Payroll and Benefits Guide Aland Islands
Last updated: Mar 11, 2026
Contribution
| Employer Payroll Contributions | |
| 17.38% | Pension insurance (TyEL) |
| 1.87% | Health insurance (health care contribution) |
| 0.20% | Unemployment insurance (for annual payroll up to €2,455,500) and 0.80 % above that |
| 0.54% | Accident Insurance |
| 0.06% | Group Life Insurance |
| 20–22 % | Total Employer Cost |
| Employee Payroll Contributions | |
| (age 17–52 or 63–67); 8.65 % (age 53–62) | Pension insurance |
| approximately 0.59 % | Unemployment insurance |
| 0.84 % if annual income ≥ €16,862; otherwise 0 % | Health insurance (daily allowance contribution) |
| 1.06 % of net income | Health insurance (medical expenses contribution) |
| 9–10 % of gross salary (slightly higher if age‑based pension rate is 8.65 %) | Total Employee Cost |
| Income Tax | |
| Monthly income up to 50,000 ALL | |
| 12.64% | 0–€21,200 |
| 19% | €21,201–31,500 |
| 30.25% | €31,501–52,100 |
| 34% | €52,101–88,200 |
| 41.75 % | €88,201–150,000 |
| 44.25 % | Above €150,000 |
In addition, employees pay municipal tax (~4.7–19.7 %) depending on municipality (Åland average ~9.3 %) and, if applicable, church tax (1.0–2.25 %) and Yle tax (2.5 % capped
Employer taxes
Working Hours
General
Standard working hours in the Åland Islands are typically 8 hours per day and 40 hours per week for adult employees. Working time rules are governed by the Ålands Landskapslag om arbetstid (Provincial Act on Working Hours), which largely mirrors Finnish national employment law.
Overtime
Overtime and working time regulations in the Åland Islands are governed by the Ålands Landskapslag om arbetstid (Provincial Act on Working Hours). This legislation largely mirrors Finland’s national working time framework and establishes limits on working hours, overtime, and employee protections.
Limits on Hours and Consent
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Maximum ordinary working hours are 8 hours per day and 40 hours per week. Any hours worked beyond these limits are considered overtime (övertid).
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Overtime generally requires both employer initiation and the employee’s explicit consent.
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Total working time, including overtime, must not exceed an average of 48 hours per week over a four-month reference period.
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Overtime is typically limited to 250 hours per calendar year, although this may be extended to 330 hours through a collective agreement.
Mandatory Overtime Pay Rates
Overtime must be compensated with premium pay rates or equivalent paid time off (vapaa-aika) if agreed between the employer and employee. Compensation follows progressive minimum rates depending on the type and duration of overtime.
| Type of Overtime | Hours Worked | Minimum Compensation Rate (Supplement) | Total Pay Rate |
| Daily Overtime | First 2 hours beyond the daily limit. | +50% of the regular hourly wage. | 150% |
| Daily Overtime | Subsequent hours of overtime on the same day. | +100% of the regular hourly wage. | 200% |
| Weekly Overtime | Hours exceeding 40 hours/week that are not counted as daily overtime. | +50% of the regular hourly wage. | 150% |
| Sunday Work | All hours worked on a Sunday. | +100% of the regular hourly wage. | 200% |
Note on Collective Agreements: The specific rules and thresholds are frequently detailed in Collective Agreements (Kollektivavtal) for different sectors within the Åland Islands, provided they adhere to the minimum protections established by the provincial law.
Payroll
Payroll in the Åland Islands is typically processed monthly, with salaries paid by the last working day of each month. Employers must report salary payments, tax withholdings, and social contributions through Finland’s centralized Incomes Register within five days of payment.
13th Salary
A 13th-month salary is not required by law in the Åland Islands. However, some employers may offer year-end bonuses or holiday bonuses, depending on company policy or sector-specific collective agreements.
Leave
Annual Leave (vacation)
Employees typically accrue 2.5 days of paid annual leave for each month of employment, resulting in approximately 30 days of paid vacation per year after the qualifying period. During the first year of employment, leave may accrue on a pro-rata basis.
PTO carryover
In the Åland Islands, annual leave rules follow Finnish law since Åland is part of Finland. Employees accrue paid annual leave (typically about 30 days per year) and unused leave can be carried over to the next holiday period (e.g., beyond the summer holiday season) under the Finnish Annual Holidays Act, especially for parts of leave not used within the usual holiday season; this carry-over generally requires agreement between employer and employee or is subject to specific rules under that Act.
Public Holidays
Holidays falling on the weekend are observed on the following working day(s).
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 01 Jan 2026 | Thursday | New Year’s Day | Standard holiday |
| 06 Jan 2026 | Tuesday | Epiphany | Standard holiday |
| 03 April 2026 | Friday | Good Friday | Standard holiday |
| 05 April 2026 | Sunday | Easter Sunday | Standard holiday |
| 06 April 2026 | Monday | Easter Monday | Standard holiday |
| 01 May 2026 | Friday | May Day | Standard holiday |
| 14 May 2026 | Thursday | Ascension Day | Standard holiday |
| 24 may 2026 | Sunday | Whit Sunday (Pentecost) | Standard holiday |
| 09 June 2026 | Tuesday | Åland Self-Governing Day | Standard holiday (regional official) |
| 20 June 2026 | Saturday | Midsummer Day | Standard holiday / bank holiday |
| 31 Oct 2026 | Saturday | All Saints’ Day | Standard holiday |
| 06 Dec 2026 | Sunday | Independence Day | Standard holiday |
| 25 Dec 2026 | Friday | Christmas Day | Standard holiday |
| 26 Dec 2026 | Saturday | Boxing Day (Second Day of Christmas) | Holiday / bank holiday |
Sick Days
- Employees in the Åland Islands are entitled to employer-paid sick leave for up to 10 working days, provided they have been employed for at least one month. If employment has lasted less than one month, the employee is typically entitled to 50% of normal pay during sick leave.
