The Finnish legislation concerning consultations between employers and employees was updated in the beginning of 2022. The new rules aim to facilitate true dialogue at work and ensure that the employees have access to information and the possibility to influence decisions that concern them.
The nature of consultation remains the same
Like its predecessor, the new Co-operation Act becomes applicable if the company regularly employs 20 or more employees. The calculation is based on the number of employees, not person-years. Thus, two part-time employees working regularly half a week each count as two employees when assessing whether the company falls within the scope of the Co-operation Act or not.
The new Co-operation Act preserves the co-operation negotiations as a strictly internal matter. The employer is represented by a representative chosen by the management, typically the CEO, HR manager or relevant line manager. The employees are represented by the shop steward or by another employees’ representative. In case no representative has been selected, the employer must negotiate with all employees together. Labour unions have no formal role in the negotiations, although the union may assist and support the shop steward between the negotiation meetings.
The employer has the final say
The other fundamental aspect of the co-operation process also remains unchanged. The employer is obliged to listen to the employees and to provide the employees’ representatives with an opportunity to present their views. The new Act even reinforces the employer’s obligation to explain the reasoning to the employees’ representatives, but after the consultations the employer is, however, entitled to make the final decision in its sole discretion.
The key innovation introduced by the new Act is the obligation for the employer and the employees to engage in regular dialogue. In companies with less than 30 employees the employer and the employees’ representatives should meet at least twice a year and in larger companies there should be at least four meetings each year. However, the employer and the employees’ representatives may agree on a different rhythm for the discussion as long as there is at least one meeting per year. If the employees have not elected a representative, the employer may fulfill the obligation to engage in continuous dialogue by organizing a town hall type of meeting with all employees at least once a year.
The Act defines the matters that shall be addressed as part of the continuous dialogue, but the practicalities regarding the discussions are left to be determined in each workplace. The matters to be addressed cover a wide range of employment related issues including, for example, the financial situation of the company, anticipated changes in the company’s business environment, training of employees, use of different types of employment relationships and outsourced workforce at the workplace as well as various policies and practices. The intention is not to address all issues in each meeting. Instead, the employer and the employees’ representatives may agree on an annual schedule to cover all topics.
Ultimately the employer shall ensure that there is at least an attempt to engage in continuous dialogue. However, the employees’ representatives have the right to request dialogue on issues that belong within the statutory scope of continuous dialogue. Regardless of whether the initiative to dialogue is coming from the employer or the employees, the employer shall provide the employees with all the necessary information the employer has available and may share with the employees.
Consultation before making changes at the workplace
In practice the old Co-operation Act had become synonymous to redundancies and dismissals as the most visible obligation was the employer’s obligation to engage in consultations before the employer could take a decision that could result in dismissals. The obligation to consult with the employees prior to making such decisions remains in place also under the new Act, but the new Act introduces a few tweaks into the process.
Under the new Act, potential changes may trigger either simple consultations or full-scale consultations. Full-scale consultations are needed if the contemplated changes may result in terminations, temporary layoffs or changes in the employees’ terms of employment while simple consultations are sufficient in connection with potential changes to work arrangements, working hours or places of work.
The timing of consultations has not changed. The employer must initiate the consultations by giving the employees or the employees’ representative a written invitation to the consultations explaining the topics to be discussed during the consultations. In full-scale consultations the invitation has to be sent at least five days before the first meeting but in simple consultations there is no definitive deadline. The full-scale consultations have to continue at least for 14 days and the minimum duration is extended to 6 weeks if the company has at least 30 employees and the contemplated actions may affect at least 10 employees. No minimum consultation period applies in simple consultations.
As a new feature the employees’ representatives are given the right to submit a written formal proposal or suggest alternative solutions to the situation. If the employer rejects such proposal, the employer must explain the reasons for the rejection in writing.
Failure to comply may result in fines or liability to pay compensation to the employees
Failure to comply with the consulting obligations may result in two types of consequences.
If the employer fails to comply with the consultation obligation before making a decision resulting in dismissal or temporary layoffs, the employees who were dismissed or laid off may claim compensation. The maximum compensation is currently EUR 35,000 per employee.
If the employer fails to comply with other consultation obligations, the first consequence will be that the co-operation ombudsman will order the employer to fulfill its obligations. If the employer continues to neglect the obligations after being ordered to act by the ombudsman the employer’s representative who is responsible for the matter, typically the CEO or the HR manager, may be sentenced to fines.