Legal Updates

Changes to employment legislation aim to increase flexibility and lower the employment threshold

The Finnish Government is introducing changes to the Employment Contracts Act with the aim of boosting competitiveness, increase flexibility on the Finnish labor market and lower the employment threshold. The Government bill on the proposed changes is currently being considered by the Parliament and the changes are proposed to enter into force on 1 January 2017.

First, the maximum duration of a trial period will be extended from four to six months. The Government anticipates that these changes would lower the employment threshold and encourage companies to take the risk to hire new employees, as the company would more easily recover from a bad hiring. Further, if an employee is absent from the work during the trial period due to sickness or family leave for more than 30 calendar days, the duration of the trial period may be extended by 30 calendar days for each 30 calendar days’ period of absence. This change aims to ensure that the employer will always have a genuine opportunity to evaluate the employee’s performance during the trial period.

Second, the requirements for hiring an employee for a fixed term will be relaxed if the company hires a long-term unemployed. Generally an employment contract may not be concluded for a fixed term without a justifiable reason, but if the employee has been unemployed continuously for the preceding twelve months, the duration of the unemployment is automatically a justifiable reason to hire an employee for a fixed term of up to twelve months. The Government expects this change to improve the position of the long-term unemployed on the labor market and open up more opportunities for them to return to the workforce.

Third, the employer’s obligation to re-employ an employee whose employment was earlier terminated due to redundancy will be limited. Currently an employer is obliged to offer work to an employee if the employer needs a new employee for a similar position within nine months after the termination of the employee’s employment. Based on the Government bill, the duration of the re-employment obligation would be limited to four months if the employee was employed by the employer for less than twelve years prior to the termination and to six months if the employee was continuously employed for more than twelve years. The purpose of the change is to increase flexibility in the labor market and make it easier for the companies to adapt to changing market conditions.

The new provisions concerning the trial period and fixed term agreements become applicable if the employment commences after the changes have entered into force. The limitations to the employer’s obligation to re-employ dismissed employees become applicable only if the employee’s employment terminates after the changes have entered into force and the current nine months’ re-employment period would remain applicable in respect of employees whose employment would terminate before the changes enter into force. Further, the current re-employment period of nine months has been included in some collective agreements and in those sectors the legal state remains unchanged.

For further information, please contact

Jouni Kautto

Specialist Partner