An amendment to the Finnish Employment Contract Act (55/2001, hereinafter the "Act") came into force on 1 January 2011. The new amendment specifies the conditions under which an employment relationship may be concluded for a fixed term.

Prior to the amendment, the Act stipulated that employer-initiated fixed-term employment contracts are legally allowed provided that there is a justified reason for having a fixed-term employment contract. Where there is no 'justified reason', a fixed-term contract shall automatically be considered to be valid indefinitely.

In addition to the requirement for a justified reason, the newly amended section 3 of chapter 1 of the Act has now introduced a concept of permanent need for labour. According to the amendment, consecutive fixed-term contracts shall not be legally allowed when "the number or the combined term of fixed-term contracts or the entirety created by them indicates the employer's need for labour to be permanent."

According to the Finnish government, the amendment was issued for the purpose of clarifying the existing rule on consecutive fixed-term contracts. However, it does in practice restrict employers' rights for concluding fixed-term agreements as the requirement of a permanent need for labour has been introduced to complement the requirement of a justified reason.