If illness continues beyond this period, employees may receive sickness allowance from Finland’s Social Insurance Institution (Kela) for up to 300 working days for the same illness.
. If employed less than a month, entitlement is 50% pay.
- Sick pay starts from the first working day of absence (often unpaid waiting day can apply only if a collective agreement or contract stipulates differently).
- If illness continues beyond 10 working days, employees receive Kela sickness allowance, which may continue for up to 300 working days for the same illness.
Maternity
Up to 40 working days (approx. 8 weeks), typically starting 30 working days before expected birth.
Paternity
Specifically, 54 workdays available to fathers; up to 18 of those can be taken during the mother’s maternity or parental leave period
Parental Leave
Up to 320 working days total per child (approx. 14 months), shared between both parents (normally 160 days each), with the option to transfer up to 63 days between parents. Single parents may take all 320 days alone
Employer taxes
Termination
Termination Process
Governed by Finland’s Employment Contracts Act, with notice periods, probation rules, and severance based on tenure and collective agreement provisions. Probation typically up to 3–6 months, with shorter notice during probation. Notice and termination procedures may vary by agreement.
| Salary payment interval / date | Final payment on termination | Bank account payment requirement |
|---|---|---|
| Pay is on the last day of the pay period unless otherwise agreed. In practice, monthly for salaried staff and twice a month for hourly staff (collective agreements may set different cycles). | When the employment ends, the pay period also ends and all amounts due fall payable. If any part is delayed, the employee is entitled to full pay for waiting days up to 6 calendar days, plus statutory interest (with limited exceptions for disputed amounts). | Paid to the employee’s bank account; cash only for compelling reasons (and then the employer must document the payment). The authority site also states wages must be paid into the employee’s designated bank account. |
Notice Period
Employer-Initiated Termination:
| Length of Service | Statutory Notice |
| Up to 1 year | 14 days |
| More than 1 – 4 years | 1 month |
| More than 4 – 8 years | 2 months |
| More than 8 – 12 years | 4 months |
| Over 12 years | 6 months |
Employee Resignation:
- Up to 5 years’ service: 14 days’ notice
- Over 5 years: 1 month’s notice
These statutory periods apply unless a longer notice is agreed via contract or collective agreement—but cannot exceed 6 months for either party
Severance Pay
No statutory severance pay is required under Finnish law, regardless of the employee’s tenure or the reason for termination. Severance-type payments may appear only in collective agreements, individual employment contracts, or negotiated settlement agreements in cases of redundancy or contested dismissal.
Probation period
- Probation is optional, but if included, it must be explicitly stated in the employment contract.
- Maximum duration is 6 months for permanent contracts.
- For fixed-term contracts, probation cannot exceed half the contract duration, though if the contract exceeds six months, probation may still last up to six months
- During this period, either party may terminate the contract without notice or reason—though good practice suggests giving at least a few days’ warning
Immigration
Finnish immigration laws apply in the Åland Islands, with some regional autonomy in residence rights.
EU/EEA Citizens
- No visa or residence permit required.
- Must register with the Finnish Immigration Service (Migri) if staying longer than 90 days or working.
Non-EU/EEA Citizens
- Must obtain a Finnish residence permit before entering for work.
- Common permit types include:
- Employment permit
- Specialist permit
- EU Blue Card
- Entrepreneur or seasonal work permit
Åland -Specific points:
- Åland has autonomy in residence rights, land ownership, and voting.
- Right of domicile (after 5 years) is needed for land ownership and certain civic rights.
- Employers must verify valid work permits before hiring.
Processing
- Applications handled via Migri and usually processed in 1–3 months.
Minimum Wage
The Åland Islands do not have a statutory national minimum wage. Instead, minimum wage levels are determined through sector-specific collective bargaining agreements, which cover most employees and establish minimum salary standards, overtime rates, and employment conditions.
MINIMUM WAGE (PER MONTH)
VAT
The Åland Islands are outside the EU VAT area, which allows duty-free sales on ferry routes between Finland and Sweden. However, Finnish corporate tax rules apply, including a 20% corporate income tax rate for companies operating in Åland.
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Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 01 Jan 2026 | Thursday | New Year’s Day | Standard holiday |
| 06 Jan 2026 | Tuesday | Epiphany | Standard holiday |
| 03 April 2026 | Friday | Good Friday | Standard holiday |
| 05 April 2026 | Sunday | Easter Sunday | Standard holiday |
| 06 April 2026 | Monday | Easter Monday | Standard holiday |
| 01 May 2026 | Friday | May Day | Standard holiday |
| 14 May 2026 | Thursday | Ascension Day | Standard holiday |
| 24 may 2026 | Sunday | Whit Sunday (Pentecost) | Standard holiday |
| 09 June 2026 | Tuesday | Åland Self-Governing Day | Standard holiday (regional official) |
| 20 June 2026 | Saturday | Midsummer Day | Standard holiday / bank holiday |
| 31 Oct 2026 | Saturday | All Saints’ Day | Standard holiday |
| 06 Dec 2026 | Sunday | Independence Day | Standard holiday |
| 25 Dec 2026 | Friday | Christmas Day | Standard holiday |
| 26 Dec 2026 | Saturday | Boxing Day (Second Day of Christmas) | Holiday / bank holiday |
Questions & Answers