Legal Updates

Changes in the Finnish employment legislation

As part of the Finnish Government’s efforts to boost the competitiveness of Finnish companies and balance the public finance, several modifications to the Finnish employment legislation were introduced as of 1 January 2017. The modifications aim to increase flexibility on the Finnish labor market and curtail the increase of costs of the Finnish statutory pension system.

Employment Contracts Act

The maximum duration of a trial period is extended from four to six months. The trial period may be further extended if the employee is absent from work during the trial period due to sickness or family leave.

The employers are given the right to conclude a fixed term employment agreement with duration up to twelve months with a new employee if the employee has been continuously unemployed for the preceding twelve months.

The employer’s obligation to re-employ an employee whose employment has been terminated due to redundancy is limited from current nine months to four months for employees who have been employed by the employer for less than twelve years prior to the termination and to six months for other employees.

Employers who employ 30 or more employees in Finland are obliged to provide outplacement services to employees whose employments are terminated due to redundancy. The value of the outplacement services has to be approximately equal to the higher of the employee’s monthly salary or the average monthly salary of the employer’s all employees in Finland and the services have to be provided to the employees within two months after the expiry of the applicable notice periods.

Act on Co-operation within Undertakings

The Act’s scope of application is extended to cover branch offices of foreign entities in the same way as Finnish companies. Accordingly, a branch office of a foreign entity is obliged to observe the provisions of the Act if the branch office regularly employs 20 or more employees in Finland.

Employees Pensions Act

The statutory employment pension system is reformed and the statutory pension age increased. At the first stage the statutory pension age increases incrementally from 63 years and 3 months (for employees born in 1955) to 65 years (for employees born between 1962 and 1964). Beginning from 2030, when the employees born in 1965 start to reach the statutory pension age, the statutory pension age will be reviewed annually based on the expected life span.

For further information, please contact

Jouni Kautto

Specialist Partner