Legal Alerts/21 Jun 2016

Legal Alert – Upcoming Employment Law Changes: Length of Trial Period, Fixed-Term Employment, And Employer’s Re-Employment Obligation

The Finnish government has recently proposed three amendments to employment law concerning the Employment Contracts Act, Seafarers’ Employment Contracts Act and the Act on Public Employment and Business Service. The following amendments are due to enter into force on 1 January 2017.

Extension of the Maximum Length of Trial Period

The government proposes that the maximum length of the trial period be increased from the current four months to six months. In addition, the employer would be entitled to continue the trial period if the employee has been absent from work during the trial period due to family leave or incapacity for work.

The aim of this extension is to:

  • lower the employment threshold;
  • improve the purpose of the trial period in situations where the employee is absent from work for a longer period of time; and
  • increase the flexibility of the labour market, which in turn is expected improve productivity and employment.

On the other hand, the extension of trial period may increase uncertainty for employees, which could affect well-being at work. Although the aim is to extend the trial period, the length of the trial period should be in line with its purpose.

Long-term Unemployed May Be Hired for a Fixed Term without a Justified Reason

The government also proposes that long-term unemployed could be employed for a fixed term without any specific justified reason which is currently required by law. In this context, a long-term unemployed is a person who, based on the notification of the Employment and Economic Development Office, has been an unemployed jobseeker continuously for the previous 12 months. However, short-term employments of maximum two weeks would not disrupt the continuity of unemployment.

The aim of this amendment is to:

  • encourage employers to hire long-term unemployed and therefore improve their employment opportunities on the free labour market; and
  • increase the flexibility for businesses in hiring.

Such fixed-term employment agreement without the requirement for a justified reason could be concluded for a maximum of one year. Alternatively, the employer and employee could agree on a maximum of three shorter fixed-term agreements, as long as their total duration does not exceed one year.

Length of Employer’s Re-Employment Obligation Is Decreased

Thirdly, the government proposes that employers’ re-employment obligation be decreased to four months from the current nine months. However, if the employment relationship has lasted for 12 years, the re-employment obligation will be six months.

The employer’s re-employment obligation means that once the notice period of a termination based on financial and production-related grounds has come to an end, the employer is bound by an obligation to re-employ that is valid for nine months. If the employer needs new employees for the same or similar work during this period of re-employment obligation, it must offer the work in question to its former employees.

The aim of this amendment is to:

  • facilitate employment after dismissing employees on financial and production-related grounds;
  • reduce the administrative burden of companies and increase employers’ freedom of choice; and
  • promote other jobseekers’, especially fixed-term employees’, situation in relation to those whose permanent employment have been terminated and facilitate the transition from fixed-term employment to permanent employment.

The final point in particular is likely to increase the turnover rate of labour. It may also increase productivity as the employer is able to choose the suitable person more freely. On the other hand, it slightly deteriorates permanent employees’ job security and may increase their risk of unemployment.

We are happy to assist our clients to utilize these upcoming opportunities.

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Additional information

Jani Syrjänen