Insuring an employee

As an employer you are in charge of your employees’ pension cover. Then every euro your employee earns increases both his or her own pension and that of future generations. You can take care of the matter by taking out employee’s pension insurance, i.e. TyEL insurance for your employees.

Insure your employees

Pension cover is part of the Finnish social security system. That is why taking care of it is statutory, i.e. mandatory, for you. You are responsible for the pension and social security cover of all of your employees between the ages of 17 and 67 to whom you pay a specific minimum sum in wages or salary each month. The sum changes annually. In 2021, it is EUR 61.37 per month (EUR 60.57 in 2020). Read more about TyEL age limits and how contributions are determined.

Contract employer or temporary employer? When it comes to pension matters, you are always either a so-called contract employer or a temporary employer. As a contract employer, you take out TyEL insurance for your employees, and as a temporary employer, you only pay the TyEL contribution. Check here to see if you are a temporary or contract employer.

Who needs to be insured?  

As an employer, you are responsible for your employee’s pension cover. The obligation to insure starts at the beginning of the month following your employee’s 17th birthday and expires at the end of the month in which your employee turns 68.  

Pension cover is also your responsibility when  

  • you hire a pensioner  
  • you hire out your employee to another employer   
  • you post your employee to work abroad › 

Pension cover is not your responsibility when  

  • your employee works for you through a temporary work agency or another company  
  • your employee works for you as a self-employed person  
  • your employee works for you while owning more than 30 per cent of your company.  

If your employee is a freelancer 

Your employee may be a freelancer, which means that he or she works for you simultaneously both as a self-employed person and as an employee. For pension purposes, he or she is still considered to be either a self-employed person or an employee. A freelancer is considered to be a self-employed person if he or she works without being in a private or public sector employment relationship. In that case, he or she takes out YEL insurance for him- or herself just like other entrepreneurs. However, if the work carried out by him or her meets the criteria of an employment relationship, i.e. he or she works for another for compensation under their direction and supervision, he or she is your employee. In that case, you must arrange his or her pension cover.

If your employee is a summer employee

Insure your summer employee and occational employee in the same way as all of your other employees aged between 17 and 67. Follow these steps: 

  • If you already have TyEL insurance, report your summer employee’s personal and earnings data to the Incomes Register, using the pension policy number of your TyEL insurance.
  • If you do not have TyEL insurance, arrange your summer employee’s pension cover in the PikaPalkka®, Palkka.fi or Oima service.
  • If you are an accounting firm user, take care of your insurance matters in the online service for accounting firms, go to the service › 

Pension cover is also your responsibility when you hire a foreign employee to come work in Finland. The only situations where you are not responsible for the pension cover of your foreign employee are when your employee comes as a so-called posted worker from an EU or EEA country, Switzerland or a so-called social security agreement country, and if he or she has a certificate of posting, i.e. an A1 certificate, granted by an earnings-related pension authority. If your foreign employee is not a posted employee, insure him or her with TyEL insurance just as you would your Finnish employees. Read more about insurance provision for expatriate employment.

This is how you insure your employee posted to Finland from abroad 

  • If you represent a foreign employer and post your employee to work in Finland, take out TyEL insurance for him or her.  
  • If you post your employee to Finland from an EU or EEA country, Switzerland or a social security agreement country, take care of your employee’s pension cover in accordance with the practices in place in your country.  
  • If you post your employee to Finland from a non-agreement country, i.e. a country with which Finland does not have a social security agreement, only insure him or her if they intend to work in Finland for more than 2 years. 

You may also apply for an exemption from the obligation to insure from the Finnish Centre for Pensions (etk.fi).

In some cases, the pension cover of a person working for you is nobody’s responsibility. This is the case, for example, when the person is an auditor or Board member and you pay him or her a fee. However, you can still take out voluntary TyEL insurance for him or her. This may be the case with, for example, auditors or Board members. However, if the employee is in an employment relationship with you, instead of voluntary TyEL insurance, add the remuneration for the employee’s position of trust to your statutory TyEL insurance.

This is how you arrange pension cover for your employee

As a contract employer, you must arrange pension cover for your employee immediately when you are hiring him or her. Report the salaries and wages that you pay to him or her to the Incomes Register within five days of payment.

When calculating your employees’ salaries or wages, take out TyEL insurance no later than the day preceding the day on which you report earnings data in order to allow time for the information about the pension policy number to be updated in the Incomes Register. For the report to the Incomes Register, you will need an insurance number, i.e. a pension policy number.

You only need one TyEL insurance for your employees. If you hire a new employee, add him or her to your existing TyEL insurance. 

Take out TyEL insurance >
Read the TyEL insurance terms and conditions >

If you are a temporary employer, arrange your employees’ pension cover in the PikaPalkka®, Palkka.fi or Oima.fi service. It is also an easy way to take care of payroll calculation. These services automatically send the earnings payment data to the Incomes Register. Take a closer look at the services for temporary employers.

This is how you arrange your employee’s other social security

Arranging other social security becomes your responsibility when you pay a salary of more than EUR 1,300 to your employee during a calendar year. Take out three separate insurance policies: 

  1. workers’ compensation insurance 
  2. unemployment insurance 
  3. group life insurance. 

If the wages and salaries you pay exceed the lower limit set by the tax authority, also pay your employee’s social security contribution, i.e. the health insurance contribution. 

If the salary you pay to your employee is exactly EUR 1,300 or less, you do not need to do anything. Learn more about employees’ social security and contributions.

 

Are you a self-employed person?

As an entrepreneur, you are in charge of your pension cover and your other social security. Take out self-employed person’s pension insurance, i.e. YEL insurance, for yourself. YEL insurance is often the right choice also when you employ one or more members of your family. 

Read more about YEL insurance >

Read more about who should take out YEL insurance >

How much does TyEL insurance cost?

The size of the contribution depends on your size as an employer and the client bonuses you receive. The TyEL age limits determine the TyEL contribution percentage.

Read more about TyEL contributions and discounts

How do I pay the TyEL contribution?

You should report your employee’s earnings to the Incomes Register, but, depending on your notification method, you should pay the TyEL contributions either directly or through your service provider to us at Ilmarinen.

Read more about paying and invoicing