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Finland – Review of Employment Law Changes in 2017

Written by
Dittmar & Indrenius, a leading Finnish law firm focused on creating exceptional added value to demanding corporate clients.
This article gives an overview of significant changes to Finnish employment legislation that took effect in 2017.

Requirement to have an equality plan

According to the Finnish Non-Discrimination Act, in force since the beginning of 2015, an employer who regularly employs at least 30 people must have a written plan of necessary measures for the promotion of equality. The requirement to have an equality plan entered into force on 1 January 2017. The plan can be prepared as a stand-alone document or it may be incorporated into other plans, such as the gender equality plan or the occupational health and safety policy. To meet the legal requirement in the latter case, the employer must, however, be able to specify the particular measures that will be taken to promote equality.

Pension reform

Changes to pension rules came into effect on 1 January 2017. As a result of the reform, the general retirement age will increase from 63 to 65 by 2025. The percentage growth of occupational pensions was also harmonised. The previous ‘part-time pension’ was replaced by a partial early old-age pension, available from age 61.

Significant changes to the Finnish Employment Contracts Act

Changes to the Employment Contracts Act entered into force on 1 January 2017.  The main changes are as follows:

  1. The maximum length of the probationary period is extended to six months (from the previous four months). If an employee has been absent during the probationary period due to incapacity to work or family leave, the initial period can be extended, provided that the extension is made before the initial period expires.
  2. The employer’s re-employment obligation period has been shortened from nine months to four months (or to six months if the employee has been employed by the same employer for at least twelve years).
  3. An employer no longer needs a specific reason justifying the use of a fixed-term employment contract if the individual has been unemployed for a long period of time.

Training or education for redundant employees 

As of 1 January 2017, an employer who employs at least 30 people has an obligation to offer education or training, at the employer’s cost, to employees who have been made redundant on financial or production-related grounds.  An employee must have at least five years service with the employer to qualify for this education or training.  The employer is also required to offer occupational health care services to employees who are made redundant for six months after the termination of the obligation to work.

Family leave costs shared more equally

Costs incurred from female employees’ family leave are now levelled by a lump-sum compensation payment of EUR 2,500, paid to the employer by the Social Insurance Institution of Finland. This compensation is paid to all employers paying wages based on an employment contract or collective agreement for at least one month during a maternity allowance period. The amendment entered into force on 1 April 2017.

Employers’ administrative burden reduced

Under the Employment Contracts Act, an employer was obliged to notify the employment office when it laid off at least ten employees or gave notice on financial or production-related grounds to at least ten employees. In addition, the employer had a duty to explain to the redundant employees the employment services available and a duty to inform them of their right to an employment plan. These obligations have been revoked with amendments that entered into force on 1 May 2017.

The above-mentioned obligations applied to employers regularly employing fewer than 20 employees. However, employers employing 20 or more people fall under the scope of a different act, the Act on Co-operation within Undertakings, which contains distinct information and notification requirements. The requirements based on the Act on Co-operation within Undertakings remain unchanged.

New notification requirements for posted workers

A legislative reform concerning posting of workers to Finland took place in 2016. As from 1 September 2017, undertakings that post workers to Finland have an obligation to notify the occupational safety and health authority regarding the posting. The purpose of this notification is to improve targeting of the occupational safety and health authorities’ monitoring activities.

Intra-corporate transfers

New legislation based on the EU Directive on Intra-Corporate Transfers (2014/66/EU) facilitates intra-corporate transfers of managers, specialists and trainee employees transferring into the EU and from one Member State to another. An employee holding an intra-corporate transfer permit may start working in Finland before the Finnish Immigration Service has issued its decision concerning their right to work. The maximum duration of the permit is three years. The amendments entered into force on 1 January 2018.

Government proposal on zero-hour employment contracts

According to a government proposal submitted in December 2017, the use of zero-hour employment contracts should be limited to situations where the employer’s need for manpower is variable. In addition, under the proposal an employee would no longer be able to give his or her consent to additional work for an undefined period of time. Employees’ right to sick pay would be safeguarded by restricting the employer’s right to decide on the matter unilaterally. Employees’ rights during notice periods would also be improved: if the number of working hours offered during a notice period is below the average of the previous 12 weeks, the employer would be obliged to compensate the loss of income incurred. Amendments to stipulations concerning work schedules required in workplaces are also being proposed. These amendments are expected to enter into force on 1 June 2018.