  • Wages for insurance purposes
  • Stand-by compensation
  • Weekly rest compensation
  • Annual holiday compensation
  • Private day care allowance municipal supplement
  • Private day care allowance (wages)
  • Overtime compensation
  • Night work allowance
  • Night shift compensation
  • Interest benefit for a housing loan
  • Meal allowance
  • Compensation collected for car benefit
  • Withholding tax
  • Share of reserve and surplus drawn from personnel fund (taxable 80%)
  • Notice period compensation
  • Kilometre allowance (tax-exempt)
  • Compensation for use, earned income
  • Compensation for use, capital income
  • Elected official fee
  • Tax at source
  • Tax at source deduction
  • Wages paid
  • Reimbursement collected for other fringe benefits
  • Other taxable income deemed earned income
  • Other item deductible from net wage or salary
  • Net wage or salary
  • Waiting time compensation
  • Kinship carer's fee
  • Reimbursement of private caretaker's expenses
  • Private caretaker's fee
  • Reimbursement of family day care provider's expenses
  • Daily allowance
  • Capital income payment
  • Wages paid by substitute payer: employer pays for employer's earnings-related pension insurance contribution
  • Wages paid by substitute payer, employer pays for accident and occupational disease insurance contribution
  • Wages paid by substitute payer, employer pays for employer's health insurance contribution
  • Reimbursement of costs, paid to conciliator
  • Non-wage compensation for work
  • Pension paid by employer
  • Employer-paid premium for collective additional pension insurance
  • Employer-paid premium for collective additional pension insurance, employee's contribution
  • Employee's health insurance contribution
  • Employee's pension insurance contribution
  • Employee's unemployment insurance contribution
  • Dividends/profit surplus based on work effort (wages)
  • Dividends/profit surplus (wages) based on work effort (non-wage)
  • Reimbursement for employer-subsidised commuter ticket
  • Employer-subsidised commuter ticket, tax-exempt share
  • Tax paid abroad
  • Distraint
  • Wages paid from athletes' special fund
  • Wages transferred to athletes' special fund
  • Damages in conjunction with termination and lay-off
  • Voluntary compensation in conjunction with termination of employment
  • Voluntary individual pension insurance premium
  • Taxable reimbursement of expenses
  • Deduction before withholding
  • Private day care allowance (non-wage)
  • Kilometre allowance paid by non-profit organisation
  • Daily allowance paid by non-profit organisation

If the type of income is one of the following, contact our customer service or read the Incomes Register instructions

  • Initiative fee
  • Compensation for membership of a governing body
  • Monetary gift for employees
  • Kilometre allowance (taxable)
  • Meeting fee
  • Lecture fee
  • Compensation for acting in a position of trust
  • Other taxable benefit for employees
  • Other fringe benefit
  • Stock options and grants
  • Compensation for employee invention
  • Partial pay during sick leave
  • Benefit arising from synthetic option
  • Share issue for employees
  • Employee stock option
  • Profit-sharing bonus

Wages used as the basis of unemployment insurance contributions do not include

  • waiting-period pay (compensation for the delayed payment of wages in connection with termination of an employment relationship)
  • compensation for unfair dismissal
  • notice-period pay to an employee who has resigned or has been dismissed during a lay-off period
  • compensation paid in connection with cancellation of the employment contract (similar to a golden handshake)
  • non-statutory compensation for termination of the employment contract
  • redundancy payment
  • tax-free daily allowance paid for a business trip or other tax-free compensation of expenses incurred from performance of work
  • reimbursement of removal expenses 
  • reimbursement of special costs incurred by work performed abroad 
  • reimbursement of costs incurred for work equipment, work gear, and other immediate work-related expenses
  • personnel benefits received from the employer (for example, the interest benefit from loans and free healthcare services)
  • an additional daily allowance paid by the sickness fund (a benefit paid by the sickness fund provided by the workplace after the fund member’s right to sick pay or supplementary sickness allowance under the collective agreement has expired)
  • a tangible gift or an employee anniversary gift from the employer 
  • royalties, compensation based on intellectual property rights, and compensation for employee inventions
  • a share of the profits of a limited-liability company paid to the entire personnel or a cash profit bonus
  • payments from the personnel fund 
  • a benefit arising from the employment relation-based right to subscribe to the company's shares for a lower price, if this benefit is available to the majority of the company's personnel
  • employee stock options and equivalent equity-related pay arrangements based on performance
  • a profit share or dividend allocated to a shareholder of a limited-liability company

 Unusual situations relating to salary payment

During a posted work assignment abroad, the unemployment insurance contribution is based on the agreed salary for insurance purposes for work performed abroad. This salary may differ from the actual salary paid to the employee. The salary for insurance purposes agreed by the employer and the employee may be larger or smaller than the monetary salary actually paid by the employer.

