Wage income types: 200 series

201

Time-rate pay

Wages paid based on the time worked. Time-rate pay can be defined for a calendar month, for example.

Tax is withheld and employer's social insurance contributions paid from time-rate pay.

202

Initiative fee

One-off remuneration paid to the originator of an initiative related to the development of operations or a product, for example.

If the initiative fee is related to work agreed in the employment contract, the fee is treated as wages, i.e., in addition to withholding, social insurance contributions are paid from the fee.

If the recipient of the initiative fee is not employed by the payer, or the initiative is not related to the work agreed in the employee's employment contract, no social insurance contributions are paid for the fee. In this kind of situation, tax is withheld from the initiative fee, unless the recipient of the initiative fee is registered in the Prepayment Register.

By default, this income type is subject to social insurance contributions. If a payment reported using this income type differs from the default, the payer must report it by specifying insurance information in conjunction with the income type.

Detailed guidance on reporting insurance information: Reporting data to the Incomes Register: insurance-related data.

203

Bonus pay

One-off remuneration, the amount of which is partially or fully determined by how well the work result set as the target is achieved. The performance metric can be volume, quality, or some other performance factor.

Bonus pay differs from commission by being one-off in nature, while a commission is a remuneration of a continuous nature. Both of these are based on achieving a pre-set target for a person or a group. Bonus pay differs from profit-sharing bonus in that the profit-sharing bonus is paid without a plan agreed in advance, based on the company's profit.

Tax is withheld and employer's social insurance contributions are paid from the bonus pay.

204

Complementary wage/salary paid during benefit period

Wages paid to an employee receiving a benefit that cover the difference between full wages and the benefit paid.

Such a benefit could be a daily sickness allowance paid by Kela. If the employer pays complementary wages during the benefit period, Kela pays the benefit directly to the employee, not the employer.

Tax is withheld and employer's social insurance contributions are paid out of the complementary wages paid during the benefit period.

205

Emergency work compensation

Working time compensation paid for emergency work. Emergency work means work assigned in an emergency situation outside regular working hours.

Tax is withheld and employer's social insurance contributions are paid from emergency work compensation.

206

Evening work compensation

Working time compensation paid for evening work. Evening work compensation can be paid for regular working hours, or for time exceeding regular working hours.

Tax is withheld and employer's social insurance contributions are paid from evening work compensation.

207

Evening shift allowance

Shift work compensation paid for an evening shift.

Tax is withheld and employer's social insurance contributions are paid from the evening shift allowance.

208

Notice period compensation

Compensation paid by an employer to an employee when employment is terminated without a notice period, i.e., when the notice period is disregarded and the employment is terminated with immediate effect (Employment Contracts Act 6:4).

This income type is also used when reporting a compensation paid by the employer, when an employee gives notice due to a lay-off that has lasted over 200 days, and when the employer terminates an employee who has been laid off.

This income type is used to report only those items paid when employment is terminated without a notice period. The wages paid for the notice period are reported using other income types, such as the Total wages (101) or Time-rate pay (201).

Tax is withheld but social insurance contributions are not paid from notice period compensation.

209

Kilometre allowance (taxable)

Kilometre allowance that does not meet the requirements set for tax-exemption.

A taxable kilometre allowance can be paid to both employees and other persons. There are several criteria for the taxability of kilometre allowances. The Tax Administration has defined a maximum amount for the tax-exempt kilometre allowances paid by an employer to an employee; the part exceeding this amount is taxable income. Kilometre allowances paid to a commissioned person are taxable income in their entirety.

This income type is used only to report taxable kilometre allowances paid to employees. If a taxable kilometre allowance is paid to a commissioned person or organisation, the allowance is reported as non-wage compensation for work and the cost is added to the amount of non-wage compensation for work (see the description of the income type Non-wage compensation for work (336)).

Tax is withheld from the income. The default of the income type is that it is subject to social insurance contributions.

