The EU has earlier reprimanded Finland for failing to comply with the so-called sanctions directive which aims to fight illegal immigration and penalise employers for hiring undeclared workers from outside the bloc.
On Friday, President Sauli Niinistö approved a reform that will bring Finnish labour laws in line with the directive.
The change in legislation comes into force at the start of August. Fines to be levied by the Finnish Immigration Service can run from 1,000 to 30,000 euros.
Other countries facing criticism from the EU for failing to comply with the directive were Portugal and Slovenia. The measure was supposed to be implemented by July 20, 2011.