The grey economy
Agreement with a foreign company
Contractors must obtain the required reports also on foreign partners. In order to comply with the obligation to investigate, contractors must obtain the same reports for both Finnish and foreign partners. If a foreign company has a registered Finnish business ID at the time of signing the agreement, the contractor must obtain reports on tax register entries and tax status both from the home country of the company and in Finland.
The contractor must ensure that the content of reports received from abroad is understood. If necessary, the documents must be translated into a language that the contractor understands.
The occupational safety and health division, working with the Ministry of Social Affairs and Health, has compiled information on how to pursue contractor's investigations abroad. This table contains details for a number of countries on which reports or certificates may be considered to fulfil the requirements of the Act on the Contractor’s Obligations and Liability when Work Is Contracted Out.
Report on pension and accident insurance for a foreign partner
If the foreign enterprise sends posted workers to Finland, the contractor must, before they commence work, investigate and ascertain the validity of the health and accident insurance coverage of the workers.
The main principle is that all work done in Finland must be insured in Finland. This applies to both Finnish and foreign employers and to both Finnish and foreign employees. A derogation is made for foreign employees temporarily assigned to work in Finland. Posted workers are subject to the social security legislation of their country of origin for the duration of their work in Finland.
In the case of a partner from EU and EEA Member States, Switzerland and certain countries with bilateral agreements on social security, the pension insurance report requirement may be satisfied with a posted worker’s certificate issued by the country of origin separately for each posted employee. Such a certificate must contain original entries by the authorities in the country of origin, and its validity must cover the entire time of work in Finland.
In the case of EU and EEA Member States, Switzerland and certain countries with bilateral agreements on social security, the posted worker’s certificate also satisfies the accident insurance report requirement under section 5a of the Act on the Contractor's Obligations and Liability when Work is Contracted Out.
Should the contracting party not provide the certificates concerning posted workers, one usually must have a certificate on a Finnish pension insurance, a certificate showing that the pension insurance fees have been paid or a certificate showing that a payment plan has been made for due pension insurance fees and, for contracts on building activities, a certificate on an accident insurance in Finland.
In order to meet with his obligation to check, the contractor, before concluding the contract, also must require in writing that the contracting partner provides accounts on the pensions- and accident insurances for all posted workers for the whole contracting time before these workers start working in Finland.
For agreements concerning construction activities, the contractor has an ongoing obligation to ensure that posted workers of the partner have valid posted worker’s certificates. The contractor's ongoing obligation applies equally to all agreements entered into before 1 September 2015 regardless of what kind of activity the agreement is associated with.
Posted worker from an EU or EEA Member State or Switzerland
An employee posted to Finland from an EU or EEA Member State or Switzerland must have a posted worker’s certificate issued by the authorities in the country of origin, known as the A1 certificate (previously the E101 certificate). The posted worker’s certificate affirms that pension and accident insurance for the employee is taken out in the country of origin for the duration of the period shown on the certificate. During that period, the employee does not need to be insured as required by Finnish law.
Posted worker from a country with a bilateral agreement on social security
If an employee is posted to Finland from a country with which Finland has signed a bilateral agreement on social security (Australia, Chile, India, Israel, Canada, China, Québec, South Korea or the USA), the employee must have a posted worker’s certificate issued by the authorities in the country of origin (e.g. AUS 1/FI).
Regarding accident insurance, it should be noted that these certificates only cover accident insurance in the country of origin in the case of posted employees from Israel and Québec. In other cases, accident insurance must be taken out for posted workers as per Finnish legislation.
Posted workers from other countries
If a posted worker is sent to Finland from a country other than the above, e.g. Russia or Ukraine, accident insurance must be taken out as per Finnish legislation. The pension insurance requirements depend on the length of the posting:
Posting lasting two years or less
For a posting lasting two years or less, a certificate of employment insurance as per the legislation of the country of origin and of up-to-date payment of pension insurance premiums is required.
Posting lasting more than two years
For a posting lasting more than two years, a report on a decision by the Finnish Centre for Pensions granting exemption from the insurance obligation under the Employees Pensions Act, and a certificate of employment insurance as per the legislation of the country of origin and of up-to-date payment of pension insurance premiums is required, or a certificate from a Finnish employment insurance company from which insurance for employees of the partner has been taken out.
Further information on pension insurance obligation is provided by The Finnish Centre for Pensions and on accident insurance obligation by the Finnish Workers' Compensation Center.