If a payment reported using this income type differs from the default, the payer must report it by specifying insurance information in conjunction with the income type. This situation may arise, for example, when the employer pays the employee taxable kilometre allowance based on a collective agreement on more lenient grounds than those defined in the Tax Administration's decision of expenses and the amount of the allowance does not exceed the maximum amounts of tax-exempt payments in accordance with the Tax Administration's decision of expenses. In this case, the income is not subject to earnings-related pension, unemployment, or accident and occupational disease insurance contribution.

Detailed guidance on reporting insurance information: Reporting data to the Incomes Register: insurance-related data.

210

Meeting fee

A fee paid for participating in a meeting.

Tax is withheld from a meeting fee.

If the payment of the meeting fee is based on work performed in an employment relationship, social insurance contributions are paid from the meeting fee.

If the recipient is not in an employment relationship, the obligation to pay earnings-related pension insurance contribution, the employer's health insurance contribution, and the employee's daily allowance contribution of health insurance from the fee will vary according to the applicable law. If the payment of the meeting fee is not based on work performed in an employment relationship, the employer can, if it so desires, voluntarily take out pension insurance for the income earner.

By default, this income type is not subject to social insurance contributions. If a payment reported using this income type differs from the default, the payer must report it by specifying insurance information in conjunction with the income type.

Detailed guidance on reporting insurance information: Reporting data to the Incomes Register: insurance-related data.

211

Saturday pay

Working time compensation paid for work on a Saturday. Saturday pay can be paid for regular working hours or for time exceeding regular working hours.

Tax is withheld and social insurance contributions are paid from the pay.

212

Extra work premium

Working time compensation paid for extra work.

Tax is withheld and the employer's social insurance contributions are paid from the pay.

213

Holiday bonus

A bonus paid in addition to annual holiday pay based on an employment contract or collective agreement, the amount of which is determined according to the collective agreement applicable in the field or the number of holiday days earned during the previous holiday credit year.

If the holiday bonus is replaced with time off, the wages paid for the time off must be reported using the income type ‘Time-rate pay’ (201), for example.

Tax is withheld and social insurance contributions are paid from the holiday bonus.

Supplements to annual holiday pay are subject to an itemisation and reporting obligation, regardless of whether the term 'holiday pay' is used. Such an itemisation is required for Kela and the unemployment fund, and for claims handling for an accident at work, for example.

214

Lecture fee

A fee paid for giving a lecture.

Tax is withheld from the lecture fee.

If the payment of the lecture fee is based on work performed in an employment relationship, social insurance contributions are paid from the lecture fee.

If the recipient is not in an employment relationship, the obligation to pay a earnings-related pension insurance contribution, the employer's health insurance contribution, and the employee's daily allowance contribution of health insurance from the fee vary according to the applicable law.

By default, this income type is not subject to social insurance contributions. If a payment reported using this income type differs from the default, the payer must report it by specifying insurance information in conjunction with the income type.

Detailed guidance on reporting insurance information: Reporting data to the Incomes Register: insurance-related data.

215

Compensation for acting in a position of trust

Remuneration paid for acting in a position of trust, with the exception of participating in meetings.

Tax is withheld from compensation for acting in a position of trust.

When compensation for acting in a position of trust is paid, the recipient is not usually in an employment relationship with the payer; in such cases, social insurance contributions are not paid from the compensation.

In the private sector, however, the health insurance contribution is paid from the compensation, for acting in a position of trust. Additionally, the pension insurance contribution is paid, if the payer has taken out voluntary earnings-related pension insurance for the person acting in a position of trust. An earnings-related pension contribution is paid for certain types of public sector compensation for acting in a position of trust.

As a default, this income type is subject to the employer's health insurance contribution and the employee's daily allowance contribution of health insurance. However, as a default, the income is not subject to pension insurance contribution, unemployment insurance contribution or accident and occupational disease insurance contribution.

