Legal Updates

Legal updates covering current topics.

Legal Updates / 09.03.2016

Finnish labour market organisations reached faltering peace on new labour market deal

The Confederation of Finnish Industries, representing interests of the Finnish business, and the main trade unions, Akava, STTK and SAK, representing senior white collar employees, white collar employees and blue collar employees, respectively, have agreed on a new labour market deal that shall serve as a basis for the next round of negotiations for sectoral collective agreements. The goal of the new labour market deal is to increase the competitiveness of Finnish business and allow the Finnish government to withdraw its highly criticized labour market reforms.

The measures proposed in the new labour market deal will enter into force if the labour market parties agree on new sectoral collective agreements by 31 May 2016. However, the labour unions for blue collar employees working in the service sector, the transportation sector, the constructions and food industry as well as the labour union for cabin crew in aviation have declared that they abstain from negotiations. These unions represent some 40 % of all blue collar employees and the employer confederation has been hesitant to engage in any negotiations on sectoral collective agreements until also these unions join the negotiation table.

The main measures that would be implemented if the deal is materialised are as follows:

Freezing salary increases

The term of the existing collective agreements, which are now widely set to expire in the autumn 2016 or the spring 2017, would be extended by 12 months and there would be no general salary increases during that period.

Changes in social security contributions

Beginning from 2017 pension insurance contributions and unemployment insurance contributions payable by the employers would be decreased and pension insurance contributions and unemployment insurance contributions payable by the employees would be increased in proportion so that the total contributions due would remain unchanged. The changes would affect all employers and employees, irrespective of whether they are bound by any collective agreement or not.

The change would be 0.65 percentage points in 2017, 0.6 percentage points in 2018 and 0.4 percentage points in 2019 and 2020. In addition, the employers’ social security contributions would be decreased by 0.94 percentage points for the year 2017, by 1.00 percentage points for the year 2018, 1.04 percentage points for the year 2019 and 0.58 percentage points for the year 2020 and subsequent years.

Increasing working time

Annual working hours would be increased by 24 hours without any adjustment in salaries as of 1 January 2017, for example, by changing three public holidays into workdays. The change would be implemented through changes in the sectoral collective agreements in a manner to be determined by the labour market parties. The changes will not extend to sectors without an applicable collective agreement.

Improved options for company specific agreements

Employers and employees are given an option to deviate from the applicable collective agreement based on a company specific agreement if the company is in financial peril.

Further, the legislation governing company specific collective agreements would be amended and where a collective agreement includes a possibility to conclude a company specific agreement on working hours, salaries or other issues, the right to utilize such a possibility would be extended also to the employers who are not members of the respective employer association.

Obligation to provide increased benefits to dismissed employees

If an employer employing regularly 30 or more employees in Finland would dismiss an employee on collective grounds, the employer would be obliged to grant the dismissed employee access to occupational healthcare for a period of six months after the termination of the employee’s employment, provide the employee with out-placement services with a value at least equal to the higher of the employee’s monthly salary or the average monthly salary of an employee employed by the employer. In order to qualify for the benefits the employee must have been employed by the employer for more than five years.

These obligations would be implemented through legislation and affect all employees irrespective of whether they are bound by any collective agreement or not.

For further information, please contact

Jan Waselius
Senior Partner
Jouni Kautto
Specialist Partner