For your income model, responsibilities and financial safety net, it is essential to know whether you are working under an employment contract, a commission contract or on the basis of a grant. The text below outlines the differences between these three models and explains the rights, responsibilities and obligations associated with each.

In Finland, labour legislation has historically been strongly on the employee’s side, which has made employment the most secure way to earn a living. However, the trend and reality in the arts sector have increasingly moved towards entrepreneurship.

Regardless of the type of work arrangement or income model, it is very important to ensure that your pension insurance is in order. In addition to the old-age pension, pension contributions affect other social benefits such as parental and sickness allowances. In an employment relationship, the employer is responsible for pension contributions, whereas in commissioned work, the entrepreneur must pay the contributions themselves. In most cases, grants do not automatically include pension security, meaning grant recipients must also manage their own pension arrangements.

Employment contract:

An employment contract establishes an employment relationship between the employer and the employee. As an employee, you work under the supervision and direction of your employer.

The contract typically defines key terms of the employment, such as salary, working hours and duration of the contract – which may be either permanent or fixed-term.

In addition to mandatory labour legislation, many sectors, including the arts, are governed by collective labour agreements that set minimum standards for employee rights and responsibilities. You can find collective labour agreements relevant to your field through your trade union.

Receiving salary:

In an employment relationship, you submit your tax card to your employer, who withholds tax, pays the social security contributions (including pension contributions) and deposits the remaining amount to your designated bank account. If your employer becomes insolvent and cannot pay your salary, you can apply to receive it through the wage guarantee system administered by the Centre for Economic Development, Transport and the Environment (ELY Centre).

Employee rights:

Finnish legislation grants employees many rights, including the right to paid vacation, holiday bonuses, paid sick leave, parental leave and a safe working environment. Employees are also well-protected against dismissal, which supports the continuity of employment. As a jobseeker, you are eligible for unemployment benefits.

Form of employment contract:

There is no legally required format for an employment contract. A binding agreement may be established in writing (including electronically) or verbally. However, due to the benefits of written documentation, it is strongly recommended to always create a written contract.

Commission contract:

Freedom, risk and responsibility – the greatest of these is…

As an entrepreneur, you are free to determine your own working hours, work location and fees, but you also assume full responsibility for your obligations and income.

Commission contracts created by entrepreneurs are not subject to the same mandatory regulation as employment contracts, meaning there is broad contractual freedom in business arrangements.

As an entrepreneur, you are responsible for your sales, fulfilling agreements and meeting deadlines. You must also handle your own salary payments, taxes, pension and health insurance contributions, and those of any employees you may have.

In return, you have the freedom to set your own working conditions, and your income potential is limited only by the demand you generate and your available time.

To run a financially sustainable business, you must make offers to clients and partners in a way that ensures your expected income exceeds production costs, such as materials, marketing, rents, wages and social security expenses. Since you are responsible for your own salary and pension security, you should also include items such as paid leave in your cost structure.

Remember that entrepreneurs can fall ill too…

If you fall ill as an entrepreneur, this does not automatically release you from fulfilling your contractual obligations, unless you have agreed upon a cancellation clause in your contract.

A cancellation clause may define the financial consequences of illness, such as contract termination or compensation if illness prevents you from completing your work as agreed. Without such a clause, you are usually personally responsible for any financial consequences of being unable to work due to illness.

You can take out private health insurance to protect yourself financially in the event of illness.

Receiving payment:

As an entrepreneur, you bear the risk of whether your client is willing or able to pay. If your client or partner fails to pay your agreed fee or invoice, you may end up without the compensation you earned.

If a client defaults on payment, you must take action to recover the debt, which may involve sending reminders, hiring a collection agency or, if necessary, initiating legal proceedings.

Be aware that if a client declares bankruptcy, you may permanently lose the amount owed. It is therefore recommended to check for credit issues in advance, especially for financially significant contracts. Such background checks can help you evaluate your clients’ solvency and reduce the risk of lost income.

Grant-based work:

In the arts sector, work may also be conducted on a grant, which can be awarded for a specific artistic or creative project. In such cases, there is generally no employment relationship between the grantor and the recipient, and the grant is not given in direct exchange for work but to support creative practice without an explicit obligation to produce something.

Grants vary greatly in nature, and their tax treatment depends on multiple factors, including the grantor, the intended purpose and the recipient’s taxation status.

It is important for grant recipients to clarify the tax implications of their grant and to consult a tax expert if necessary to ensure proper treatment. You should remember that tax regulations may change, so it is crucial to obtain up-to-date information.

A grant recipient may be considered self-employed under the Unemployment Security Act, which could affect their eligibility for unemployment benefits and the amount granted. As a grant recipient, you should contact unemployment services to verify your status, rights and any obligations related to receiving or concluding a grant.