If a payment reported using this income type differs from the default, the payer must report it by specifying insurance information in conjunction with the income type.

Detailed guidance on reporting insurance information: Reporting data to the Incomes Register: insurance-related data.

216

Other compensation

The total amount of working time and exceptional situation compensations not paid regularly and not included in the earnings from regular working time.

These include midweek holiday compensation, start-up grants and any other compensation and bonuses paid in accordance with collective agreements or employment contracts.

Tax is withheld and social insurance contributions paid from the compensation paid.

This income type is also used to report daily allowances paid by the employer to the employee on more lenient grounds than those defined in the Finnish Tax Administration’s decision on the tax-exempt reimbursement of travel expenses. If the payment is based on a collective agreement, the income is not subject to an earnings-related pension, unemployment, or accident and occupational disease insurance contribution. However, the income is subject to a health insurance contribution.

This income type is also used to report compensation paid for additional days off supplementing an annual holiday. The compensation paid for additional days off is not subject to earnings-related pension, unemployment or accident and occupational disease insurance contributions, but it is subject to a health insurance contribution.

In addition, this income type is used to report the proportion of an employee’s moving and travel expenses that is paid by the employer and regarded as taxable earned income. On the basis of section 69c of the act on income tax, 50 per cent of costs paid by the employer that are regarded as living expenses of an employee and their family members are taxable earned income. Moving and travel expense reimbursements are subject to social insurance contributions.

By default, this income type is subject to social insurance contributions. If a payment reported using this income type differs from the default, the payer must report it by specifying insurance information in conjunction with the income type.

Detailed guidance on reporting insurance information: Reporting data to the Incomes Register: insurance-related data.

217

Waiting time compensation

Compensation to which an employee is entitled if the payment of their wages is delayed after the end of the employment relationship.

Unless otherwise agreed, the wages must be paid on the last day of the pay period. Waiting time compensation can be paid for no more than six days.

Tax is withheld but social insurance payments are not paid from waiting time compensation.

218

Working condition compensation

A wage supplement paid based on the conditions at the location where the work is performed.

Working condition compensation is, for example, a supplement paid based on a collective agreement or an employment agreement such as a foaming supplement, cold region bonus and archipelago bonus.

Tax is withheld and social insurance contributions are paid from working condition compensation.

219

Partial pay during sick leave

Wages for the duration of illness reduced in accordance with the law or a collective agreement.

The share of income the person has received, in a reduced amount, during their illness is reported as partial pay during sick leave.

Tax is withheld and social insurance contributions paid from partial pay during sick leave.

If items not subject to social insurance contributions are paid as partial pay (e.g. damages in conjunction with termination of employment), the payer must report it by specifying insurance information in conjunction with the income type.

Detailed guidance on reporting insurance information: Reporting data to the Incomes Register: insurance-related data.

220

Commission

Remuneration of a continuous nature forming a permanent part of the wages, the amount of which is agreed in the employment contract.

Tax is withheld and social insurance contributions are paid from the commission.

221

Sunday work compensation

Working time compensation paid for work on a Sunday. Sunday pay can be paid for regular working hours, or for time exceeding regular working hours.

Tax is withheld and social insurance contributions paid from the pay.

222

Benefit arising from synthetic option

A privilege based on which the income earner is not entitled to subscribe shares underlying the option at the strike price; instead, the income earner receives the difference between the strike price and the share value as money (net value settlement) at the time of execution. A synthetic option does not affect the subscription of shares.

In practice, a synthetic option concerns a monetary payment, the amount of which is determined by the development of the employer company's share price. Instead of a synthetic option, this arrangement may be called a share-based bonus or reward system.

Tax is withheld from a benefit arising from an option, but no social insurance contributions are paid.

223

Performance bonus

Remuneration paid based on meeting or exceeding the organisation's performance target agreed in advance.

Tax is withheld and social insurance contributions paid from a performance bonus.

