New temporary legislation regarding layoff procedure

D&I Alert

Posted on

31 Mar


Dittmar & Indrenius > Insight > New temporary legislation regarding layoff procedure

The parliament has just passed a government proposal for temporary legislation regarding layoffs and immediate termination of employment during a probationary period.

The changes constitute a part of the measures proposed by the labour market parties and accepted by the government to ease the position of employers suffering from the COVID-19 crisis.

The temporary changes will enter into force on 1 April and remain in force until 30 June 2020. They include the following:

Shortening the minimum cooperation consultation period preceding layoffs to five days

Employers regularly employing at least 20 employees in Finland are obliged to conduct cooperation consultations prior to making decisions on contemplated layoffs.

The minimum cooperation consultation period is temporarily shortened to five days regardless of the number of employees the layoff plan concerns and the length of the planned layoffs. The parties to the cooperation consultations may also agree on the further shortening of the length of the consultation period.

The five days consultation period is applied for cooperation consultations that have already started. In addition, the shorter consultation period applies for consultations that continue beyond 30 June 2020.

Shortening the layoff notice period to five days

The employer is obliged to notify the employees of the approaching layoff at least five days in advance. The notice should be given in person but if this is not possible, the notice can also be given by email or otherwise in ‘electric form’ or by regular mail. The notice should contain the grounds for the layoff, its start date and expiry date or estimated expiry date.

The five days layoff notice period applies if the layoff notice is given on 30 June, at the latest. If the employer has already given the 14 days layoff notice in accordance with the previously applied rules, the employer has a right to shorten the layoff notice period to five days by informing the employees of the change at least one day before the layoff starts.

Layoffs possible also for fixed-term employees

Until 30 June 2020, employers are temporarily allowed to layoff fixed-term employees subject to same criteria as employees whose employment contracts are concluded until further notice. Such layoffs may also continue after the validity of the temporary legislation has expired provided that the grounds for the layoff remain valid.

Extending the grounds for termination during a probationary period

Immediate termination of employment during a probationary period is now possible due to financial and production-related reasons. This requires that the employee cannot be repositioned and trained to other duties. In addition, the employer is not entitled to recruit another employee to same or similar duties just before or shortly after the termination on probationary period, unless the circumstances have materially changed.

If the termination on probationary period is based on the employee’s performance or suitability to the role in question, the supplementary criteria referred to in the previous paragraph does not apply. In such case, the employer is simply entitled to terminate the employment contract with immediate effect during the probationary period provided that the grounds are not discriminative or otherwise inappropriate.

Extending the re-employment period for redundant employees who have received a notice of termination prior to 30 June 2020 to nine months

An employer who has terminated an employment relationship on financial and production related grounds is obliged to make an inquiry to the unemployment authorities on whether the former employee is registered as unemployment jobseekers and offer the employee re-employment if same or similar duties become vacant shortly after the expiry of the employment relationship. This obligation applies during nine months after the expiry of the employment relationship for employees who have received a notice of termination between 1 April and 30 June 2020. For employees who have already received a notice of termination for financial or production related grounds or receive the notice of termination after 30 June 2020, the re-employment period is four to six months.

We emphasize that the above-mentioned temporary legislative changes do not affect the applicability of the terms of the collective agreements. Accordingly, provisions of the applicable collective agreement, if any, should be reviewed if the terms of the collective agreement deviate from the statutory rules.

We also remind that the need to layoff a substantial part of the company’s personnel because of a severe and sudden drop in the demand for products or services may meet the criteria for carrying-out temporary layoffs without preceding co-operation consultations. This does not, however, limit the employer’s obligation to give layoff notices to the employees. Also the cooperation consultation obligation should be met afterwards, as soon as practicably possible.

As always, we are happy to discuss further and to assist our clients in choosing and implementing appropriate HR-measures to adopt their businesses to the changing market environment.

Links (pdf):

Act on the temporary amendment of the Employment Contracts Act (167/2020)

Act on the temporary amendment of the Seafarers’ Employment Contracts Act (168/2020)

Act on the temporary amendment of section 51 of the Act on Co-operation within Undertakings (169/2020)

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