Employer Cost Calculator 2026

How the Employer Cost Calculator Works

Employer's statutory side costs in 2026:

• TyEL earnings-related pension insurance 17.10% – the employer's share of the statutory earnings-related pension insurance.
• Health insurance contribution (sava) 1.91% – funds Kela sickness allowances and parental allowances.
• Unemployment insurance contribution 0.31% of the wage sum up to €2,251,500/year; the excess is 1.24%.
• Accident insurance approx. 0.51% on average – varies by the industry risk class between 0.05% and 5%.
• Group life insurance 0.06% – basic insurance defined in collective agreements.

Total about 19.89% of gross salary. An employee's €3,500 monthly gross therefore means a total cost of about €4,196 per month for the employer, purely in wage side costs.

What Makes Up the Employer's Total Cost?

The employee's actual cost to the employer is much more than just the gross salary. Total cost consists of several items:

1. Gross salary – the base pay agreed in the contract plus any allowances.
2. Statutory side costs – about 20% (TyEL, sava, unemployment, accident, group life).
3. Holiday pay – accrues 2.5 days/month, usually 12% of annual salary during paid time.
4. Holiday bonus – often 50% of holiday pay per TES, i.e. about 6% of annual salary.
5. Sick pay – at least 9 days by law, often 28–56 days by TES.
6. Occupational healthcare – €300–1,500/person/year depending on the level.
7. Work environment and tools – desk, computer, phone, licences.
8. Training and recruitment – together easily 5–10% of annual salary.

Rule of thumb: an employee's actual cost is 1.3–1.5× the gross salary. E.g. a €3,500/month gross salary means an average real cost of €4,600–5,300/month to the employer.

Accident Insurance – The Item That Varies by Industry

Accident insurance is the only side cost that varies significantly by industry. The insurance provider sets the contribution based on workplace accident risk. Roughly:

• Office work, IT, expert work: 0.05–0.3%
• Retail, services: 0.2–0.5%
• Nursing, education: 0.3–0.8%
• Industry: 0.8–2%
• Construction: 2–5%
• Forestry, mining: up to 5%

Our calculator uses the 0.51% average, which works well for most industries. In construction and industry, the actual cost may be significantly higher – check your specific percentage from your insurance company for accurate budgeting.

Estimating a Recruitment Budget

When considering hiring a new employee, remember to include the following in budget estimates:

• Gross salary × 1.20 = direct annual cost with side costs.
• Gross salary × 12.5 months (12 months + holiday bonus) = actual annual salary sum.
• Annual total cost: gross salary × 12.5 × 1.20 ≈ annual salary × 15.

Example: €3,000/month gross salary → actual annual cost 3,000 × 15 = €45,000/year. Add to this occupational healthcare, training costs, tools, and recruitment side costs.

If employment is fixed-term or part-time, statutory side costs remain the same as percentages, just scaled directly to the smaller salary.

Example: €3,500/month Gross for the Employer

Let's take a practical example where the employee's monthly gross is €3,500:

• Gross salary: €3,500
• TyEL 17.10%: +€598.50
• Sava 1.91%: +€66.85
• Unemployment insurance 0.31%: +€10.85
• Accident insurance 0.51%: +€17.85
• Group life insurance 0.06%: +€2.10

Side costs total: €696.15 (19.89% of gross)

Employer total cost/month: €4,196.15

On an annual basis, including the holiday bonus (about €1,750) and normal side costs, the total cost is about €52,200/year – considerably more than just the €42,000 annual gross.

Employer Trend Over Time – Side Costs Declining

Employer side costs in Finland have decreased in recent years. In the early 2010s, statutory employer side costs were over 25% of gross salary. The Competitiveness Pact of 2017–2020 lowered the employer's health insurance contribution and shifted part of the earnings-related pension contribution to the employee. Today, side costs are about 20% – historically low. The reforms have improved the international competitiveness of Finnish labour, but have also shifted more responsibility to the employee side.

The trend has been that the employee's own responsibility (TyEL 7.15%, unemployment insurance 0.89%, health insurance ~1.90%) has grown by several percentage points over a decade. Employer contributions have decreased.

Employer Obligations to the Tax Administration and Insurance Companies

Payroll brings several statutory reporting obligations. The employer must:

• Report salaries to the Incomes Register within five calendar days of payment. The Incomes Register is a centralised register maintained by the Tax Administration, to which employers, Kela, pension providers and unemployment funds report all salary data.
• Withhold income tax and remit it to the Tax Administration monthly. Withholding is determined by the employee's tax card.
• Pay earnings-related pension contributions to the chosen pension company (e.g. Varma, Ilmarinen, Elo, Veritas).
• Handle unemployment insurance contributions to the Employment Fund, which collects contributions and forwards them to unemployment funds.
• Take out accident insurance from the chosen insurance company – it is mandatory for all employees.
• Arrange occupational healthcare – the law requires at least preventive occupational healthcare.
• Report annually the wage sum and employee data as required by the collective agreement.

In Finland, outsourcing payroll is very common – about half of SMEs use an accounting firm or payroll service to handle salary payments.