Recent changes to the Annual Holidays Act in Finland

The Finnish legislation on annual holidays has been amended to reduce the cost to the public purse and the effects of sickness absence on employers. The following amendments to the Annual Holidays Act, Seamen’s Annual Holidays Act and Health Insurance Act came into force on 1 April 2016:

Restriction on employees’ right to postpone annual holiday due to illness

As of 1 April 2016, a waiting period is applied before an employee who falls ill during annual holiday can postpone their scheduled leave. In practice, the waiting period is counted as annu-al holiday even though the employee is sick. Only after the waiting period can the employee ask to postpone the remainder of the annual holiday period if the sickness continues. The em-ployee must make their request without delay and, if asked by the employer, must present a reliable account of their incapacity for work.

The waiting period only applies if the employee has accrued at least four weeks’ annual holi-day. If the employee has accrued less than four weeks’ leave, the employee has a right to postpone their annual holiday from the first day of illness or incapacity for work. Where the employee has accrued an annual holiday of more than four weeks, but less than five weeks, the days exceeding four weeks are considered as the waiting-period. The maximum length of the waiting-period is six days, and it applies to annual holidays of five weeks or more.

Restrictions on holiday accrual during family leave

Further changes mean that employees taking maternity, paternity and parental leave only accrue holiday during the first six months (156 days) of the period of leave. Previously annual holiday was accrued throughout the whole of the family leave period.

Because maternity leave paternity leave do not exceed the 156 day period (running for up to 105 days and 54 days respectively), in practice it is only if an employee takes parental leave that holiday accrual is restricted.

The change took effect on 1 April 2016 but will not affect annual holiday accrual in practice until 2017.

Restrictions on employer’s right to compensation for annual holiday costs

With respect to the restrictions on holiday accrual during family leave, the Health Insurance Act has also been amended so that the employer has a right to compensation only for the costs incurred during the statutory holiday accrual period.

Collective bargaining agreements may still provide for holiday accrual over a longer period than the statutory 156 days. Nevertheless, following the reform, employers are not entitled to compensation for the costs exceeding 156 days. This means that the cost to employers of providing annual holidays will increase where a collective bargaining agreement contains more favorable holiday accrual rules than stipulated in the Annual Holidays Act.