May 16, 2025
Learn how Finland expects to implement the Pay Transparency legislation.
Category:
Pay Transparency
Does your organization have a presence in Finland? If so, this update is for you. Finland has now unveiled its draft approach to implementing the EU Pay Transparency Directive (Directive (EU)2023/970) - and it’s a solid read (the draft is 102 pages long!). For all Finnish employers, big or small, this means new requirements are on the horizon - especially if you have 100+ employees, as additional reporting duties will kick in on a phased timeline.
If you have any questions about the draft legislation, how to approach compliance, or need a hand preparing for these changes (perhaps even a platform to help automate the process across countries), don’t hesitate to reach out. I’m happy to share insights from our experience working with companies of all sizes as we gear up for pay transparency.
Enough preamble - let’s jump in and see what Finland has in store, enjoy the read! :-)
Finland is implementing EU Directive 2023/970 (Pay Transparency Directive) through a series of amendments to national laws, primarily the Act on Equality between Women and Men. The Finnish government has committed to transposing the directive in line with its minimum requirements, without adding additional obligations beyond what the EU law prescribes. The law will apply to both public and private sector employers, including civil service roles.
As Finland keeps the threshold for pay gap reporting at 100 employees and above, this will impact 2.799 Finnish companies. However, it is important to notice that this only counts for the report. All Finnish employers must adhere to the legal requirements for employees right to information and the pre-employment requirements.
The legislation is scheduled to enter into force on 18 May 2026, aligning with the EU's official transposition deadline.
Let’s have a look at the core obligations that you as an employer of Finnish employees will face.
Employers will need to be proactive and transparent about salary right from the start of the hiring process. The draft law introduces several mandatory practices:
After seeing multiple countries propose drafts, it is surprising that most countries take a similar approach to salary ranges in job ads. I was convinced that this would (finally) be a push towards disclosing ranges, as that is what many candidates are asking for. It will be tricky to monitor companies on their disclosure of ranges prior to negotiations – but I hope companies will stick with it to provide better candidate experiences. In addition to that, it is also a key tool in making gaps don’t start evolving in the organization.
A core element and enforcement mechanism of the directive and transposition draft is the “employees right to information”. According to the Finnish draft, any employee will be entitled to request and receive written confirmation of their own salary as well as the average salary for colleagues of the opposite gender who are performing the same or equivalent work. This right is not limited to base salary but applies to all relevant components of pay that could reveal gender-based discrepancies.
Employers are obligated to respond to such requests in writing and within two months from the date of the request. In cases where disclosing the average salary would risk identifying a specific individual, such as in very small teams, employers should route the information through an employee representative or through the Equality Ombudsman to protect personal privacy while still honouring the transparency obligation.
To ensure that workers are aware of this right, employers will be required to notify all employees annually about their option to request salary information and the steps to do so. This could be done by email, intranet updates, or other internal communication channels, and it must be presented clearly and accessible to everyone.
Perhaps most importantly, employees cannot be penalized, discriminated against, or subjected to any negative consequences for requesting pay information, helping someone else make such a request, or simply discussing their salary with colleagues. This protection is at the core of the directive. It serves the function of ensuring that the right to transparency is more than just a formality and can be exercised freely without fear.
For organizations with 100 or more employees, Finland’s draft legislation introduces a reporting framework aimed at creating a detailed and transparent picture of pay practices. Specifically, the reporting must include the following elements:
What sets Finland apart, is their approach to submitting data. The draft suggests that reporting component 1 – 5 will be directly submitted through the Statistical Office and the Incomes Register, who will compile the data. However, the reporting requirements on category of workers must be done manually by the employers and be shared with all employees and employee representatives.
The frequency of reporting is tied to the size of the employer, following a phased structure set out by the directive and mirrored in the Finnish draft. Organizations with 250 or more employees will be required to report annually. For companies employing between 150 and 249 staff, the reporting obligation will occur every three years. Those with 100 to 149 employees benefit from the longest grace period: their first report will be due by 2031, after which reporting will also take place every three years.
This phased approach is designed to give mid-sized companies more time to build internal systems, processes, and expertise to handle the new requirements. However, the delay in initial reporting should not be misinterpreted as permission to postpone preparation. Setting up the necessary data infrastructure, aligning payroll systems, and training relevant staff are all time-consuming processes. For employers, the smart move is to begin preparing well in advance so that when the reporting requirement kicks in, they’re not only compliant but confident in the integrity and accuracy of their data.
Perhaps the most substantial new measure is the “joint pay assessment” requirement for employers with more than 100 employees. This is essentially a mandated pay audit and action plan that must be carried out when the organization has significant unexplained pay gaps.
When is a Joint Pay Assessment triggered?
If a company’s pay gap report shows a pay gap of more than 5% in any category of workers and the employer cannot justify this difference with objective factors, and the employer fails to fix the gap within six months, then the company must perform a detailed joint pay. This threshold and procedure come directly from the EU directive.
How does a joint pay assessment work?
