Since the Act on Cooperation within Undertakings was reformed in 2007, it has applied to companies which employ 20 employees or more. However, since then the cooperation ombudsman has received numerous enquiries about the application of the act. The act itself, in combination with the associated legislative materials and legal practice, does not address such questions unambiguously. As a result, in April 2010 the cooperation ombudsman requested a statement from the Labour Council regarding the application of the act.
The ombudsman inquired as to whether the minimum number of employees is determined according to the number of employees working in Finland under Finnish employment contracts, including posted workers, or whether it is determined according to the total number of company employees, including those employed abroad.
Correspondingly, the ombudsman also inquired as to whether the act is to be applied in cases where a foreign company has a branch in Finland and the total number of employees in the branch or in the whole company is at least 20, or whether the foreign branch should even be considered as a company to which the Cooperation Act shall apply.
In its statement, the Labour Council considered that the act should apply if the total number of the employees in a Finnish company and its branches or offices in other countries is regularly at least 20. The act does not apply, however, to registered or unregistered branches of foreign companies located in Finland.
The word 'company' in the act is used to refer to a community, foundation or physical person which carries out financial business, regardless of whether the business is intended to generate profit. Further, the act applies to companies in which the number of employees working under an employment contract is at least 20.
The Labour Council stated that the number of employees working at a Finnish foreign branch must be taken into account when counting the number of employees and considering whether the act is to apply. The act applies, for example, to a company which has 10 employees who work in Finland and 10 employees who work in a foreign branch, provided that:
- the employees work under an employment contract; and
- the company's foreign branch is not an independent legal entity.
It makes no difference whether the employees have been transferred from Finland to work abroad or were employed locally.
Correspondingly, the act does not apply to registered or unregistered branches of foreign companies located in Finland. According to the Government Bill (162/1995), the term 'branch' refers to a part of the foreign community or foundation's organisation which runs business in Finland on behalf of the community or foundation. A branch is not an independent legal entity and has no legal competence.
In light of the Labour Council's statement, Finnish companies which have branches located abroad would be well advised to note that if they have fewer than 20 employees working under an employment contract in their country, but have a combined number of employees who are employed under an employment contract of at least 20, then the Cooperation Act applies to them (provided that the aforementioned conditions are also fulfilled).
For further information on this topic please contact Seppo Havia at Dittmar & Indrenius by telephone (+358 9 68 1700), fax (+358 9 65 2406) or email ([email protected]).