Proposed changes to Finnish labor legislation due to the coronavirus crisis
After the joint proposal by the Social Partners (central organizations for employer and employee unions) in Finland on Wednesday 18 March 2020, the Finnish Government on Thursday 19 March 2020 decided on a list of measures aimed at easing the situation of companies during the coronavirus crisis.
The Finnish Government has decided on, among other things, various temporary changes to labor legislation in order to achieve the necessary measures of reducing costs of employment and guaranteeing the flexibility of the labor market in times of crisis. These proposed changes would only concern employers and employees in the private sector. The time of entry into force of the new legislation remains to be decided by the Parliament.
The Government decided on the following proposals regarding the changes in the labor legislation due to the current coronavirus crisis:
Lay-offs and co-operation
- Shortening of the minimum co-operation negotiation period regarding lay-offs to 5 days (instead of the current 14 days or 6-week period).
- Shortening of the lay-off notification period to 5 days (from 14 days).
- Fixed-term employees can also be laid off (following the same rules that apply to employment contracts valid indefinitely).
- The Government agreed with the joint interpretation of the Social Partners on 18 March 2020, that the sudden and severe fall in demand due to the coronavirus is to be considered such an occasion where Section 60 of the Act on Co-operation within Undertakings (334/2007) is applicable and the lay-offs can be completed without the requirement to comply with the standard co-operation obligations. However, whether or not Section 60 applies needs to be assessed on a case-by-case basis. According to the Social Partners’ proposal, the employers are to be obligated to notify the Public employment and business services i.e. TE Office (Finnish: TE-toimisto) and the benefit payer (either the unemployment fund or the Social Insurance Institution of Finland KELA) when laying off at least 10 employees under the new rules.
Terminations of employment
- Employment contracts can be terminated with immediate effect on financial and production-related grounds during probationary period.
- Obligation to re-hire employees made redundant on financial and production-related grounds is extended to 9 months (if the termination has occurred when the changes to labor legislation due to the coronavirus situation are in effect).
The propositions for legislative changes will be drafted by the Finnish Ministry of Economic Affairs and Employment, after which the Parliament still needs to approve the proposed legislative amendments before they come into force. We will keep you updated on this issue.