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New temporary layoff procedures introduced in Finland

Written by
Dittmar & Indrenius, a leading Finnish law firm focused on creating exceptional added value to demanding corporate clients.
Finland’s parliament has just passed a government proposal regarding layoffs and termination of employment during a probationary period. The changes constitute part of the measures to support employers during the COVID-19 crisis. 

Finland’s parliament has just passed a proposal for temporary legislation regarding layoffs and immediate termination of employment during a probationary period.

The changes constitute part of the measures proposed by the labour market parties and accepted by the government to ease the position of employers suffering during the COVID-19 crisis.

The temporary changes began on 1 April 2020 and remain in force until 30 June 2020. They include the following:

Shortening the minimum consultation period preceding layoffs to five days 

Employers with at least 20 employees in Finland are obliged to conduct consultations prior to making decisions about layoffs. The minimum consultation period ranges from two to six weeks, depending on the size of the employer and the number of proposed layoffs.

Under the new legislation, the minimum consultation period is temporarily shortened to five days regardless of the number of employees affected by the layoff plan and the length of the planned layoffs. The parties to the consultations may also agree to shorter consultation periods.

The five-day consultation period applies to consultations that have already started, as well as those that continue beyond 30 June 2020.

Shortening the layoff notice period to five days 

Employers are obliged to notify employees of an approaching layoff at least five days in advance. The notice should be given in person, but if this is not possible, the notice can also be given by email, other electronic form, or regular mail. The notice should contain the grounds for the layoff, its start date, and its end date or estimated end date.

The five-day layoff notice period applies if the layoff notice is given by 30 June 2020. If an employer has already given a 14-day layoff notice in accordance with previous rules, the employer has the right to shorten the layoff notice period to five days by informing employees of the change at least one day before the layoff starts.

Layoffs for fixed-term employees 

Until 30 June 2020, employers are temporarily allowed to lay off fixed-term employees subject to the same criteria as employees whose contracts are indefinite-term. Such layoffs may continue after the temporary legislation has expired, provided that the grounds for the layoff remain valid.

Extending the grounds for termination during a probationary period 

Immediate termination of employment during a probationary period is now possible for financial or production-related reasons, as long as the employee cannot be repositioned and trained for other duties. In addition, an employer is not entitled to recruit another employee for the same or similar duties just before or shortly after the termination on probationary period, unless circumstances have materially changed.

If termination during a probationary period is based on the employee’s performance or suitability to the role, the criteria in the previous paragraph do not apply. In such cases, the employer is simply entitled to terminate the employment contract immediately during the probationary period, provided that the grounds are not discriminatory or otherwise inappropriate.

Extending the re-employment period to nine months for redundant employees who have received a notice of termination prior to 30 June 2020 

If an employer terminates an employee on financial or production-related grounds, the employer is obliged to inquire with unemployment authorities as to whether the former employee is registered as a jobseeker and, if so, offer re-employment if the same or similar duties become vacant shortly after the end of the employment relationship. For employees who have received a notice of termination between 1 April and 30 June 2020, this obligation applies to the first nine months after the end of the employment relationship. For employees who have already received a notice of termination on financial or production-related grounds, or who receive a notice of termination after 30 June 2020, the re-employment period is four to six months.

Also keep in mind that the need to lay off a substantial part of a company’s personnel because of a severe and sudden drop in demand for products or services may meet the criteria for temporary layoffs without consultations. This does not, however, limit an employer’s obligation to give layoff notices to employees, and the consultation obligation should be met afterwards, as soon as practicably possible.

These temporary legislative changes do not affect the terms of collective agreements. Accordingly, any provisions of collective agreements should be reviewed if the agreement’s terms conflict with these statutory rules.

Suvi Knaapila
Partner - Finland
Dittmar & Indrenius
Seppo Havia
Partner - Finland
Dittmar & Indrenius
Petteri Uoti
Partner - Finland
Dittmar & Indrenius