Payment of salary

The minimum pay is determined separately for each industry in collective agreements. An employer that belongs to the employer union that made the collective agreement shall comply with the collective agreement made for the industry by the union. An employer that does not belong to the employer union that made the collective agreement is obliged to comply with the generally applicable collective agreement in the industry. An employer must not agree on employee benefits that are of lower standard than those prescribed by the generally applicable collective agreement. More detailed information on generally applicable collective agreements is available from the Occupational Safety and Health Administration.

Minimum pay in the absence of a collective agreement

If the employer does not belong to an employer union that has made a collective agreement and there is no obliging generally applicable collective agreement in the industry, the Employment Contracts Act (chapter 2, section 10) shall be complied with. It is noted in the Employment Contracts Act that if neither a collective agreement applicable under the Collective Agreements Act nor a generally applicable collective agreement is applicable to an employment relationship, and the employer and the employee have not agreed on the remuneration to be paid for the work, the employee shall be paid a reasonable and normal remuneration for the work performed.

If there is other than a generally applicable collective agreement in the industry, remuneration determined for the work can be considered reasonable and normal. If there are no collective agreements in the industry, reasonable and normal remuneration can be based on, for example, salary recommendation of organisations in the industry. If those do not exist either, it is recommended that the remuneration for full-time work would be at least so much that the right to daily allowance in accordance with the condition regarding employment under the Unemployment Security Act is met.

An employer is obliged to pay an employee a full salary if he/she has been at the employer’s disposal in accordance with an agreement without being able to work due to a reason attributable to the employer, unless otherwise agreed.

If an employee is prevented from working due to fire, exceptional natural disaster or other such reason irrespective of the employee or employer, the employee is entitled to receive his/her salary for the duration of the hindrance, but for a maximum of 14 days. If the reason for the prevention of working irrespective of the parties to the employment contract is industrial action by other employees which has no interdependent relationship with his/her working conditions or terms of work, the employee is entitled to receive his/her salary for a maximum of seven days.

The employer may deduct from the salary paid on the above grounds the amount which the employee has saved due to the prevention of work performance and the amount that he/she has earned in other work or intentionally failed to earn. In deducting the salary the employer shall comply with the regulations on the limits for the right of set-off.

In conjunction with the payment of salary the employer shall submit to the employee a calculation which shows the amount of pay and the basis on which it is determined. The pay slip is a necessary tool if you wish to clarify any calculation errors or other errors that have possibly occurred in the calculation of pay. If the employer does not give a pay slip, the employee shall immediately remind the employer about it. If the employee thinks that he/she has not received from the employer all the pay that he/she should have received, he/she has to request for rectification of pay from the employer.

Failure to submit a payslip despite a request is a punishable act pursuant to chapter 13, section 11, subsection 2 of the Employment Contracts Act.

The salary shall be paid on the last day of the pay period, unless otherwise agreed. If the basis for time-based salary is a period shorter than one week, the salary shall be paid at least twice a month and otherwise once a month. In work with performance-based pay, the duration of the pay period may be a maximum of two weeks, unless the pay based on performance is paid in conjunction with a monthly pay. If the work with performance-based pay lasts for longer than one pay period, a proportion of the salary determined according to the time spent on the work shall be paid for each pay period.

If part of the pay is determined as a share of profit, commission, or on other similar grounds, the payment period of that part may be longer than those prescribed above, but no longer than 12 months.