National minimum wage in detail

There is no statutory minimum wage that must be paid by the employer to the employee for work performed. The law states that if no collective agreement applies to an employment relationship, and the employer and the employee have not agreed on remuneration, the employee must be paid reasonable remuneration for the work performed.

However, many collective agreements set out minimum wages that must be paid to employees to whom the agreements apply. For example, the Collective Agreement for Salaried Employees in the Technology Industries provides a minimum monthly wage of EUR 1,621 be paid to employees covered by that agreement.

Compensation for work performed is usually monetary. However, the law does not prescribe the form in which compensation for work must be paid. The employer and employee may agree on how performance is remunerated. The agreement may be made either when concluding the employment contract, or later, during the employment relationship. However, collective agreements, as well as mandatory statutory provisions in favour of the employee, may restrict the scope of the agreement.

Further, it is customary for the employer to offer its employees fringe benefits in addition to monetary salary, for example, a mobile phone, meal or housing. In order for these benefits to be considered part of the employee's salary, they must be of monetary value. For employees in higher positions, it is standard practice to offer fringe benefits in the form of a possible bonus or use of a company car. The Finnish Tax Administration sets a monetary value for these benefits (e.g. the monetary value of the mobile phone benefit is currently EUR 20 per month) and which is added to the basic salary paid to the employee. In theory, fringe benefits could comprise the entire wage of an employee, as there is no requirement for payment to be in monetary form. 

In addition to the payment of a salary, the employer may, as compensation for expenses, reimburse the employee for the use of his or her own machinery and tools. For example, an employee travelling to work in his or her own car may be compensated for reasonable fuel expenses. Arrangements of this kind are more common for employees who live a long way from the workplace.  

Further, the employee's salary may be a combination of compensation paid by the employer and government-funded financial support.

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Author: Dittmar & Indrenius

Date: April 2020

Note: For specific advice on any particular issue, please consult the relevant firm. The law is stated as at March 2019.