Legal Alert – Recent Legislative Changes Extend Employees’ Rights in Case of Redundancy

The Finnish central organizations of labour markets negotiated during 2016 so-called competitiveness agreement, which is the result of the reached labour market settlement. More specifically, the competitiveness agreement is a social agreement aimed to cut unit labour costs and thereby improve Finland’s relative economic competitiveness. Following this agreement, the Finnish parliament recently introduced certain legislative changes promoting the rights of redundant employees.

Find below a summary of the key changes that came into force on 1 January 2017:

1. Employer may now be obliged to pay for training offered to redundant employees

Under the amended Finnish Employment Contracts Act, employees made redundant due to financial or production related grounds may be entitled to participate in coaching or training that promotes re-employment and is paid by the employer.

The new obligation concerns companies that regularly employ at least 30 employees. In addition, the employee must have a working history of at least five years in the employer’s service to be eligible for such coaching or training. The value of the coaching or training should be equivalent to one month’s salary of the redundant employee or the employees in average, unless otherwise locally agreed between the employer and the personnel.

Under the updated Finnish Act on Co-operation within Undertakings, the principles for organising coaching or training should be recorded in the employer’s personnel and training plan during 2017, even if no redundancies are planned.

2. Employees’ entitlement to occupational health care could from now on continue even though the employment ends

Under the updated Finnish Occupational Health Care Act, the employer may be obliged to arrange occupational health care for employees who have been made redundant due to financial or production related grounds. The obligation may continue for up to six months after the employee’s working obligation ends.

Like the aforementioned training obligation, this obligation only concerns employers who regularly employ at least 30 employees. Furthermore, the redundant employee must have been employed by the employer for at least five years prior to the termination. After the redundancy the content and scope of the occupational health care services should be equivalent to the services offered prior to the termination.

3. The Finnish Act on Co-operation within Undertakings now also applies to Finnish branches of foreign companies

Previously, it was unresolved whether the Finnish Act on Co-operation within Undertakings should be applied in Finnish branch offices of foreign companies. However, a recent clarification to the Act settles this question and provides that, starting from 1 January 2017, the Act must also be applied by Finnish branches of foreign companies if they regularly employ at least 20 employees. This means that the branches must, for example, start carrying out consultation procedures before executing redundancies.

Our experts are available to assist in addressing any questions you may have regarding the recent employment law changes. Please feel free to contact any of the Borenius attorneys listed in this alert or those with whom you usually work.