Employee’s outstanding wages

Employee’s outstanding wages - Alasivu

Employees are entitled to late-payment interest if their wages are not paid on time.

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It is the employer’s responsibility to make sure that employees’ wages are calculated correctly and paid on the agreed day. It is the employee’s duty to provide the employer within the agreed timeframe with all the information needed to calculate their pay, such as records of the hours that they have worked.

Late payments

In an ongoing employment relationship, an employee is entitled to late-payment interest pursuant to the Finnish Interest Act if their wages are not paid on the agreed day. Interest on late payments begins to accrue on the day after the due date.

Formula for calculating interest on late payment

(interest rate x amount x number of days) / (100 x 365)
The legal interest rate on late payments under section 4 of the Interest Act (in Finnish) for the period between 1 July and 31 December 2022 is 7.0%.

E.g. due amount is €300 and the payment is delayed by 29 days:
(7 x 300 x 29) / (100 x 365) = interest €1.67

After the employment relationship has ended, the employee is entitled to both interest on late payments and potentially wages for the days that the payment is late, if the payment of wages or part thereof is delayed. The application form for outstanding wages can be used to apply for interest on late payments and the wages for the days that the payment is late from the employer.

Forms (doc files):
Demand for the payment of outstanding salary in an ongoing employment relationship
Demand for the payment of outstanding salary when the employment relationship has ended

Employee’s right to wages for the days the payment is late

The wage payment period ends at the end of the employment relationship, unless otherwise agreed. However, the final pay may also be paid on an ordinary pay day. In addition to late-payment interest, the employee is also entitled to full pay for each day that the payment is late if the payment of the final pay is delayed. The employee is entitled to wages for the days that the payment is late for a maximum of six calendar days. The number of days for which a full wage must be paid is calculated from the day following the date on which the wage should have been paid, regardless of whether the employee would have worked the days in question had their contract not ended.

What constitutes an employee’s “full wage” depends on the circumstances. If the employee has been exclusively on time-based pay, the amount payable for the days that the payment is late is usually based on their time-based pay.

If there is disagreement over the amount of the delayed salary or the delay in the salary is due to a miscalculation, the employee is only entitled to wages for the days the payment is late if they have pointed out the delay to the employer within one month of the termination of the employment relationship and the employer has not paid the claim within three working days of the date of the notification. In this case, the right to the pay for the days the payment is late begins after the payment period reserved for the employer (three working days). To avoid any confusion, the employee should always point out to the employer if the payment of wages is delayed. The remark should be made without delay and in writing.

Applying for outstanding wages

If an employer thinks that their wages have been miscalculated, it is the employee’s responsibility to ask their employer to rectify the error. The rectification of an error in the payment of wages means that the employee notifies the employer about their outstanding wages or overpayment of wages, and the employer rectifies the error by paying the outstanding sum or arranges for the overpayment to be reimbursed.

Employers and employees should ideally be able to settle any disagreements concerning wage payments between themselves. If they cannot reach an agreement on the matter, a unionised employee can turn to their trade union for help. A non-unionised employee can contact, for example, a legal aid office or a law office. 

The enforcement of occupational safety and health does not include the calculation of or applying for outstanding wages. Instructions and advice on wage payments are available from the Regional State Administrative Agencies’ Divisions of Occupational Safety and Health, but they cannot provide legal representation or file lawsuits in order for the matter to be finally settled in court.

Time limit for claiming unpaid wages and the claim period

There is a time limit after which an employer no longer has an obligation to pay unclaimed wages. There is also a time limit for bringing a lawsuit for unpaid wages.

Time limit for claiming unpaid wages in an ongoing employment relationship

Employees have up to five years to claim any wages that are owed to them. The time limit applies to basic wages and various extras regardless of whether they are based on an employment contract, a collective agreement or the minimum wage provisions of the Employment Contracts Act.

The time limit is calculated from the date on which the wages should have been paid. The clock stops if the employee files a claim or brings the debt to their employer’s attention through other official channels, and a new five-year time limit is set.

The time limit for claiming unpaid hourly remunerations that are based on the Working Hours Act, such as overtime pay, is two years. Employees are entitled to overtime remuneration if they work overtime. The time limit is calculated from the end of the calendar year during which the employee became entitled to the remuneration or time off in lieu. The employee loses their right to the overtime remuneration if they do not claim the amount within two years of the end of the calendar year during which the overtime was accrued.

According to the Annual Holidays Act, the right to holiday pay or holiday compensation expires within two years of the end of the calendar year when the annual holiday should have been granted or the holiday compensation should have been paid. If the employer and employee have jointly agreed to postpone the annual holiday until the year following the holiday season (2 May – 30 September), the right to the outstanding sum corresponding to the postponed holiday will expire within two years of the end of the agreed-upon calendar year. According to legal practice, holiday bonuses are considered to expire within the same timeframe as holiday pay and holiday compensation.

Time limit for claiming unpaid wages when the employment relationship has ended

The time limit for claiming unpaid wages that are based on either the Employment Contracts Act or the Working Hours Act is two years from the end of the employee’s contract, except where the right to claim has already expired before the end of the employment relationship. A corresponding time limit is applied to the right to claim receivables based on the Annual Holidays Act.

Unpaid wages that are based on a collective agreement can be claimed up to five years later, if

  • the provisions of the collective agreement on which the claim is based are manifestly ambiguous
  • disagreement has arisen after the end of the employee’s contract over the application of the provisions.

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