Employees Without Borders – Foreign Employees in Finland and Finnish Employees Abroad

Authors: Johanna Haltia-Tapio and Hannes Snellman employment law team

Labour mobility on a global scale opens new possibilities for both employers and employees, but might also have unexpected consequences. During the recent years, the mobility of employees has increased due to globalisation, development of technology as well as companies’ efforts to recruit the best employees. We discussed the subject through case examples at our seminar. For instance, what should an employer be aware of in a situation where an Indian employee has been seconded to work in Finland for a short period of time or when a Finnish company sends a specialist to work at a company’s Russian subsidiary? What should an employer take into account before allowing a Finnish employee to work remotely from his summer house in Spain? What about when a Nordic company’s Swedish manager works partly in Sweden and partly in Finland?

The employer needs to consider several aspects of cross-border employment, for example, whether the employee’s presence in the foreign country creates a permanent establishment for the company in corporate taxation, which country’s social security the employee belongs to, which country the employee is tax resident in and what employment legislation needs to be applied. We also briefly discussed the licenses, permits and documentation needed when a Finnish employee is posted to work in Russia. The topic raised interesting conversations about complex and unexpected problems companies have faced in practice.

The questions related to employees’ mobility should not discourage employers from contemplating cross-border employment, but rather encourage them to ensure that the main stumbling blocks are avoided.

Three important questions when receiving foreign employees or sending employees abroad:

• Taxation: Does the employee’s presence risk the creation of a permanent establishment for the company? Which country is the employee tax resident in?

• Social security: Which country’s social security does the employee belong to?

• Terms of employment: Does the legislation of the country where the company is located or the country where the employee is working apply?

In case you wish to discuss the subject further or need assistance in a particular case we are happy to advise you in more detail.