New pension reforms come into effect

One of the principal purposes of the pension reform is to lengthen working careers. Accordingly, the age limit for old-age retirement will be gradually raised from 63 years to 65 years. In addition, accrual of pension will be standardized to 1.5 percent of annual income during the whole career. The revised legislation came into force on 1 January 2017.

Changes related to the Competitiveness Pact

The legislative changes related to the Competitiveness Pact are to enter into force at the beginning of 2017. For instance:

  • Redundant employee will be entitled to certain employer-provided training and continued occupational healthcare for up to six months after the termination of employment. These obligations affect employers with at least 30 employees in Finland.
  • The employees’ pension insurance contribution will be gradually increased to 1.2% by 2020. The employers’ contribution will be lowered accordingly.

Family leave costs to be shared more equally

As of 1 April 2017 the costs incurred from a female employee’s family leave will be compensated by a lump-sum payment of EUR 2.500 to the employer.

Practically significant changes to the Employment Contracts Act

The following changes to the Employment Contracts Act entered into force on 1 January 2017:

  • The length of the probation period can be up to six months (previously four months). If an employee takes sick leave or is on family leave during the probationary period, the initial period can be extended, provided it is done before the initially agreed probationary period expires.
  • The employer’s rehiring obligation (which is related to collective redundancies) is generally shortened from nine months to four months following the expiry of the employment relationship. However, the period is six months if the employee has been employed by the same employer for at least 12 years.
  • An employer will no longer need a specific reason justifying the use of a fixed-term contract if the individual has been unemployed for a long period of time.


Changes to the job alternation leave regime

In 2016, the prerequisite for the right to job alteration leave was increased to service of 20 years, the maximum length of job alternation leave wasshortened to 180 days and the job alternation allowance standardized to 70 % of unemployment allowance.

Restrictions on accrual of holiday and postponement of holiday when sick

As of April 2016 employees can accrue annual leave for up to a maximum period of six months during maternity, paternity, or parental leave. Previously, employees earned annual leave during the entire family leave period. In addition, employees’ right to postpone their holidays to a later date if they are incapacitated during the holiday has been tightened.

The Competitiveness Pact

The Government and Trade Unions have reached an understanding on the so-called Competitiveness Pact to enhance competitiveness of the Finnish labour market. The Pact introduces new regulatory elements to Finnish working life. New laws will be implemented in 2017.

New obligations on employers using posted workers

The Posted Workers Act was revised. The new Act imposes several changes, including the employer’s obligation to notify the authorities in advance of the use of a posted workforce. This obligation enters into force during 2017.

With thanks to Suvi Knaapila of Dittmar & Indrenius for her invaluable collaboration on this update.