COVID-19 Newsroom

The pandemic and its effects on business in Finland.

Temporary closedown amid Covid-19 crisis – what can employers do?

Even at the time of a serious crisis, the Finnish legislation tries to find a balance between the interests of the employees and the interests of the employers. The Finnish mentality does not allow solutions that would suddenly and abruptly leave an employee with nothing, but at the same time, the legislation recognises that if the employer does not survive, the employee will have no work in the future.


Disruption of work due to the Corona outbreak

The Finnish Employment Contracts Act stipulates that if work is disrupted due to circumstances beyond the employer’s control and the employer cannot provide employees with work, the employer is nevertheless obliged to pay the employees their ordinary salary but only for the first 14 days after the work has ceased. Based on legal practice a disruption is caused by circumstances beyond an employer’s control if, for example, the authorities force the employer to close down operations or if the employer’s place of business or factory is destroyed in fire or by natural disaster. Accordingly, if the employer would be ordered to close down a shop or office in order to prevent the spread of the Corona virus and the employees could not be assigned any work outside the shop or office, the employer would be liable to pay its employees salary during a maximum period of 14 days.

Controlled shutdown

If the employer chooses, on its own initiative, to suspend its business, the employees concerned would, at the outset, be entitled to their ordinary salary during such suspension. The employees’ right to salary ceases only if their employment is terminated or if the employee is laid off temporarily.

During a temporary layoff the employee’s obligation to work and right to salary are both suspended, but once the business situation improves and the temporary layoff ends, the employee returns to work normally. A temporary layoff may be full time so that the employee is completely released from any working obligation, and receives no salary, or cover certain hours only, in which case the employee’s salary is decreased pro rata. In either case the employment relationship remains in force and the employee is still bound by confidentiality and non-competition obligations that apply during employment.


Process to be followed before temporary layoffs

If the employer has 20 or more employees in Finland, any contemplated temporary layoff would trigger an obligation to consult with the employees or their representatives before the decision on a temporary layoff can be taken. However, if the need for temporary layoffs is at hand due to unforeseen circumstances and a delay with the contemplated layoffs could cause material harm to the employer’s operations, the decision to temporarily lay off employees may be made without prior consultations. The employer federations and the trade unions have urged that the exemption would be applied only if the employer and the employees agree that such circumstances are at hand.

If a formal consultation obligation applies, the employer has to formally notify the employees about the consultation process at least five days before the first consultation meeting. The statutory minimum period for the consultations is 14 days from the first consultation meeting. If the employer employs at least 30 employees in Finland and the employer is contemplating to temporarily layoff at least 10 employees for a period exceeding 90 days, the minimum consultation period is longer, i.e. six weeks from the first consultation meeting. However, the government has announced that the minimum negotiation period would be decreased to 5 days. The temporary measure would be in force for three months.

Once the decision on temporary layoffs is made the employees have to be notified about the decision and the temporary layoffs may start at the earliest 14 after the employees have been notified about the layoffs. However, some collective agreements have now waived this notice period and the government has announced that the notice period will also be temporarily decreased to 5 days as part of the legislation aimed to support the employers amid the crisis.  The expectation is that the relevant legislation will be enacted and the temporary measures will enter into force over the next weeks.

UPDATE 1.4.2020:
As of 1 April, the minimum duration of consultations before temporary layoffs has decreased to five days and the notice period prior to temporary layoffs has also decreased to five days. The shorter deadlines apply until the end of June 2020 and the employers may apply the shorter notice period and consultation time already in processes that have started before the legislation entered into force. However, despite the temporary measures the employers have to observe the longer consultation periods and notice periods defined in the applicable collective agreements.

For more information, please contact:

Jouni Kautto
Specialist Partner