Multiple employment law changes take effect in Finland from 1 January 2017

On 1 January 2017 numerous changes to employment legislation took effect. Most of the amendments stem from the government programme or the Competitiveness Pact of the Cen-tral Organizations of Labour Markets. We outline below the most notable changes.

Employment Contracts Act amended

The amendments to the Employment Contracts Act (55/2001) were set out in detail in our October briefing. In summary:

  • it is now possible to employ a long-term unemployed person for a fixed term without the condition of a justified reason being satisfied
  • trial periods may now last for six months instead of the former four months
  • the duration of the obligation to re-employ has been reduced to four months, or six months for employees with at least 12 years’ continuous service

Extended change security and occupational health care for dismissed employees

Other changes stemming from the Competitiveness Pact are the extension of redundancy change security (in the form of re-employment coaching or training) and the obligation to provide occupational health care for dismissed employees. The new rules apply if the follow-ing conditions are satisfied: an employee has been dismissed on financial or production-related grounds; the employer regularly employs at least 30 employees; and the employee has been employed by the employer consecutively for at least five years before the end of the em-ployment relationship.

The extended redundancy change security applies only where the employer’s proposal for commencement of co-operation negotiations has been issued and the notice was given on or after 1 January 2017. In those circumstances an employer must provide an employee who has been dismissed on financial or production-related grounds the opportunity to participate in coaching or training that promotes employment. The value of the coaching or training must correspond to whichever is the highest of the following measures: the employee’s pay for one month or the average monthly pay of the employees working in the same office as the dis-missed employee.

An employer who give notice to employees on 1 January 2017 must also arrange occupational health care for dismissed employees for six months after the employee’s work duties have ended. The extent of occupational health care must correspond to that provided during the employment relationship.

Pension reform

Pension reforms also took effect on 1 January 2017. Consequently, the retirement age will be gradually raised from 63 to 65 years by 2025 and thereafter the retirement age will be linked to life expectancy. New pension types have also been introduced: the years-of-service pen-sion and the partial old-age pension. In addition, the grounds for determining pensions have been unified and pension now begins to accrue at the age of 17.

Scope of the Act on Co-operation within Undertakings widened

As of 1 January 2017 the Act on Co-operation within Undertakings (334/2007) now applies in addition to branches of foreign companies if the branch regularly employs at least 20 employees.