Insuring an employee moving abroad from Finland
Are you posting an employee abroad? Is your employee going abroad to work remotely? As an employer, you need to take care of your employee’s pension cover even when they work abroad.
When your employee goes to work abroad
When your employee goes to work abroad, you as an employer need to take care of your employee’s pension and social security. What you need to do when your employee works abroad depends on the country in which your employee works.
First check below if the country in which your employee will work is an EU country, an EEA country, a social security agreement country or a non-agreement country, and read the instructions for each specific case. Then learn about the salary for insurance purposes, which is an important part of insuring work abroad.
EU countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the *UK.
*For persons going to the UK, the same rules apply as if the UK were still a member of the EU.
EEA countries: Norway, Iceland and Liechtenstein.
Social security agreement countries: Australia, Canada, Chile, China, India, Israel, Japan, Korea, the Province of Quebec and the USA.
Insuring work abroad in different countries
When your employee works in an EU or EEA country or Switzerland, you should usually take out insurance for them in the country in which they work. This section describes two different situations:
- When your employee goes abroad to work temporarily (a so-called posted worker)
- When your employee works in more than one country
1. When your employee goes to work abroad temporarily
Posting an employee abroad means some new things to consider. When you send your employee to work abroad temporarily, they usually have the status of a so-called posted worker. Your employee meets the criteria of a posted worker when they go to work in an EU or EEA country or Switzerland and the following conditions are met:
- their posting abroad lasts no more than 24 months, or, with an exemption, no more than five years.
- they have been covered by the Finnish social security system, based on work or residence, for at least one month before starting to work abroad.You can also hire an employee directly for a posting abroad, in which case they do not have to be employed by you before the posting.
- their employment relationship with your company, i.e. a Finnish employer, remains in force during the posting abroad.
Follow these steps:
1. Apply for a social security certificate, i.e. an A1 certificate, for your employee going to work abroad from the Finnish Centre for Pensions. That way, they will be covered by Finnish social security also during their work abroad. Also apply for it when your employee goes on a business trip abroad, even for a few days. Apply for an A1 certificate (etk.fi).
2. After you have applied for an A1 certificate and it has been granted, the Finnish Centre for Pensions will send the A1 certificate to you and your employee. The Finnish Centre for Pensions will inform the employee’s pension insurance company and Kela that an A1 certificate has been granted. Based on the certificate, your employee can apply to Kela for a European Health Insurance Card. Read more about the European Health Insurance Card (kela.fi).
3. Conclude an agreement on posting abroad with your employee. Also state in the agreement the salary for insurance purposes, i.e. the earnings based on which your employee will accrue earnings-related pension during their posting abroad. You can read more about the salary for insurance purposes on this page. Report the salary for insurance purposes to the Incomes Register under the income type 352. Read more about international situations in the Incomes Register (vero.fi).
2. When your employee works in several EU or EEA countries or in Switzerland
Based on international social security agreements, your employee is only covered by one country’s social security system at a time, even if they work in several EU or EEA countries or Switzerland. If they work in several EU or EEA countries or in Switzerland, they must apply for an A1 certificate from the Finnish Centre for Pensions. The A1 certificate states which country’s social security the employee is covered by.
The country of residence determines the applicable legislation. The A1 certificate is a requirement for the employee to be covered by Finnish social security also during their work abroad.
Pension and social security can be arranged in different ways
1. Take out pension insurance based on the employee’s country of residence if the employee carries out a substantial part of their activities in their country of residence. A substantial part means that more than 25 per cent of the activity is carried out in the country of residence. Your employee’s working hours or pay or both will also be taken into account when determining the substantial part of the activity.
2. Take out pension insurance for your employee based on your company’s domicile if at least one of the following criteria is met:
- your employee does not carry out a substantial part of their activities in their country of residence and only has one employer
- all of the employers are domiciled in the same country.
3. If there are several employers and they are domiciled in your employee’s country of residence and in one other country, take out social insurance in the foreign employer’s country of domicile.
