New rules for consultations with employees
The new rules for workplace cooperation entered into force at the beginning of 2022. The new rules aimed to facilitate better dialogue in the workplace and erase the stigma attached to the old consultation process as a mere precursor for dismissals.
The new rules introduced an obligation for the employer to engage in regular dialogue with the employees’ representatives about the company’s operations and plans for the future, covering topics such as:
- the financial situation of the company;
- anticipated changes to the business environment;
- the company’s employment structure;
- training of employees; and
- policies and practices applied at the workplace.
If the company has at least 20 employees, such discussions should be held at least twice a year. In companies with 30 or more employees, the frequency should be doubled to at least four meetings per year.
The required consultation process before potential dismissals survived with few cosmetic changes. The biggest change is that the employer is obliged to provide the employees with a written explanation if the employer rejects an alternative proposed by the employees. The new rules will likely be tested over the next few years as the business climate has become more challenging since Summer 2022 and the likelihood that companies will initiate reorganisations has clearly increased.
Reform of non-competition clauses
The rules governing the use of non-competition clauses in employment agreements were reformed from the beginning of 2022. Going forward, employees are always entitled to compensation for a post-contractual non-competition obligation. The compensation is paid as long as the non-competition obligation remains valid. If the non-competition obligation has a term of six months or less, the employee is entitled to monthly compensation equal to 40% of the employee’s monthly salary. If the non-compete obligation is valid for a period of more than six months, the compensation is equal to 60% of the employee’s monthly salary during the entire validity of the non-competition obligation.
Under the new rules, the employer may remove the non-competition obligation from the employee’s employment agreement only by observing a notice period. The applicable notice period is two months if the non-compete obligation is valid for a period of six months or less and equal to one-third of the term of the non-compete obligation if it is valid for more than six months. Further, the employer can no longer unilaterally remove the non-competition obligation after the employee has given notice to terminate their employment.
So far, the rules have applied only to agreements that have been concluded in 2022. However, from 1 January 2023, the rules apply to all employment agreements. The employers could have removed non-competition clauses from the existing agreements without having had to observe the notice period as long as the employees were informed about the change before the end of year 2022.
New rules governing parental leave entered into force on 1 August 2022. Since the old rules continued to apply to any parental leave that had started before the new rules entered into force, the cut-off date was in practice around 4 September 2022. Those with children born after 4 September 2022 are entitled to parental leave under the new rules, while those with children born before remain subject to the old rules.
The new system is designed to be simpler and more equal than the previous system while still allowing parents to keep family leave as before. Maternity leave was decreased to 40 workdays and paternity leave was abolished all together, but the parental leave quota was almost doubled so that each parent is given a quota of 160 workdays with the opportunity to transfer up to 63 workdays worth of leave to the other parent.
As was the situation before, the employee is entitled to take the parental leave as stipulated in the law and the employer is not entitled to terminate an employee’s employment because they have taken or are planning to take parental leave. However, the employer does not need to pay the employee any salary during parental leave. The employee is entitled to allowance from the state.
After considerable delay, Finland finally introduced the legislation implementing EU Directive 2019/1937 on the protection of whistle-blowers just days before the end of 2022. The legislation entered into force on 1 January 2023, just over a year after the deadline for the implementation. Large companies that have at least 250 employees have to introduce a whistle-blowing channel and implement policies ensuring the protection of whistle-blowers by 31 March 2023 at the latest, while smaller organisations have to implement the whistle-blowing channel by 17 December 2023 at the latest. Organisations with fewer than 50 employees are exempt from the obligation to establish a whistle-blowing channel.
What to expect from 2023
The year has started with a somewhat restless labour market. Due to a rapid rise in inflation during the past year, the main industrial sectors, technology and chemistry, did not reach agreement on salary increases for 2023. The term of the agreed collective agreements was cut to just one year as the collective agreements for technology industries and chemical industries were terminated on 30 November 2022 and 31 December 2022, respectively. At the time of writing, the parties still seem to be quite far from each other, and it seems quite likely that labour actions will be seen before the new agreements are concluded. However, at least for now it seems that both employers and employees are committed to the collective bargaining process at the federation level and the dissolution of employer federations witnessed in forestry industries in 2022 is so far not spreading to other industries.
With general elections coming in April 2023, the current government has no labour market initiatives left and there is no major new legislation coming in 2023. The need to increase flexibility in the Finnish labour market remains a common talking point in politics – it seems unlikely that elections would result in a coalition that could make any major reforms.