Legal Alerts/16 Jan 2026

Government proposes reforms to the use of fixed-term employment contracts, notice periods for temporary lay-offs, and the scope of the re-employment obligation

The Finnish Government has proposed new legislation to implement several amendments to the Finnish Employment Contracts Act. Under the proposed legislation, the Government proposes to:

allow the use of fixed-term employment agreements without needing a justified reason for up to one year under certain conditions;
shorten notice periods for temporary lay-offs from the current 14 to 7 days; and
limit the re-employment obligation to employers regularly employing at least 50 employees.

The amendments would enter into force on 1 April 2026.

Key features of the proposal

Fixed-term employment agreements

Currently a justified reason is required for fixed-term employment agreements, with the employment of exception of agreements concluded for the long-term unemployed persons.

Under the proposal, employers would be permitted to conclude fixed-term employment agreements without a justified reason, when hiring someone for the first time or when rehiring a former employee after a gap of at least two years. In such cases, the employer would not be obliged to assess the need for permanent labour, unlike in the case of fixed-term agreements concluded for justified reasons.

A maximum of three consecutive fixed-term agreements without a justified reason could be concluded, with up to two renewals permitted during the year following the first contract. The combined total duration of the agreements could not exceed one year; however, if concluded within one year from the first agreement, the agreements could extend over a period longer than one year.

As safeguard for from misconduct, the proposal includes the following protective measures:

If the statutory conditions are not complied with, the agreement is deemed to be permanent.
The employer must inform the employee that the fixed-term agreement is concluded without a justified reason, for example by including this information in the employment agreement.
Either party may terminate a fixed-term agreement concluded without a justified reason after six months, regardless of whether a termination clause has been included in the agreement.
Before the expiry of the fixed-term agreement, the employer must provide a reasoned explanation regarding the possibility of continuing employment under an indefinite agreement or a fixed-term agreement with a justified reason. Upon request, this explanation must be provided in writing within one month. If continuation is not possible, the employer must state the reasons.
When a fixed-term agreement is ending, employers must offer the employee any new positions in the same or similar role. The obligation to offer work would last for one third of the total duration of the fixed-term agreements concluded without a justified reason, i.e., a maximum of four months. The obligation only arises if the employer decides to hire additional employees, i.e., to increase the number of employees, for the same or similar tasks that were previously performed under a fixed-term agreement without a justified reason. This obligation is secondary to other statutory obligations to offer employment to employees who are still in an employment relationship with the employer. Work must be offered in a verifiable manner, and the position may be offered to another employee if the employee has not responded to the offer within two weeks.

The proposal does not, in principle, affect the use of fixed-term agreements concluded on justified grounds under the applicable legislation and the proposed safeguarding measures discussed above would not apply to such agreements.

Shorter notice period for temporary lay-offs

The applicable notice period under the Employment Contracts Act for temporary lay-offs would be reduced from 14 to 7 days.

If the applicable collective agreement stipulates a longer notice period for temporary lay-offs, that period is principally binding on the employer. However, the legislator proposes that it could be agreed locally to shorten the notice period to 7 days regardless of the collective agreement’s provisions. If the collective agreement includes a possibility to agree on a shorter notice period through local agreement, the process for local bargaining under the applicable collective agreement must be followed.

Limitation of re-employment obligation

Under the Employment Contracts Act, the re-employment obligation requires an employer that has terminated an employee on financial or production-related grounds to offer possible open position to that former employee. This obligation applies for four months following the termination of the employment relationship, or for six months if the employment relationship lasted at least 12 years.

Under the proposal, the re-employment obligation would be limited to employers regularly employing at least 50 employees. No such restriction on the applicability of the re-employment obligation currently exists.

What this means for your business

These reforms give employers more flexibility in hiring new employees and managing need for temporary workforce. However, they also introduce new administrative requirements, especially around documentation and communication with employees on fixed-term agreements.

If you have any questions concerning this Legal Alert, please contact the undersigned.

We are organising a webinar on new legislative developments, including these changes, on Tuesday, 20 January 2026 at 10:00 a.m. (in Finnish). Register by contacting seminars@borenius.com.