224

Monetary compensation from a working time bank

Wages paid based on the time saved in a working time bank.

Withdrawing wages from a working time bank tends only to be possible in exceptional situations, such as upon termination of employment or when the working time bank is dissolved. In some working time banks, it is also possible to withdraw wages or free time on credit.

If the balance transferred to the working time bank is taken as time off, the compensation paid for the time off is to be reported using the income type ‘Time-rate pay’ (201), for example.

Tax is withheld and social insurance contributions paid from monetary compensation from a working time bank.

225

Compensation for accrued time off

Working time compensation paid from the loss of earnings caused by the equalisation of working time with the average weekly working time.

This income type is to be used when compensation is paid in money instead of time off. The income type can also be used when the normal wages are reduced for the period of leave and a corresponding compensation for accrued time off is paid.

Compensation for accrued time off is paid for regular working hours. The accrued holiday compensation is an example of compensation for accrued time off.

Tax is withheld and social insurance contributions paid from such compensation.

226

Share issue for employees

A share issue targeted at the company's personnel. The benefit that arises from the right to subscribe the employer company's shares based on an employment relationship is taxable income.

The income type is only used to report the amount of the benefit regarded as taxable earned income. Tax is withheld from a share issue for employees, but the income is not subject to social insurance contributions.

If the benefit is not available to the majority of the personnel, the entire discount received is regarded as wages subject to social insurance contributions. In this case, the payer reports the entire amount of the payment using the income type Share issue for employees (226) and specifies that the payment is subject to social insurance contributions with the help of the Type of insurance information data related to the income type.

Detailed guidance on reporting insurance information: Reporting data to the Incomes Register: insurance-related data.

The subscription benefit also applies to shares in an organisation.

227

Contract pay

Performance pay, paid based on the performance of a work contract agreed in advance.

Contract pay includes both a fixed and variable component.

Tax is withheld and social insurance contributions are paid from contract pay.

229

Damages in conjunction with termination and lay-off

Compensation that the employer is obligated to pay after terminating an employment relationship in violation of the Employment Contracts Act, Act on Civil Servants in Local Government or State Civil Servants' Act. Compensation for the cancellation of an employment contract (ECA 8:1, 55/2001) and compensation for unjustified lay-off are also reported in this section.

Damages to be paid due to the groundless termination of an employment relationship can be based on a decision by a court, a reconciliation confirmed by a court, a result of negotiations between the associations representing the parties to the employment relationship, or an agreement between the parties to the employment relationship.

Damages in conjunction with termination of employment or lay-off or other comparable compensation are not taxable income, unless they have been received instead of taxable income or as compensation for reduced subsistence. Neither is compensation for neglect of co-operation procedure obligations, as defined in more detail in the related legislation, regarded as taxable income.

This income type is used only to report taxable amounts, i.e., not the tax-exempt compensation paid under the Act on Co-operation within Undertakings or the Equality Act. Tax-exempt damages are not reported to the Incomes Register.

This income type is not used to report compensation based on the performance of work paid in connection with the termination; instead, it is reported using other income types, such as the Total wages (201) or Time-rate pay (201).

Tax is withheld, but social insurance payments are not paid from taxable damages.

230

Stand-by compensation

Wages paid to the employee for being available for call-out to work, if required by the employer, to perform duties under their employment.

Tax is withheld and social insurance contributions paid from stand-by compensation.

231

Voluntary compensation in conjunction with termination of employment

Compensation voluntarily paid by the employer when employment is terminated or dissolved, or ended by agreement.

In situations where employment is terminated, voluntary compensation paid includes CEO's severance compensation (so-called golden parachutes), severance compensation, severance pay, and severance packages. Such compensation can also be non-monetary.

Tax is withheld but social insurance payments are not paid from the compensation.

232

Weekly rest compensation

Working time compensation paid for work performed during weekly rest times.

