Freelancer vs employee 2026 — who keeps more?

Many Finns wonder whether to go freelance or stay in employment. An hourly rate or monthly billing figure alone does not answer the question — a freelancer must cover costs that an employee never even notices. The most significant of these is the YEL self-employment pension contribution.

This article concretely compares what billing level a freelancer needs to match an employee — and what actually has to go into that calculation.

YEL contribution — self-employment pension insurance

YEL (yrittäjän eläkelaki, Self-Employment Pensions Act) is mandatory for all entrepreneurs whose confirmed earned income exceeds €9,010 per year (2026). The YEL contribution is calculated on the confirmed work income (työtulo) — not actual invoicing. Work income is the salary that would be paid to a professional doing the same work.

YEL rates in 2026:

The YEL contribution is fully tax-deductible from earned income. Even so, it is a significant cost: on a work income of €30,000, the YEL contribution is approximately €7,230/year (24.10%).

New entrepreneurs receive a 22% discount for the first four years, making the effective YEL rate approximately 18.8% during that period.

Holiday bonus and sick pay

An employee enjoys two significant benefits that a freelancer does not have:

• Holiday bonus (lomaraha)— typically 50% of one month's salary on top of holiday pay. In practice this increases effective annual earnings by around 4–8%. A freelancer receives no holiday bonus or holiday pay unless specifically agreed in the contract.
• Sick pay— an employee receives full salary during sick leave (typically 1–3 months). A freelancer loses all billing when ill — Kela's sickness allowance (approximately 70% of YEL work income) only starts after the waiting day.

Together these benefits effectively add 10–20% to an employee's total compensation compared with the monthly gross salary figure alone.

What billing level does a freelancer need to match an employee?

A concrete example. An employee earns €4,000/month gross (in Helsinki, municipal tax 5.30%). Net pay is approximately €2,754/month. The holiday bonus adds roughly €167/month (€2,000/year ÷ 12). The employee's effective monthly benefit is therefore approximately €2,921/month.

What does a freelancer need to bill to achieve the same net benefit?

The practical rule of thumb: a freelancer needs to bill roughly 40–50% more than an employee's gross salary to take home the same amount. An employee on €4,000/month gross therefore requires a freelancer to bill approximately €5,500–6,000/month.

The figure can rise if the freelancer has significant equipment, software, or insurance costs. Conversely it falls if the YEL work income can be set lower.

Overhead costs and risks

A freelancer bears several costs that are invisible to an employee:

• Equipment and software — computer, licences, cloud services. Tax-deductible, but paid upfront.
• Business insurance — liability insurance, accident insurance, and possibly legal expenses insurance typically totalling €500–1,500/year.
• Bookkeeping costs— €30–100/month for an accountant or bookkeeping firm if you don't do it yourself.
• Gaps between contracts — an employee receives a salary every month. A freelancer can face empty months or delayed payments.

A freelancer does have advantages too: freedom to choose engagements, broader deductibility of expenses, and potentially higher hourly rates. The question is not which is better, but which suits your situation — and above all, whether your billing level is sufficient.