For work performed abroad, earnings (i.e. salary for insurance purposes) are regarded as comprising the salary that would be paid for corresponding work performed in Finland. If corresponding work does not exist in Finland, earnings are regarded as comprising the salary that is otherwise considered suitable for the work in question.

If the employee only receives fringe benefits and no monetary salary as compensation for his/hers work, the unemployment insurance contribution is based on the taxable value of the fringe benefits. Although the employer can´t deduct the unemployment insurance contribution because no monetary salary is paid, the employer is nonetheless responsible for paying the unemployment insurance contributions for the employer and the employee to the Employment Fund. The employer is also responsible for the unemployment insurance contribution when no monetary salary is left after deducting tax.

If an employee has not been paid a sufficient salary to deduct the employee's unemployment insurance contribution, the employer may deduct the employee's unemployment insurance contribution from subsequent salary payments within a two-year period.

Remuneration paid to board members of companies, organisations and other legal entities is not subject to an unemployment insurance contribution liability unless the recipient of the remuneration is in an employment or public-service relationship with the party paying the remuneration. If the remuneration paid for the duties is not intended to be remuneration for work but for the time spent attending to these duties, the relationship is not regarded as an employment relationship and the elected officer is not liable to pay unemployment insurance contributions.

Examples of such elected officials include the members of municipal councils, boards and committees, members of interest groups, association and company boards, supervisory boards, and boards of directors. Board members may be in an employment relationship with the employer, in which case their salary and remuneration are covered by the unemployment insurance contribution liability as usual.

If the pay of a practising veterinarian consists of a basic salary paid by the municipality, compensation for on-call duty and practice income, their unemployment insurance contributions are based on the total sum of the salary paid by the municipality and income confirmed as the basis of a pension.

The employer is also liable to pay unemployment insurance contributions in situations in which a portion of the salary is paid by someone other than the employer.

For example, a child-minder is in an employment relationship with the child’s parents, but the salary may be partly or fully paid as a private day-care allowance or as a similar allowance by the Social Insurance Institution of Finland (Kela). In this case, the unemployment insurance contribution is paid for the combined amount of the allowance and salary. As employers, the child’s parents are liable to pay unemployment insurance contributions, even if no other salaries are paid in addition to the Kela subsidy.

Kela or other payers do not deduct the contribution on the employer’s behalf from the share they pay.

Monitoring of unemployment insurance benefits

Enployment Fund monitors that employers comply with their liability to pay unemployment insurance contributions and that they report correct payroll information on which to base unemployment insurance contributions. For monitoring, we use information obtained from the Tax Administration and other authorities. Enployment Fund also compares information in cooperation with the Finnish Centre for Pensions and Finnish Workers' Compensation Center. This information is compared to the information supplied by the employer.

The national Incomes Register will be deployed on 1 January 2019. Once the Incomes Register has been deployed, monitoring will be mainly based on information submitted to the Incomes Register, with cooperation with the Tax Administration, other authorities and social insurance providers.

We will contact the employer if, on the basis of information obtained during monitoring, it appears that the payroll on which insurance contributions are based is incorrect, or the employer has neglected their payment liability entirely. As a result of monitoring, the employer may have to pay additional insurance contributions or may receive a payment refund.

If you have received a hearing letter or request for clarification related to monitoring:

  • Reply to the letter by the due date.
  • Use the reply form.
  • Remember the required attachments.
  • Please contact us if you have any questions.

Please note that we do not accept any calculations you make yourself without supporting documentation. Always print reports directly from payroll administration software.

Clarification cannot be given through our e-service. You can send the reply form with attachments via post to the reply mail address given on the form or through secure e-mail connection to vakuutusmaksuvalvonta@tyollisyysrahasto.fi.

Enployment Fund takes part in combating shadow economy and economic crime. Read more about it at Finnish Tax Administrations webpage.

Page updated: 9/1/2019