Employment law update: Wrapping up 2022 and taking a sneak peek at 2023

Employment Alert

Posted on

22 Dec


Dittmar & Indrenius > Insight > Employment law update: Wrapping up 2022 and taking a sneak peek at 2023

As the turn of the year is fast approaching, it is a good time to summarise some key takeaways in the field of employment law from 2022 and look what we can expect from 2023. We hope that this high-level summary helps you to make plans for the coming year and to double-check that the recent developments have been duly taken into account in your organisation.

Whistleblower Protection Act finally comes into effect

Like an anxiously awaited Christmas gift, the Finnish Whistleblower Protection Act implementing the EU Whistleblowing Directive has now been approved and comes into effect on 1 January 2023. This means that private sector employers regularly employing at least 250 employees and public sector employers regularly employing at least 50 employees must have an internal whistleblowing channel in place by 1 April 2023 at the latest. Private sector employers that regularly employ at least 50 employees will have to establish a whistleblowing channel by 17 December 2023.

The key objective of the Whistleblowing Directive and the national Act is to encourage persons who have become aware of suspected breaches against public interest in a work-related context to report their observations. Besides requiring organisations to establish confidential internal whistleblowing channels and prepare related instructions for the whistleblowers, the new Act sets forth specific protection for whistleblowers against retaliation regardless of size of the organisation in question.

Even though the new Act concerns only suspected breaches in specifically determined fields of law, many organisations decide to accept reports on all suspected infringements, including breaches of employment laws that fall outside the scope of the new legislation. It is noteworthy that a whistleblower acting in good faith is protected against retaliation by general employment law provisions in all situations. Even so, in these situations the level of protection differs from the specific protection provided by the new Whistleblower Protection Act.

In terms of risk management, each organisation should assess in advance how it will ensure that whistleblowers receive appropriate protection and how submitted reports are processed – especially given that reporting breaches is usually associated with overlapping interests and suspected serious breaches may even throw the organisation into turmoil.

The one-year transition period for old non-competition agreements is coming to its end

New provisions on the employer’s mandatory payment obligation in connection with post-employment non-competition agreements came into effect on 1 January 2022. Following this legislative reform, all employees’ post-employment non-competition agreements regardless of the duration of their restricted period trigger a payment obligation (the minimum level of compensation payable equalling 40%/60% of one’s salary, depending on whether or not the restricted period exceeds six months).

Employers were given a one-year transition period to adjust to these changes by reviewing their existing practices and terminating old unnecessary non-competition agreements without any notice period. As of 1 January 2023, the obligation to pay compensation and the obligation to comply with the statutory notice period when terminating a non-competition agreement (1/3 of the duration of the restricted period but not less than two months) apply also to non-competition agreements concluded prior to 2022.

First experiences of the renewed Co-Operation Act

The new Co-operation Act came into effect on 1 January 2022. One of the main goals of the new law has been to give employees and their representatives a say in matters affecting the personnel on a continuous basis, rather than only when staff cuts or other remarkable changes are on the horizon. For this purpose, an obligation to conduct continuous dialogue was introduced.

The continuous dialogue is a procedure whereby the employer regularly meets with its staff representatives or staff to discuss matters such as foreseeable developments and the financial situation of the company, workplace policies and practices, use of fixed-term and part-time work and outsourcing of work, skills development and training as well as collecting of personal data. The Act lays down a general framework for the dialogue and stipulates the matters that must be addressed, but gives ample leeway as to the practical ways of implementing the continuous dialogue at the workplace.

As part of the continuous dialogue, the employer must establish a work community development plan. The clock is ticking for employers that have not yet prepared the new plan given that work community development plans must be in place by the end of 2022.

Further, the Act introduced a rebranded co-operation procedure called “change negotiations”. Regardless of the name change, the content of the co-operation consultation procedures regarding possible staff reductions as well as less significant changes in the terms of employment and working arrangements remained mainly similar as in the previous Act from 2007.

Family leave reform

The family leave reform came into effect in August 2022. The reform aims to increase equality in working life and between parents, for instance, by increasing the number of parental leave days, allocating each parent a specific quota of parental allowance days and giving more flexibility for parents to decide on the timing of the leave days. The Act is written in a more gender-neutral way hence its takes better account of different types of families. Employers may wish to take this opportunity to review and update their internal family leave policies.

Legislative amendments concerning transparent working conditions and variable working hours

Following the implementation of the EU directive on transparent and predictable working conditions in August 2022, employers’ obligation to provide a written account of the key conditions of employment has been slightly extended, the written account must be given more quickly and the obligation applies also to short-term employment relationships. Employers should ensure that their employment contract templates or onboarding processes fulfil this obligation to provide the necessary information in writing.

Further, employers using variable working hours have a new stronger obligation to review an employee’s actual working hours at least every 12 months. If an employee’s actual working hours indicate that the need for labour is higher than the determined minimum working hours, the working hour clause should be adjusted by increasing the employee’s minimum working hours.

