Ambitious Labour Market Reforms In Finland

• Published date: 06 July 2023
• Subject Matter: Employment and HR, Contract of Employment
• Law Firm: Ius Laboris
• Author: Mr Mika Karkkainen (Dittmar & Indrenius) and Suvi Knaapila (Dittmar & Indrenius)

A new government has taken office in Finland. Major labour market reforms are planned, which would amount to the most significant changes in decades.

The new Finnish government under the leadership of Petteri Orpo, leader of the National Coalition Party, has announced wide-reaching measures which amount to the most ambitious reform of the Finnish labour market in decades. The measures, published recently after several weeks of negotiations and consultations since the parliamentary election earlier this year, are intended to be implemented during the Government's four-year term in office. The purpose of the reforms is to boost the labour market participation rate, which in Finland has been lagging in comparison to other countries.

The planned reforms concern employment legislation, unemployment benefits and work permits for foreign employees.

We have collected here the most important changes to employment legislation the Government aims at introducing:

• The scope of application of the Finnish private sector employee consultation law will be raised from 20 to 50 employees.

• The minimum periods for change negotiations (the employee consultations required for downsizing of staff) will be reduced by half. The current minimum periods are 14 days and six weeks.

• The re-employment obligation following termination of employment on collective grounds will be abolished for employers with fewer than 50 employees. The proposed rule would also override any conflicting provision in a collective agreement.

• The first day of sick leave will be unpaid for absences shorter than five days. Sick leave resulting from occupational accidents or diseases would be exempt. The proposed rule would apply if the applicable collective agreement does not provide otherwise. The impact of the planned change would be limited, as collective agreements typically have provisions on sick pay.

• It will be possible to conclude a fixed-term employment contract for up to one year without special grounds.

• The furlough notice will be shortened from 14 to seven days. The proposed rule would set aside any conflicting provisions in collective agreements.

• Dismissing an employee for cause will be made easier for the employer.

This is the most far-reaching and important item on the Government's reform list, at least with regard to employment law. Currently, dismissal on individual grounds requires proper and weighty grounds. Case-law has set the bar high for satisfying that requirement. The...