sub contractor regulations in finland

[cors187]

Hi ,
I am looking for more info on the sub contracting requirements in Finland.
I would like to know as much a possible of the legal requirements for employing sub contractors and also being employed as a sub contractor.
At present i am looking through http://www.vero.fi/en-US for info.
Anyone know of any other pages online i can veiw in terms of wages,contract,tax, insurance for a sub contractor employee.
Anyone got any thoughts.

regards

[Rosamunda]

With the regards to employment law, subcontractors are employers the same as anyone else. And their employees are employees, no different to anywhere else. What exactly are you looking for?

I would like to know as much a possible of the legal requirements for employing sub contractors and also being employed as a sub contractor.

Maybe this is just semantics but... generally speaking a company doesn't "employ" a subcontractor, rather they "contract" one. The relationship is B2B (business to business) rather than employer/employee. So a subcontractor invoices the contractor in the same way as a supplier would bill his customer. There are no payslips as such, no wages.

[Upphew]

In what field? Medicine? IT? Construction?

Anyone know of any other pages online i can veiw in terms of wages,contract,tax, insurance for a sub contractor employee.
Anyone got any thoughts.

Sub contractor isn't an employee. It is just a business buying services from business. Unless we're talking about construction. Then you have to deal with reverse VAT.

[cors187]

Yeah its construction, we have what most would consider to be non career making work, so it seems workers dont always stay.

Basically im trying to put together some costing profiles on the existing employees costs per month versus a contracted worker, i dont want to make any mistakes in the budget itemizing.
Ive worked as a sub-contractor most of my life in Australia and there are a few small items that need to be addressed there, i figured as the union influence is more prominent here then there maybe some factors i cant figure out.
Any help would be great.

[Rosamunda]

There was that recent thread about using Eezy. I guess most of your answers are in there. I don't think there are any hidden costs when using subcontractors but obviously it depends on the T&Cs in the contract and the rates negotiated with the subcontractor. I'm not sure it is any cheaper to subcontract. Most companies use subcontractors because they want the flexibility of not hiring more people onto their payroll. But the trade-off is usually quality.

[cors187]

I am going to try and add some meat to this thread.
using this link as a general entry to my question.
http://www.vero.fi/en-US/Companies_and_ ... n_employer

Employment contract or other contract?

To be aware that an employer/employee relationship exists is important. If it exists, it means that the company will have employer obligations. Both tax law and labor law implement the same criteria to determine whether an employer/employee relationship exists. One of the important markers is the answer to the question whether the employer has a direction or control right with respect to the performance of labour. If an employer/employee relationship exists, the employer has the authority to give detailed orders as to how work should be performed. If an employer/employee relationship exists, the employer also has the right to control and follow up the performance of work.

The entire situation should be examined carefully. If the markers of an employer/employee relationship are present, the arrangement is deemed an employer/employee relationship, even if the concerned parties have made no employment contract.

So i guess at first i need to asses as to whether the work and the direction i give to a worker would create this employer/employee relationship regardless of if we came to a simple sub-contract agreement.
Any members got some comments/personal experiences on the boundaries between contractor/sub-contractor~employer/employee?

[cors187]

A little more info,

Wages through the payroll system or non-wage compensation?

Tax rules usually treat any remuneration paid for the performance of work, labour or personal services as wages or non-wage compensation

.

WAge or non wage compensation? is the translator working!

Sometimes it is difficult to determine whether the payment should be regarded as wages or as non-wage compensation. In this case, the primary examination should focus on whether the markers of wage payment can be seen. If the answer is negative, the remuneration is a non-wage compensation.

here is point back to these primary markers.Its important for me to "do right by ALL", ive seen first hand last year that some finnish workers are quick to call up the regulations people even if things are above regulations.hmmm

[cors187]

Wages are paid for the performance of work within an employer/employee relationship. Additionally, several fees that are listed in Prepayment Act are to be treated as wages even if no employer/employee relationship is formed. These fees include personal fees paid for lectures and for attendance in a conference. The compensation given by the employer to the employee may partly consist of fringe benefits (including company car, company telephone or accommodation), not only of cash. Wages are subject to tax withholding, and additionally, subject to payment of the employer's social security contribution.

I see that a formula for employees could be written.
employer pays = employees wage+tax withholding + social security contribution

Nonwage compensation is payable for the performance of work, a one-off assignment, or for the rendering of a service. The obligation of the payer to withhold tax is in force only in case the beneficiary is not entered in the Prepayment register (Finnish: ennakkoperintärekisteri;Swedish:förskottsuppbördsregister). No payment of the employer's social security contribution is associated with the payment of a nonwage compensation.

