New Employment Legislation Introduced in Finland
SHORTER DUTY TO RE-EMPLOY
According to the former Finnish Employment Contracts Act, if an employee’s employment relationship was terminated on financial and production-related grounds and the employer needed new employees within 9 months of such termination for the same or similar work, the employer had a duty to offer work to this former employee, provided that the employee continued to seek work via an employment and economic development office.
While the content of the duty remains otherwise the same as before, its duration has now been shortened to only 4 months, with the exception of employment relationships having lasted for more than 12 years, in which case the duty continues to apply for 6 months.
This duty continues even if the employer is changed in e.g. a transfer of business. In our view, this makes things more simple in transfers of such businesses having undergone layoffs prior the the transfer, as the risk of re-employment obligations is now reduced significantly. It is now presumably also easier for the new employer to estimate the possible cost of the risk, if materialized, as the group of persons the duty may concern is now principally more limited.
NO JUSTIFICATION REQUIRED FOR AGREEING ON FIXED TERM FOR THE LONG-TERM UNEMPLOYED
Whereas otherwise the use of fixed-term employment agreements continues to be forbidden without a justified reason, in order to enhance the employment of those having been unemployed for a long time (at least 12 months), such persons may now be hired for a fixed-term without any specific reason or other requirements. It is in fact explicitly stipulated that it is even irrelevant whether the need for employment would actually be permanent. However, the maximum duration of such fixed-term agreement is limited to one year. Also a shorter fixed-term agreement is possible, provided that it may be renewed only twice and the combined duration of the so renewed agreements is not more than one year.
In order to rely on this newly introduced exception, the employer should ensure that the employee fulfils the criteria of a long-term unemployed, which requires, in practice, a certificate from the local TE Office confirming the status of the employee. When reviewing such certificates, the employer should bear in mind that any employment lasting for more than 2 weeks suspends the unemployment (i.e. such person is no longer considered a long-term unemployed), and therefore only recent certificates should be accepted. The employer may now also rely on the help of the TE Offices to find such long-term unemployed it would wish to hire.
In addition to encouraging the employment of the long-term unemployed, the reform certainly lowers the employer’s threshold of hiring, which is currently estimated to be relatively high due to e.g. strict requirements for terminating an employment relationship after the probation period.
MAXIMUM PROBATION PERIOD PROLONGED TO 6 MONTHS
Another reform presumably enhancing employment in Finland is the prolongation of the normal maximum probation period from 4 to 6 months, also taking effect as of this year. It is thus now possible to agree on a maximum probation period of 6 months (without any specific reason) in permanent employment relationships, whereas in fixed-term agreements the rule continues to be that the probation period may not be longer than half of the duration of the employment, or (now) at maximum 6 months if the employment relationship is agreed to last longer than 12 months. In addition, it is now possible to prolong the probation period due to longer (at least 30 day) incapacity to work or parental leaves during the probation period.
CERTAIN ADDITIONAL OBLIGATIONS CONCERNING LARGER EMPLOYERS
While the aforementioned reforms more or less serve the interests of the employer, to balance the whole, also certain new stipulations to enhance (certain) employees’ position are introduced. These, however, apply only to larger companies, i.e. companies employing more than 30 employees and only to such employees whose employment relationship has lasted for more than 5 years. They improve such long-term employees’ rights after termination of their employment on financial and production-related grounds.
With effect as of 1 January, such larger employees having terminated a long-term employee’s employment relationship on the aforesaid grounds, are obligated to offer the employee free training aimed to improve such employee’s employment with a new employer. The training must take place within 2 months as of termination of the employment, unless there is a weighty reason for its postponement (which, however, is likely to occur relatively often due to e.g. suitable training not being available during such time) and, unless otherwise agreed, it shall correspond in value to the higher of the employee’s monthly salary, or the average salary paid by the employer. Otherwise, the employer is free to choose the content of the training, and it could be as well training on job hunting as training aimed to improve the employee’s professional skills (or any other kind of training fulfilling the above criteria). The training may be arranged for groups of employees, however bearing in mind that, in such case, the value of the training shall correspond to the combined value of such employees’ monthly salaries. The employer and the employee may also agree that the employee arranges the training himself at the expense of the employer.
In addition, the employee continues to be entitled to professional healthcare after termination of his employment until employed by a new employer, however at maximum for 6 months as of the termination of the employee’s duty to work (and not as of the date of termination of his employment relationship). This right terminates when the employee is hired by a new employer indefinitely or for a fixed term of more than 6 months.