Nature of consultation remains the same
Employer's word is final
Continuous dialogue
Consultation before making workplace changes

Fines and compensation

Finnish legislation concerning consultations between employers and employees was updated at the beginning of 2022. The rules set out in the revised Cooperation Act aim to facilitate open dialogue in the workplace and ensure that employees have access to information and the opportunity to influence decisions that concern them. This article provides an overview of the new rules.

Nature of consultation remains the same

Like its predecessor, the new Cooperation Act applies if a company regularly employs 20 or more employees. The calculation is based on the number of employees, not person years. For example, two part-time employees who regularly work half a week each count as two employees when assessing whether the company falls within the scope of the Act.

The new Act preserves cooperation negotiations as a strictly internal matter. The parties to the negotiations are:

  • the employer, represented by a management-elected figure (eg, the chief executive officer, human resources manager or a line manager); and
  • the employees, represented by the shop steward, another type of employee representative or, in case no representative has been selected, all the employees as a collective.

Labour unions are not officially party to the negotiations, although they may assist and support the shop steward between the negotiations

Employer's word is final

The other fundamental aspect of the cooperation process, the employer's obligation to listen and provide the employees' representatives with an opportunity to present their views, also remains unchanged. The new Act reinforces the employer's obligation to explain to the employees' representatives the reason for holding consultations, but after they have taken place, the final decision remains at the employer's discretion.

Continuous dialogue

The key innovation introduced by the new Act is the obligation for the employer and the employees to engage in regular dialogue. In companies with less than 30 employees, the employer and the employees' representatives should meet at least twice a year; in larger companies, there should be at least four meetings each year. However, the employer and the employees' representatives may agree on a different schedule for the discussions, provided that there is at least one meeting per year. If the employees have not elected any representative for themselves, the employer may fulfil the obligation to engage in continuous dialogue by organising a town hall meeting with all employees at least once a year.

The Act defines the matters that shall be addressed as part of the continuous dialogue, but the practicalities regarding the discussions are left to be determined in each workplace. The matters to be addressed cover a wide range of employment related issues including:

  • the financial situation of the company;
  • anticipated changes in the company's business environment;
  • training of employees;
  • use of different types of employment relationships;
  • outsourced workforces at the workplace; and
  • other policies and practices.

The intention is not to address all issues in each meeting. Instead, the employer and the employees' representatives may agree on an annual schedule to cover all topics.

Ultimately the employer must ensure that there is at least an attempt to engage in continuous dialogue. However, the employees' representatives also have the right to request a dialogue on issues within the statutory scope of continuous dialogue. Regardless of whether the request to start a dialogue comes from the employer or the employees, the employer must provide the employees with all the necessary information that the employer possesses and is permitted to share.

Consultation before making workplace changes

In practice, the old Cooperation Act was most widely used for redundancies and dismissals. This obligation remains unchanged, but the new Act has introduced a few modifications to the process.

Under the new Act, potential changes may trigger either simple consultations or full-scale consultations. Full-scale consultations are needed if the contemplated changes may result in terminations, temporary lay-offs or changes to the employees' terms of employment. Simple consultations, on the other hand, are sufficient in connection with potential changes to work arrangements, working hours or places of work.

The timing of consultations has not changed. The employer must initiate the consultations by giving the employees or the employees' representatives a written invitation to the consultations and explain the topics that will be discussed. For full-scale consultations, the invitation must be sent at least five days before the first meeting; however, there is no definitive deadline for simple consultations. Full-scale consultations must be carried out over at least 14 days, which can be extended to six weeks if the company has at least 30 employees and the contemplated actions may affect at least 10 of the employees. No minimum consultation period applies in simple consultations.

A new feature of the Act gives employees' representatives the right to submit a formal proposal or suggest alternative solutions to a situation. If the employer rejects such a proposal, the employer must explain the reasons for the rejection in writing.

Fines and compensation

The Act retains the two-tier system for penalties. If the employer fails to comply with the consultation obligation before making a decision that results in dismissals or temporary lay-offs, the dismissed or laid-off employees may claim compensation – €35,000 per employee.

If the employer fails to comply with other consultation obligations, a cooperation ombudsman will, in the first instance, order the employer to fulfil such obligations. If the employer continues to neglect the obligations following this order, the employer's representative may be fined.

For further information on this topic please contact Jouni Kautto at Waselius & Wist by telephone (+358 9 668 9520) or email ([email protected]). The Waselius & Wist website can be accessed at