Legal Alerts/3 Sep 2014

Legal Alert – New Employment Law Cases

During this summer Finnish courts have published interesting rulings concerning non-competition agreements, redundancy support, inappropriate treatment of employees, and employees’ entitlement to pay during maternity leave taken immediately after child-care leave.

Supreme Court rulings

In case 2014:50 the employment contract of an employee, who programmed software for robots, contained a non-competition clause restricting the employee’s freedom to enter into a new employment agreement with a competing business for a period of four months. The Supreme Court deemed that the relatively small size of the employer’s business in the technology industry spoke in favor of agreeing on non-competition. However, taking into account the routine nature of the employee’s duties, the employee’s low pay, and the fact that the employee did not have any subordinates, the Court regarded that there were not sufficiently weighty grounds for agreeing on non-competition. The Court further stated that the employer’s trade secrets were protected by the employee’s statutory non-disclosure obligation. This ruling sets the requirements for a valid non-competition obligation to a higher level than before in the case law.

In case 2014:47 the employer granted redundant employees re-employment and livelihood support as a part of the so called change security program. According to the terms of the program, the support was intended for employees who were not employed by another employer or in an enterprise of their own or were not going to be covered by pension plan arrangements within the subsequent 12-month re-employment period.

One employee, who was entitled to additional days of earnings-related daily allowance until the age of 65 years, was left out of the program.

The Supreme Court stated that the terms of the program were discriminatory with respect to the age of the employee. However, the Supreme Court deemed that promotion of employment and livelihood constituted justified and due reasons for the discriminatory measures and regarded the support package acceptable even though the benefit was only granted to employees dependent on basic unemployment benefit. Consequently the Supreme Court deemed that the employer had not acted contrary to its statutory obligation to treat employees equally. As the claimant was covered by pension plan arrangements within the relevant 12-month timeframe, he was not entitled to the benefit or to damages as a result of losing the claimed benefit.

In case 2014:44 the employee claimed that the employer had treated the employee inappropriately by, for example, unilaterally amending the employee’s working order, refusing to communicate with the employee, failing to familiarize the employee with her duties, embarrassing the employee at meetings, being amused at the employee’s request for training, and finally by neglecting to undertake measures to correct the unsatisfactory state of affairs. The employee had fallen ill as a result of this behavior.

The Supreme Court stated that behavior which can be objectively considered as offensive, humiliating and dismissive may constitute inappropriate treatment. The Supreme Court deemed some of the claims proven and the employer liable to compensate the damage caused by proven neglects.

This ruling enhances the employer’s obligation to investigate situations involving inappropriate treatment of employees by using a variety of methods and hearing the parties involved. Failure to react to work-place bullying may fairly easily lead to civil and/or criminal liability.

Labour Court rulings

The Labour Court has given three rulings (2014-115, 2014-116 and 2014-117) on employees’ entitlement to pay during a second maternity leave taken immediately after child-care leave. All three cases concerned employees who became pregnant during their child-care leave and notified their employer that they will interrupt their child-care leave and take a new maternity leave. The employers accepted the notifications but refused to pay the employees’ pay during the second maternity leave, as the maternity leave had commenced during unpaid child-care leave. The employers referred to the applicable collective bargaining agreements’ application procedure.

The Labour Court requested a preliminary ruling from the European Court of Justice. The ECJ deemed that the relevant provisions of the applicable collective bargaining agreements were contrary to EU directives. The Labour Court ruled the cases in line with the ruling given by the ECJ: provisions of the collective bargaining agreements were invalid to the degree that they prevented paying maternity leave pay to an employee interrupting her child-care leave to take a second maternity leave and the practice referred to by the employers violated employees’ entitlement to family leave.

These rulings will lead to adjustment of numerous collective bargaining agreements as well as company policies and hand-books.

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