Precedent cases in the field of redundancies, employment offences and confidentiality undertakings

Employers planning redundancies should pay attention to the two rulings clarifying the legal framework for redundancies given by the Supreme Court in 2022.

The first case (KKO:2022:17) emphasized that the employer must be – irrespective of any provisions of a collective bargaining agreement – able to first establish that the work available, as defined in the employment contract, has reduced significantly and permanently. Only after completing this first part of the assessment will the obligation to offer other work be addressed.

The key takeaway from the second case (KKO:2022:33) is that employers must select the positions to be offered to employees based on the employee’s education, professional skills and work history – instead of sending lists of all available positions – in order to duly fulfil the employer’s statutory repositioning and retraining obligation.

Moreover, in the field of employment offences, the Supreme Court ruled that not allowing union members to appoint a shop steward is punishable even if the employer is not a member of any employer’s association (KKO:2022:35).

The Supreme Court also confirmed (KKO:2022:16), as could be expected, that the statutory restrictions concerning non-competition agreements in terms of the requirement of a particularly weighty reason and maximum amount of liquidated damages do not apply as a rule to the use of post-employment confidentiality obligations.

What to expect in 2023?

Few amendments to the employment legislation are expected to come into effect in 2023:

  • First, the partial reform of the Non-Discrimination Act comes into effect in June 2023. It includes, inter alia, a new definition of harassment and more defined factors what the employer should take into account when assessing the equality situation in the workplace. In practice, this may mean that employers may have to re-evaluate the equality situation in the workplace and draft new equality plans accordingly.
  • Further, it has been proposed that the scope of application of the Employment Contracts Act is amended. Currently the section includes the characteristics of an employment relationship. Under the proposal, in addition to the current characteristics, it would be specifically stated that overall assessment should be used when evaluating whether a legal relationship is an employment relationship or something else. In general, the amendment appears only to reinforce the current practice but in most challenging cases, for instance relating to platform workers, this may result in courts applying even more purposive interpretation. The change is expected to come into effect in July 2023.
  • In addition to national legislation, we may expect some activity within the EU in 2023, as the Commission has already in 2021 put forward its proposal on new rules for platform work. The aim is to improve the working conditions and social rights of the people working in the gig economy especially within platforms. Implementation of the Directive could mean that new amendments to the scope of application section in the Employment Contracts Act would (again) be needed.

What about case law? Little birds have told that we may expect rulings on unilateral changes of terms of employment and equal treatment of employees with respect to salary harmonisations from the Supreme Court. The latter would concern a period after transfer of an undertaking and both rulings may have a great significance especially for the new health and social services counties (FI. hyvinvointialue) that start their operations in 2023.

Sounds like we have an interesting year ahead of us!

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CSRD Is Here – Why Should HR Also Be Ready?

The EU’s Corporate Sustainability Reporting Directive (CSRD) will require all large and listed companies (except micro-enterprises) to digitally disclose not only material information on possible risks and opportunities arising from social and environmental issues to the company but also information on the company’s impact on people and the environment, simultaneously with their financial reporting.

Proposal for Finnish whistleblowing legislation is finally published

The anxiously awaited proposal for the so-called Whistleblower Protection Act (Government proposal HE 147/2022) implementing the Whistleblowing Directive ((EU) 2019/1937) has just been published. The key objective of the Whistleblowing Directive and the Act is to encourage persons who have become aware of suspected breaches against public interest in a work-related context to report their observations. This is promoted by adopting a new centralised whistleblowing channel among the authorities and by obligating most organisations in the public and private sector to establish a confidential internal whistleblowing channel. In addition, whistleblowers will be protected from negative consequences.

Ehdotus whistleblowing-lainsäädännöksi on julkaistu

Hallitus antoi maanantaina 19.9.2022 jo kuumeisesti odotetun esityksen niin sanotuksi ilmoittajansuojelulaiksi[1] (HE 147/2022), jolla saatetaan Suomessa voimaan whistleblowing-direktiivi ((EU) 2019/1937). Whistleblowing-direktiivin ja ilmoittajansuojelulain keskeisenä tavoitteena on rohkaista työnsä yhteydessä yleisen edun vastaisia rikkomuksia havainneita tai epäileviä henkilöitä ilmoittamaan havainnoistaan. Tätä edistetään ottamalla käyttöön uusi viranomaisten keskitetty ilmoituskanava sekä velvoittamalla valtaosa julkisen ja yksityisen sektorin organisaatioista perustamaan luottamuksellinen sisäinen ilmoituskanava tietyistä yleisen edun kannalta merkityksellisistä väärinkäytöksistä ilmoittamista varten. Lisäksi sääntelyllä suojataan väärinkäytöksestä ilmoittajaa negatiivisilta seuraamuksilta.

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