For more information on evaluating the nature of an employee, self-employed and the compensation paid, see the official instruction in Finnish Palkkaa vai työkorvausta (Ohje Dnro 2118/31/2004, 21.6.2005).

Non wage or sub-contract contribution only shows a formula of.
Contractor pays = sub-contractors assignment + 0

[Rosamunda]

So i guess at first i need to asses as to whether the work and the direction i give to a worker would create this employer/employee relationship regardless of if we came to a simple sub-contract agreement.
Any members got some comments/personal experiences on the boundaries between contractor/sub-contractor~employer/employee?

We already explained this one:

If you pay the person a wage/salary or non-wage compensation (eg accommodation/meals) then you are their employer.
If you pay an invoice which the worker sends you, then you are his customer (ie business to business relationship)

I think you are misreading the Vero pages. The explanations regarding employer/employee relationships are there because in Finland it is possible to work for someone without a written employment contract. Therefore, it is important to understand what constitutes "employment". Thus the definition. If you work in a restaurant and there is someone there telling you what to do, then he is your employer. Even if the employer says he is "training" you and won't pay you a salary... (there was a good example of that on this forum a few days ago).

The definition you copied from Vero is NOT aiming to differentiate employment from sub-contracting. They are two entirely different things. From a tax point of view, employment concerns personal taxation (the employee and PAYE/withholding tax) whereas subcontracting is taxed on a VAT basis.

I still don't understand what you are looking for. Until you decide whether you are going to employ someone (ie pay them a salary) or subcontract (ie order services from another company) then it's difficult to answer your questions.

[Rosamunda]

I see that a formula for employees could be written.
employer pays = employees wage+tax withholding + social security contribution

Employer pays:

+ Gross salary -> Employee
+ Holiday Pay -> Employee
- Withholding tax (including church tax and municipal tax) -> Vero
- Employee sickness contribution (2.04%) -> Kela
- Employee unemployment contribution (0.6%) -> Kela
- Employer social security contribution (2.12%) -> Kela
- Employer unemployment contribution (0.8%) -> Kela
- TyEL employee pension contribution (5.15%) -> Private company eg Ilmarinen, Varma, Tapiola, Veritas
- TyEL employer pension contribution (23.3%) -> Ilmarinen etc
- Employer Occupational accident insurance (on ave 1% but probably more in the construction industry) -> as above
- Employer group life insurance (0.07% on ave) -> as above
- Union dues

There may be other non-wage compensations eg Per Diem expenses, travel costs (km reimbursement) etc if the employee is working far from his usual place of employment/home (often the case in the construction industry)

Hopefully someone will correct the bits I got wrong... Upphew?

[cors187]

Really i want the two formulas side by side with all legal obligations.

On one side is the formula of the main contractor and his obligations to the sub-contractor and state.
On the other is the formula of the sub-contractor and his obligations to the main contractor and state.

[cors187]

ahh i see you replied just before me, regards.

[Upphew]

On one side is the formula of the main contractor and his obligations to the sub-contractor and state.

Pay bills, pay vat.

[Rosamunda]

On one side is the formula of the main contractor and his obligations to the sub-contractor and state.

Pay bills, pay vat.

Yes. And then define "performance" in your contract (with or without the help of a lawyer) - but that is nothing to do with Vero, Kela, the State or anyone else.

I think you need to get your head around the meaning of the word "sub-contract" versus what is meant by "employment". Have you ever hired anyone before? If so, how/where/what did you do it then?

[Rosamunda]

I see that a formula for employees could be written.
employer pays = employees wage+tax withholding + social security contribution

Employer pays:

+ Gross salary -> Employee
+ Holiday Pay -> Employee
- Withholding tax (including church tax and municipal tax) -> Vero
- Employee sickness contribution (2.04%) -> Kela
- Employee unemployment contribution (0.6%) -> Kela
- Employer social security contribution (2.12%) -> Kela
- Employer unemployment contribution (0.8%) -> Kela
- TyEL employee pension contribution (5.15%) -> Private company eg Ilmarinen, Varma, Tapiola, Veritas
- TyEL employer pension contribution (23.3%) -> Ilmarinen etc
- Employer Occupational accident insurance (on ave 1% but probably more in the construction industry) -> as above
- Employer group life insurance (0.07% on ave) -> as above
- Union dues

There may be other non-wage compensations eg Per Diem expenses, travel costs (km reimbursement) etc if the employee is working far from his usual place of employment/home (often the case in the construction industry)

Just to clarify: The above is NOT subcontracting. It is EMPLOYMENT.