4. If your employee works, in addition to their country of residence, in several countries for different employers, they are insured in their country of residence.
When your employee works in a non-agreement country, consider the following.
1. Find out whether you need to take out TyEL insurance
When you as a Finnish employer post your employee to work in a country with which Finland does not have a social security agreement, your employee will remain covered by Finnish social security as long as they work for you, i.e. the employer posting them.Taking care of their pension cover means taking out employees’ pension insurance, i.e. TyEL insurance, for them.Take out the insurance regardless of your employee’s citizenship.
Insure your employee according to TyEL, if
- you are a Finnish employer
- you have posted your employee from Finland
- your employee is covered by Finnish social security based on residence or work when the posting starts.
2. Apply for a certificate showing that the employee is covered by the Finnish earnings-related pension system and social security
If you post your employee to a non-agreement country, you might need to insure them also based on the employment country’s legislation.
Request a statement from Kela showing that your employee is covered by Finnish social security. Also print out the TyEL certificate in Ilmarinen’s online service to show the authorities of the destination country that you have valid TyEL insurance. The certificate helps you avoid any double pension insurance contributions that you may incur if you have to arrange pension cover for your employee in two countries.
3. Report the posting to Kela
If you post your employee to a non-agreement country, you must report the start and end date of the posting as well as any changes to these to Kela. The posted employee must also submit a similar report for themselves and their possible family members so that they remain covered by Finnish social security while posted in the foreign country.Kela will decide whether the employee is entitled to Kela’s benefits and to Finnish social security during their posting.
Example: an employee is posted to Singapore
You post your employee with a family to Singapore for three years. You and your employee need to contact Kela about being covered by the Finnish social security system. As an employer, you need to find out about the statutory social insurance contributions of the country of employment. If your employee is insured under TyEL with Ilmarinen, you can download a TyEL certificate for the authorities of the destination country in the online service for employers. The statement may exempt you from pension insurance contributions in the employment country.
Agree with your employee on the salary for insurance purposes and write it down in the posting agreement. You can read more about the salary for insurance purposes on this page. Report the salary for insurance purposes to the Incomes Register.
When your employee works abroad, one important thing to remember is the salary for insurance purposes. The salary for insurance purposes means the gross salary that your employee would earn for similar work in Finland. The salary for insurance purposes is always based on the pay level in the home country and the actual amount of salary does not affect it. The salary for insurance purposes can be equal to or smaller or larger than the actual salary paid.
Agree with your employee on the salary for insurance purposes when signing a posting agreement. During the posting abroad, you will pay TyEL contributions based on the salary for insurance purposes and your employee will accrue pension based on it. Report the salary for insurance purposes to the Incomes Register under the income type 352. Read more about international situations in the Incomes Register (vero.fi).
It is not necessary to determine a salary for insurance purposes for periods of posting abroad that last less than six months, if:
- your employee will perform similar work abroad as in Finland at the time of departure
- your employee’s salary will continue to be paid from Finland
- no separate salary has been agreed on for the duration of the employee’s posting.
When agreeing on the salary for insurance purposes, consider the following:
- The fringe benefits your employee would receive for similar work in Finland
- The bonuses as of the very beginning if they were used in Finland for similar work
- The working hours – will the employee’s working hours be longer abroad than the normal working hours in Finland?
- Special requirements of the work abroad – does the work abroad require special knowledge or skills
Below you can find an example of how the salary for insurance purposes is calculated.
An employee’s salary abroad is EUR 7,100 per month.
Their salary at the time of departure in Finland was EUR 5,200 per month, including fringe benefits, holiday bonuses and estimated bonuses.
Consider the special requirements of working abroad compared to similar work in Finland. The position abroad will involve larger responsibilities for the employee.
The salary for insurance purposes is determined to be EUR 5,800 per month. The employer and the employee enter the salary for insurance purposes in the posting agreement.