Legal Alerts/23 Apr 2018
Legal Alert – New Limitations to the Use of Non-traditional Employment Contracts
The debate regarding the use of non-traditional employment contracts is gaining traction in Finland. In this context, a non-traditional contract can refer either to a so-called zero-hour contract, i.e. an employment contract where the employee’s minimum working hours are not specified, or to an employment contract where the employee’s regular working hours vary within certain agreed limits, e.g. between 10 and 20 hours a week.
The Finnish Government has proposed certain limitations to employers’ right to use non-traditional employment contracts through amendments made to existing legislation that would enter into force on 1 June 2018. We advise all employers, who have made use of these working hour arrangements until now, to ensure their compliance with the new regulations once they take effect.
What will change?
If the proposed amendments are accepted, employers cannot use non-traditional employment contracts without an acceptable reason in future. This will mean that the employer’s need for labour must genuinely fluctuate from time to time if they wish to conclude such contracts at their initiative. Correspondingly, when the need for labour is fixed, the minimum amount of working hours offered to employees must be fixed as well.
In addition, the employer will be obliged to inform the relevant employees in writing about its expectations regarding how often and in which situations the employees’ work contribution will presumably be needed. If the employee’s actual working hours do not reflect the agreed hours over a period of six months, the employer must negotiate on adjusting the agreed working hours if the employee so requests.
Lastly, the proposed amendments will affect e.g. the sick pay and notice pay entitlements of the employees concerned. Furthermore, employees with non-traditional employment contracts can no longer give their unlimited consent for accepting additional work (i.e. hours exceeding the agreed hours) in their employment contracts.
What comes next?
In practice, for many companies, the proposed changes will mean that the employer needs to guarantee certain minimum hours to the majority of its employees, who have previously worked under zero-hour contracts, and potentially increase the amount of hours guaranteed to other employees with non-traditional employment contracts. The employer may still be allowed to retain a certain number of employees under zero-hour contracts, but the retention of any extensive labour reserves must be carefully considered.
Our experts are available to assist in addressing any questions you may have regarding the upcoming changes. Please feel free to contact any of the Borenius attorneys listed in this alert or those with whom you usually work.