Wondering about hiring your first employee? A checklist for an entrepreneur in need of staff

Hiring an employee is an opportunity to share the workload and grow business. Hiring the first employee means taking the leap from being an entrepreneur to becoming an employer. What should entrepreneurs consider before hiring their first employee?

Hiring your first employee can be tempting because of a full calendar and more orders than you can handle. When you are short on time and eager to grow your business, it is time to consider hiring your first employee. We have put together a checklist of the most important things to think about before hiring your first employee.

1. Employer's pension insurance, i.e. TyEL insurance

What is TyEL insurance? The employer is obliged to insure the employee with TyEL insurance, i.e. employer's pension insurance, which secures the employee's pension. Employers need TyEL insurance when an employee is aged 17 or over, working under an employment contract and paid at least EUR 68.57 per month (in 2024).

How much does TyEL insurance cost? The cost of TyEL insurance is based on the salaries paid by the employer. The basic TyEL contribution is 25.12% of payroll (in 2024), and an administrative cost component, specific to each earnings-related pension insurance company, is added to it. TyEL contributions are reduced by client bonuses. The pension insurance company receives the salary data declared by the employer from the Incomes Register and calculates the TyEL contribution on the basis of this data.

The employee participates in the pension insurance contribution with his or her own share, which the employer withholds when paying the salary. The employee's share is 7.15% for those aged under 53 and over 63, or 8.65% if the employee is aged between 53 and 62.

Where can you get TyEL insurance? TyEL insurance is provided by earnings-related pension insurance companies.

Take out TyEL insurance easily online!

2. Workers' compensation insurance

What is workers' compensation insurance? Employers are obliged to take out workers' compensation insurance to insure employees against accidents at work and during commuting, as well as against occupational diseases. Workers' compensation insurance is statutory if the salaries paid by the employer exceed EUR 1,500 in a calendar year.

How much does workers' compensation insurance cost? Based on the risk level of occupational accidents and the insurance company's tariff, the average workers' compensation insurance contribution is 0.7% of salary in 2024.

Where can you get workers' compensation insurance? Statutory workers' compensation insurance is provided by insurance companies.

Learn more about Varma's partner If's workers' compensation insurance.

3. Health insurance

What is health insurance? As the name suggests, health insurance covers the costs of an illness. The employer must pay the employer's health insurance contribution for an employee aged 16-67 who is insured in Finland under the Health Insurance Act. Health insurance protects an insured person's right to compensation for the costs of medical treatment and loss of earnings due to short-term disability, pregnancy, or childcare.

How much does health insurance cost? The employer's health insurance contribution is 1.16% of salary (in 2024).

Where can you get health insurance? Health insurance is not taken out separately, but the employer pays the health insurance contribution to the Tax Administration together with the employees' withholding tax.

4. Group life insurance

What is group life insurance? Employees' group life insurance is a life insurance policy designed to provide immediate support for a family in the event of the death of a spouse or guardian. The employer is obliged to take out and pay for the insurance if it is required by a collective agreement binding on the employer or by a general national collective agreement in force in the employer's sector.

How much does group life insurance cost? The average contribution for group life insurance for employees is 0.059% of salary (in 2024).

Where can you get group life insurance? Group life insurance for employees is provided by insurance companies.

5. Unemployment insurance

What is unemployment insurance? Employees and employers are obliged to pay their share of the unemployment insurance contribution when the total amount of salary paid to a worker aged 17-64 exceeds EUR 1,500 in a calendar year (in 2024). The employer is responsible for paying the contribution.

How much does unemployment insurance cost? The employer's contribution to unemployment insurance depends on the total amount of payroll paid by the employer. In 2024, the unemployment insurance contribution is 0.27% of salary if the total payroll is less than EUR 2,337,000 and 1.09% of salary when the total payroll exceeds this amount.

Where can you get unemployment insurance? The Employment Fund monitors the salaries paid by employers in the Incomes Register. When the liability threshold is reached, the Employment Fund sends the employer an invoice for the unemployment insurance contribution. It is therefore the employer's responsibility to declare the employee's wages in the Incomes Register and to pay the invoices sent by the Employment Fund.

6. Occupational health care

The employer is obliged to provide statutory occupational health care for all employees subject to the Occupational Safety and Health Act. Occupational health care must be provided even if the employer has only one employee and even if the employee also has access to occupational health care through another employer.

Occupational health care does not automatically include medical care, but its provision is voluntary for the employer. The employer can organise occupational health care through a public or private provider or organise the services itself.

Read more about the organisation of occupational health care on the Occupational Safety and Health Administration's website.

See our useful table: Social security contributions and limits.

The purpose of Varma's marketing communications is to promote earnings-related pension insurance and to market Varma's services. We also publish other content that may be relevant or of interest to an insurance policyholder or a person starting a business. This content is general information, and Varma is not responsible for its exhaustiveness. We cannot guarantee the applicability of the content to all situations and are therefore not liable for any damages caused by the use of the information in the published content. Any use of the information in the published content shall be at the user's own risk.

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