Can a sole trader hire employees?
Yes. A toiminimi (sole trader) in Finland can hire employees. The moment you take on your first member of staff, you become an employer — and that brings a set of mandatory obligations regardless of how small your business is.
One important note first: as a sole trader, you cannot pay yourself a salary. You draw income from business profits, not through employment. This section is about hiring someone else.
Step 1: Register as an employer
As soon as you hire someone on a regular basis, you must register in the Employer Register (Työnantajarekisteri) with the Finnish Tax Administration (Vero). This is done through OmaVero.
If you pay wages only occasionally — once or twice a year — you may operate as an occasional employer without ongoing registration. Regular employment requires registration.
Step 2: Take out the mandatory insurance policies
Finnish law requires you to arrange several insurance policies for your employees.
TyEL — occupational pension insurance Mandatory for all employees aged 17 or over whose monthly wages exceed the minimum threshold (approximately €68/month in 2025). You take this out with a licensed pension insurance provider (e.g. Varma, Ilmarinen, or Elo). The employer's contribution is approximately 17% of the payroll.
Accident insurance (tapaturmavakuutus) Mandatory for all wage earners. Taken out with an accident insurance provider. The rate varies by industry based on workplace risk.
Group life insurance (ryhmähenkivakuutus) Usually arranged together with accident insurance. The premium is small — around 0.06% of payroll.
Unemployment insurance contribution Paid to the Employment Fund. The employer's share is 0.20% of payroll up to €2,455,500/year (2025).
Employer's health insurance contribution Paid to the Tax Administration. The rate is 1.87% of gross wages (2025).
Step 3: Write an employment contract
Every employment relationship requires a written contract. Under Finnish employment law, the contract must include at minimum:
- Names and contact details of both parties
- Start date and duration (permanent or fixed-term)
- Probationary period (up to 6 months)
- Job description and place of work
- Salary and payment schedule
- Working hours
- Holiday entitlement
- Notice period
Check whether a collective bargaining agreement (työehtosopimus / TES) applies in your industry — it may set minimum pay rates and other terms.
Step 4: Understand the total cost of employment
Finland has no statutory minimum wage. Pay is set by agreement or by the applicable collective agreement for the industry.
As an employer, you pay statutory contributions on top of gross salaries. Total employer costs run approximately 20–25% above gross salary. Budget accordingly — the real cost of an employee is significantly higher than the salary figure alone.
Step 5: Run payroll and report wages
When you pay salaries, you must submit wage data to the Incomes Register (tulorekisteri) within five days of each payment. This is done electronically through the Incomes Register portal or through accounting software.
Each month you must also remit withholding tax and the employer's health insurance contribution to Vero. The due date is the 12th of the following month.
Ask your employee to provide their tax card (verokortti) or use the electronic tax card service, so you apply the correct withholding rate.
What a sole trader cannot do
You cannot pay yourself a salary. As a toiminimi, you draw income through private withdrawals from business profit. These are not wages and do not carry employer obligations.
Wages paid to a spouse or children under 14 are not tax-deductible. Wages paid to adult children and other family members are deductible in the normal way.
The short version
A sole trader can be an employer — but it comes with real obligations. Register in the Employer Register, arrange the mandatory insurance policies, draw up a written contract, and report wages to the Incomes Register on time. Good accounting software makes managing payroll significantly easier.
NoCFO helps sole traders keep their income, expenses, and bookkeeping in order. Try it free →