More cases of failure to provide workers’ compensation insurance than before

Last year, around 4 500 employers failed to take out workers’ compensation insurance for a variety of reasons. The number of cases of failure found in the supervision carried out by the Finnish Workers’ Compensation Center was around 2100 cases more than in 2021.

In 2022, wages paid by employers who neglected their insurance obligation within the supervision carried out by the Finnish Workers’ Compensation Center (TVK) amounted to more than EUR 50 million, which is over EUR 20 million more than in the previous year. Penalty fees for uninsured wages totalled approximately EUR 1.8 million. 

Last year, TVK stepped up its supervision of the insurance obligation, as a result of which the total number of supervised employers increased and, consequently, the number of confirmed cases of negligence also increased on the previous year.

“By using Incomes Register data, we can intervene more quickly than before in cases of neglect of the insurance obligation. The wages and salaries paid for the uninsured work of an individual employer do not have time to grow over a long period. Therefore, the penalty fees incurred by employers in connection with the neglect remained reasonable, even though the total wages and salaries and total penalty fees for failure to insure have risen,” says Niina Laakso, Supervision Manager at TVK.

Insurance was neglected due to lack of awareness

The reason for neglecting insurance was usually lack of awareness of the insurance obligation. Common misconceptions among employers included that the age limits for unemployment and pension insurance were thought to apply also to workers’ compensation insurance. 

It was often unclear to employers who had neglected their insurance obligation that they would independently have to determine and meet their employer’s obligations related to insurance. Employers assumed that they would receive a notification from some external party when hiring or paying wages.

TVK aims to increase employers’ awareness of the insurance obligation by various means. For example, TVK has contacted those employers whose paid wages that have been reported to the Incomes Register have been close to exceeding the insurance limit and who, according to the information in the Insurance Register, have not taken out insurance.

Employers in a wide range of industries have neglected their insurance obligation

The employer firms that neglected their insurance obligation were spread across many industries.

“Year after year, the highest rates of negligence cases are found in the trade, professional and scientific industries, and in construction and other service activities,” Laakso says.

The professional and scientific industry mainly comprises legal and accounting services, management consulting, and architectural and engineering services, while other service activities comprise the activities of various organisations.

The share of domestic work employers among employers which failed to take out insurance fell for the first time in years. Last year, households accounted for 20 % of employers found to be negligent. In 2021, the share of households was as high as 27 %.

Among employers that failed to provide insurance, the share accounted for by limited liability companies rose to 45 % in 2022 from 38 % in the previous year.

Compared with previous years, the share of self-employed persons also rose by 4 percentage points from the previous year to 16 %.

The administrative and support services function featured as a new industry in the supervision with a share of 5.2 %. The industry category includes rental and leasing operations, the operations of travel agencies and tour operators, security, surveillance and detective services, and property and landscape management.

TVK has a statutory duty to supervise

The Workers’ Compensation Center has a statutory duty to supervise the fulfilment of employers’ insurance obligation. This duty is mandated to TVK in the Workers’ Compensation Act.

TVK has been supervising the insurance obligation since the entry into force of the Workers’ Compensation Act in 2016. All employers who have paid wages in Finland are subject to supervision.

The main method of implementing the supervision is retrospective mass surveillance, in which TVK’s supervision function extracts data on salary payments from the Incomes Register and compares these with the data in the insurance register.

If an employer has reported to the Incomes Register that it has paid wages, but the insurance register does not contain information on workers’ compensation insurance taken out by the employer, TVK’s supervision will pick up the case for further examination.