Are you a ‘light entrepreneur’ or an employee at a Finnish construction site? Know the difference!
This article collects all the key information construction industry professionals arriving to work in Finland need to know when assessing the nature and criteria of their employment or freelance contract. The article was originally written Finnish and has also been translated into Estonian and Russian.
Why should I read this article?
1. It will help you understand your tax liabilities both as a light entrepreneur and an employee.
2. You learn what a light entrepreneur is.
3. You learn what to do if your employer asks you to become a light entrepreneur.
In Uusimaa, on average, every third person working in the building construction industry is not Finnish. Elsewhere in Finland the share is one in ten. According to statistics, most non-Finnish construction workers come to Finland from Estonia, Poland, Latvia, Lithuania, or Ukraine. Estonians are the largest nationality in the industry, and many of Estonians have settled permanently in Finland and established Finnish companies.
Data on non-Finnish workers in Finland can be found in the labor force survey conducted by the Confederation of Finnish Construction Industries RT in 2019.
Before a construction professional can roll up their sleeves and get to work on a Finnish construction site, they must discuss the nature of the employment with the construction company. For starters, you should find out whether you are an employee or a light entrepreneur.
If you are an employee, i.e., you have made an employment contract with the company, your employment is subject to all the same laws and working conditions as any Finnish employee’s employment. The collective agreements of the construction industry are also equally applied to the employment of both non-Finnish and Finnish employees. The applied collective agreement defines the wages, benefits, working hours and holidays. The collective agreement says, for example, that your employer cannot legally order you to work more than 8 hours a day and 40 hours a week. That means this rule must be followed on the construction site.
After making an employment contract, take care of your tax matters immediately. Register at a tax office and get a tax number. If you do not have a tax number, you will not be able to enter your work site. The tax number must also be included on your photo ID, which you must wear while at work.
Did you know that the Finnish Tax Administration has a test on their website that can you take to determine the nature of your employment? Answer the questions and the site will tell you how to proceed with your taxes. The nature of your employment determines your taxation, so finding it out is important. Take the test here.
Are you a light entrepreneur?
Since 2013, it has been possible to work as a ‘light entrepreneur’ in Finland through the UKKO.fi service. In short, being a light entrepreneur means that an invoice service helps you work as easily as possible without you having to spend your time on bureaucracy, accounting, or paperwork.
All you need to do in the invoice service is to create and send an invoice to the company you work for. You can also set your own prices. As a light entrepreneur, you can work like a regular entrepreneur while the invoice service takes care of many of the daily responsibilities of an entrepreneur for a service fee.
As an UKKO.fi light entrepreneur in the construction industry, you are:
• Covered by accident insurance after you have notified UKKO.fi that you have started working
• Covered by liability insurance up to EUR 2 million
• Eligible for the Valtticard through us
The Valtticard is an ID card with a chip that shows the name, tax number, photo, and employer of a construction industry professional. If you are a UKKO.fi light entrepreneur, your Valtticard will have ‘SLP Group Oy (UKKO.fi)’ entered as the employer.
As an UKKO.fi light entrepreneur, it is important to note that although you send your invoice to the construction company you work for, the payment to your account will be made by the invoice service UKKO.fi. To enable UKKO.fi to make the payment, you need to take care of your taxes; remember to request a tax card from the tax administration and check that all information on it is correct. UKKO.fi receives your tax information automatically from the tax administration, so you do not need to anything else.
Discuss the nature of your employment immediately at the beginning
Sometimes on construction sites, we encounter situations where a construction industry professional has thought they are an employee but are actually a light entrepreneur working through an invoice service. Sometimes the professional knows that they are a light entrepreneur but does not understand what that means in practice.
Light entrepreneurship is suitable for those who want to work as an entrepreneur and want the opportunity to determine their own prices and working hours. If you want to be a construction industry employee with an employment contract and a set monthly salary, you should not become a light entrepreneur.
If your employer tries to steer you toward light entrepreneurship and, for example, asks you to give them a power of attorney, sit down with your employer first and negotiate the nature of your employment thoroughly. Remind your employer that work conducted under an employment agreement cannot be invoiced through an invoice service. This means an employee cannot be disguised as a freelancer!
Your employer also cannot oblige you to carry out construction work subject to license which is not permitted for a light entrepreneur to carry out.
As a freelancer, you can work for several companies and customers at the same time, and you have the right to decide when you do the work. You bear the risks and responsibilities of being an entrepreneur. For example, you will not be entitled to paid holidays; instead, you have to take your holidays into account in your pricing and save the money yourself. As a light entrepreneur, you work to earn money for yourself, and you are independent to the extent that you are not subject to the employer’s right to manage and supervise its employees.
However, if you decide together that the work you agreed to carry out will be conducted with you acting as a light entrepreneur, make a detailed agreement on the matter.
The agreement should include the shared rules to be followed by both parties during the work. The agreement is binding on both parties and cannot be unilaterally modified by the other party afterwards. You should also agree on the schedule for the work as well as on reporting, the amount to be paid to you, and what your invoices will be based on. You can also agree on the reimbursement of expenses, payment terms, and liabilities. The agreement is concluded with the signature of both parties.
Finally, here is a summary on the differences between a light entrepreneur and an employee:
As a light entrepreneur
• You can influence the terms and conditions of the agreement you make on the work
• You can set your own prices
• You can work for multiple companies or customers at the same time
• You are covered by accident and liability insurance
• You are responsible for your own schedules, holidays, and sick leave
• UKKO.fi withholds the pension insurance contribution from your salary
As an employee
• You make an employment contract with your employer
• You are not allowed to work for competing companies at the same time unless you have agreed otherwise with your employer
• Your working hours and accumulation of holidays are defined in your employment contract
• Your employer withholds the pension insurance contribution from your salary
• You get paid during sick leave as well