Tax is withheld and social insurance contributions are paid from weekly rest compensation.

233

Profit-sharing bonus

Remuneration distributed among employees without an advance plan, by a decision of the annual general meeting and determined based in the company's profits.

Tax is withheld from all profit-sharing bonuses other than those transferred into a personnel fund. No social insurance contributions are paid from a profit-sharing bonus paid by the company into a personnel fund, or profit-sharing bonuses directly withdrawn by the employee as cash in accordance with the personnel fund rules.

If the company does not have a personnel fund as defined in the Act on Personnel Funds, no social insurance contributions are paid from the profit-sharing bonus if it is paid to the employee on the basis of a decision by the annual general meeting as a profit distribution or cash profit-sharing bonus, on condition that the profit-sharing bonus is paid to all personnel and is not intended to replace a wage system required under a collective agreement or employment contract. Furthermore, the basis for determining a cash bonus must be in accordance with section 70, subsection 3(10) of the Employees' Pensions Act and section 2, items 2 and 3 of the Act on Personnel Funds, and the amount of the company's free capital must be larger than the total amount of the cash-based profit-sharing bonus and the dividend paid to shareholders as decided by the Annual General Meeting. The Act on Financing of Unemployment Benefits includes a similar provision, as does the Occupational Accidents, Injuries and Diseases Act.

By default, this income type is not subject to social insurance contributions. If a payment reported using this income type differs from the default, the payer must report it by specifying insurance information in conjunction with the income type.

Detailed guidance on reporting insurance information: Reporting data to the Incomes Register: insurance-related data.

234

Annual holiday compensation

Monetary compensation paid instead of granting an annual holiday. Annual holiday compensation may be paid during an employment relationship or when an employment relationship ends.

This income type is also used to report the construction sector's holiday bonus. In the collective agreement, the holiday compensation, holiday pay and holiday bonus are combined into a single compensation called holiday bonus, amounting to 18.5% of the earnings from the holiday credit year.

This income type is also used to report free-period compensation paid at the end of public-sector employment when a teacher or guidance counsellor has been employed for a term of less than a year. The amount of the compensation is based on the number of the individual’s working days.

As a rule, one third of the construction sector's holiday bonus is a holiday bonus and two thirds holiday pay or holiday compensation, depending on whether the employment relationship continues or was terminated. Compensation for additional days off supplementing the annual holiday is reported using income type Other compensation (216).

Tax is withheld and social insurance contributions are paid from annual holiday compensation.

235

Overtime compensation

Working time compensation paid for overtime work. Work that is performed at the initiative of the employer during working time exceeding the agreed overtime limit is deemed to be overtime work.

Tax is withheld and social insurance contributions are paid from overtime compensation.

236

Night work allowance

Working time compensation paid for night work.

Tax is withheld and social insurance contributions are paid from the night work allowance.

237

Night shift compensation

Shift work compensation paid for a night shift.

Tax is withheld and social insurance contributions paid from night shift compensation.

238

Other regular compensation

The total amount of working time and exceptional situation compensations paid regularly and included in the earnings from regular working time.

Other regular compensations includes monetary compensation paid for fringe benefits, holiday eve compensation and any other compensations and bonuses paid regularly in accordance with collective agreements or employment contracts, such as language supplements.

A bonus paid only seldom is also deemed to be regular if it is included in the earnings from regular working time.

Tax is withheld and social insurance contributions paid from regular compensations.

239

Compensation for unused compensatory leave

Compensation used in certain sectors, paid at the end of employment for unused days off.

In certain sectors, working accumulates compensatory leave for the worker, allowing the worker to take days off during employment. If the employee has not used their compensatory leave at the end of their employment, compensation is paid for the unused leave.

Monetary compensation paid instead of granting an annual holiday is reported using the Annual holiday compensation (234) income type.

Tax is withheld and social insurance contributions paid from the compensation for unused compensatory leave.