Proposed amendments to the Employment Contracts Act

The Finnish government has proposed three notable amendments to the Employment Con-tracts Act as part of its plan to lower unemployment and spur businesses into growth. The government is aiming to change the conditions of fixed-term employment contracts, the length of trial periods and the duration of the obligation to re-employ. The new legislation was announced in June and is still at a preparatory stage; the government intends that the amendments will come into effect on 1 January 2017.

Fixed-term employment contracts

The proposed Act would enable a long-term unemployed person to be employed for a fixed term without the current condition of a justified reason being satisfied. For these purposes an individual who has been an unemployed jobseeker continuously for the last 12 months would be considered as long-term unemployed.

An employer and long-term unemployed person would be permitted to enter into up to three fixed term contracts without a justified reason, as long as the total, combined duration of the contracts does not exceed one year.

In such cases a permanent need of labor would not prevent the use of fixed-term contracts. However, the proposed change only concerns the conditions for concluding fixed-term con-tracts. Therefore, the amendment would not affect the employer’s obligation to offer work, for example to a part-time employee.

Length of trial period

The government is also proposing that the length of a trial period should be six months instead of the current four-month period. The employer would also be given a right to extend the trial period if the employee has been absent from work due to family leave or disability. For every 30 calendar days’ absence during the trial period the employer could prolong the trial period by a month by giving notice to that effect before the trial period is due to expire.

Duration of the obligation to re-employ

As the Employment Contracts Act currently stands, an employer has to offer to re-engage a former employee whose employment was terminated on financial and production-related grounds or on grounds related to the reorganization of the employer’s operations if, within nine months of termination, the employer needs new employees for work that is the same as or similar to work done by the dismissed employee.

The government has proposed that the duration of this re-employment obligation should be shortened to four months, or six months for employees with at least 12 years’ continuous service. There are, however, no plans to change the content of the obligation to re-employ.