The joint pay assessment must be done in cooperation with employee representatives (if no such representatives exist, employees can designate someone to represent them). The idea is to have management and employees jointly examine the pay structures and practices to identify the root causes of the gap. The Finnish draft law specifies that the purpose of this assessment is to “identify, correct, and prevent” unjustified pay differences between women and men. During the assessment, the employer will analyse factors such as the representation of women and men in various roles, their average pay levels (including bonuses) in those roles, and any differences in pay for the same work. Together, they must determine why a gap exists - e.g. is it because of how jobs are graded, or perhaps unequal promotion or bonus practices?
What’s the outcome?
The result of a joint pay assessment is typically a report or action plan outlining the findings and the remedial steps the employer will take (for example, adjusting salaries, revising pay policies, or other corrections). The employer will need to share the outcomes of this assessment with its employees and submit it to the authorities (likely the Ombudsman/monitoring body). The expectation is that within a “reasonable time,” the identified pay inequalities will be eliminated.
For employers, the best practice will be to proactively address pay gaps before they hit that 5% trigger. Regular internal pay equity reviews, even when not mandatory, can help avoid the situation where a formal joint assessment is required. If such an assessment does occur, it will demand time and transparency with employee reps and could attract public or media attention if gaps are large, so risk mitigation and documentation is key.
One of the great things with seeing the drafts being published is the clarity it provides. The same goes for Finland when looking at the enforcements and associated penalties for not complying. There are a few notable things to pay attention to in this process.
Administrative fine (negligence fee): If an employer fails to carry out a required joint pay assessment or submits an assessment that clearly does not meet the requirements, it can trigger a fine. The proposed law calls this a “laiminlyöntimaksu” (negligence fee). The fine can range from €5,000 up to €80,000 depending on the circumstances. Factors like the severity of the violation, whether it’s repeated or deliberate, and the employer’s size (annual turnover) will be considered when setting the amount. In addition to the fine, employers should be aware of the negative attention that will be associated with the joint pay assessment and fine.
Compensation to employees: The draft suggests no new additions to this, as Finland already has strong anti-discrimination penalties set up. As an example, if an employee is found to be discriminated, the minimum compensation paid to the employee is EUR 3.240 but will increase with the severity and duration of the discrimination. In addition to this, the maximum compensation for discrimination during the hiring phase is EUR 16.210.
Compliance orders with threat of fines: Many of the obligations (such as providing pay information to an employee or giving salary range information to an applicant) will be enforceable by the Finnish authorities through orders. Under the draft law, the Ombudsman for Equality can bring a case to the Finnish Equality and Non-Discrimination Tribunal, which can then order an employer to correct a violation or fulfill an obligation, under the threat of a fine (so-called “uhkasakko”). For example, if an employer refuses to hand over the requested pay information to an employee, the Tribunal could order them to do so and attach a conditional fine if they don’t comply. This extends to all key obligations.
Extended claim period for pay discrimination: Under existing Finnish law, an employee who has been subject to pay discrimination (unequal pay for the same work due to gender) can claim compensation (known as a discrimination compensation, “hyvitys”). The new law will extend the time limit for bringing such claims to 3 years (currently it’s two years under the Equality Act. In practice this means that from the day in which an employee becomes aware of discriminatory practices, they will have three years to bring a claim to court. Employers should be aware that records and justifications for pay decisions may need to be kept longer, since a dispute could arise several years down the line.
Shift in burden of proof: One of the core concepts of EU Pay Transparency is the shift in burden of proof. In the draft, this will apply specifically to cases of alleged pay discrimination brought before a court or a competent authority, such as the Equality and Gender Equality Board, under the Equality Act. This applies in situations where the employer has not fulfilled their pay transparency obligations. For example, if an employer fails to disclose gender pay gap data as required by the new Article 6d, they will be required to prove that no discrimination occurred. However, this shift in burden of proof mechanism will not apply if the employer can demonstrate that the violation was clearly unintentional and minor. In such cases, the original burden of proof rules under paragraph 1 will remain in effect. Importantly, the failure must be connected to the specific discrimination alleged in the case.
No retaliation: Although not explicitly a “penalty,” it’s important to note that the directive and Finnish law forbid retaliation against employees who exercise their rights. An employer cannot punish or discriminate against a worker for asking about pay or for sharing pay information. If they do, it would be considered another violation and could lead to legal consequences.
Generally, we can see that Finland is providing clear guidelines for the enforcements of the directive and has introduced fines that aim to defer employers from neglecting the new legislation. Despite a fine of EUR 80.000 might seem small for the biggest Finnish companies, it is important to take note of the extensive work that goes into a joint pay assessment, in which the management must be involved, combined with negative publicity and employer branding.
The Finnish approach to Pay Transparency is by no means a gold-plated implementation, but rather a continuance of the minimum requirements we already knew from the EU directive. However, there are some subtleties that must be taken notice of.
In the Finnish draft, we do not see any dramatic shifts towards pay transparency, other than what we already knew from the EU directive. I would classify it as evolutionary rather than revolutionary. Finland already has strong anti-discrimination laws, and this is considered a solid extension of those.
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