How is an employment contract terminated on personal basis

How is an employment contract terminated on personal basis

Options for terminating employment contract | Termination | Trial period annulment | Treated as annulled

In this article is reviewed how an employment contract is terminated on personal basis. For the sake of clarity, it is pointed out that it is possible to terminate an employment contract either by termination or annulment. Both of these methods are collectively referred to as terminating an employment contract.

When terminating an employment contract, the employment relationship is terminated after the notice period. However, when the employment contract is annulled, the employment relationship ends immediately, i.e. right away. Naturally, the employment relationship can also be terminated based on a trial period annulment or at the end of the agreed fixed term.

In general, termination of the employment contract can be done on personal grounds or due to financial or production-related reasons. When terminating an employment relationship, it is always required that the other party has acted in a sufficiently reprehensible way towards the other party or in negligence. Furthermore, the employment relationship can also be treated as annulled, which ends the employment relationship in question.

Termination of the employment contract on personal grounds is applicable also when the reason for dismissal is the neglect of the work obligations. Such neglect can also be underperformance. However, it should be noted that the employee’s termination protection is a mandatory right as enacted in the 13:6 § and 13:7§ of the employment contracts act (55/2001 as amended) (“ECA”).

Grounds for termination based on personal reasons | Employment contract

In the ECA are enacted grounds for dismissal based on personal reasons as well as a list of examples is provided. The employer may terminate the employment contract that is valid for the time being only for a valid and compelling reason, as enacted in the ECA 7:1 §. Furthermore, as enacted in the section, the prerequisite for all types of dismissals must be the validity and substantiality of the reason. It should be noted that any valid reason may not be sufficient ground for dismissal.

Regarding personal grounds | How to terminate an employment contract on personal grounds

The criteria related to the personal grounds are defined in the ECA 7:2 § as following:

“Serious breach or neglect of obligations arising from the employment contract or the law and having essential impact on the employment relationship as well as such essential changes in the conditions necessary for working related to the employee’s person as render the employee no more able to cope with his or her work duties can be considered a proper and weighty reason for termination arising from the employee or related to the employee’s person. The employer’s and the employee’s overall circumstances must be taken into account when assessing the proper and weighty nature of the reason.

At least the following cannot be regarded as proper and weighty reasons:

1) illness, disability or accident affecting the employee, unless working capacity is substantially reduced thereby for such a long term as to render it unreasonable to require that the employer continues the contractual relationship;

2) participation of the employee in industrial action arranged by an employee organisation or in accordance with the Collective Agreements Act;

3) the employee’s political, religious or other opinions or participation in social activity or associations;

4) resort to means of legal protection available to employees.

Employees who have neglected their duties arising from the employment relationship or committed a breach thereof shall not be given notice, however, before they have been warned and given a chance to amend their conduct.

Having heard the employee in the manner referred to in chapter 9, section 2, the employer shall, before giving notice, find out whether it is possible to avoid giving notice by placing the employee in other work.

What is provided in subsections 3 and 4 need not be observed if the reason for giving notice is such a severe breach related to the employment relationship as to render it unreasonable to require that the employer continues the contractual relationship.”

The first subsection above enacts grounds for termination in general. The section stipulates the circumstances where the employee’s behaviour can be considered as a valid and weighty reason for dismissal due to the employee or related to his person. The second paragraph enacts situations that cannot at least be considered proper and weighty reasons. After this paragraph is enacted how to give a warning and finally for the obligation to place the employee in other work.

When are the employer’s reasons for dismissal sufficient | How is an employment contract terminated on personal basis

The aforementioned section 7:2 § of the ECA, does not contain a list of reasons which would describe the reasons which would be sufficient grounds for termination. Interpretation for such grounds can be found from a document drafted together by  Employer and Employee Unions.  The termination protection agreement of TT (EK) and SAK (2001) solely lists reasons for which termination of the employment relationship is permitted. For this reason, the adequacy of the grounds for dismissal must be considered separately and individually in each case.

It is obvious that many practical challenges and problems are encountered when interpretating adequacy of the grounds for termination based on personal grounds. For example, such problems are encountered when analysing and deciding in case of a longer illnesses, whether due to the illness, the employee’s ability to work has been substantially and sufficiently long-term impaired. Furthermore, in some cases, the employee’s publicly expressed opinions can also significantly complicate the performance of the employees’ work tasks and thus enable the employment relationship to be terminated.

When the employee’s dismissal has been carried out using a general clause, then the overall assessment of the situation is reviewed based on overall review of the matter. In such case, various aspects are reconciled. The analysis takes into account, on the one hand, the activity that violates the contractual obligations and, on the other hand, the evaluation of the factors that led to it, i.e. the circumstances and effects of the event. In the end, it’s also about valuing of various acts committed. In decision-making situations, one has to regularly evaluate the principles of protection of employment and protection of the weaker party, as well as the reasonable protection of the employer’s interests in the case.

Other conditions for terminating the employment relationship when citing personal reasons

An employee may not be dismissed until he has been given the opportunity to correct the situation with a warning, when the employee has neglected to fulfil the obligations arising from the employment relationship or has violated them. The employer must also consult the employee in accordance with the ECA and find out whether the employee’s dismissal could be avoided by placing the employee in another position.

However, in case the reason for the termination is based on a serious violation related to the employment relationship and therefore the employer cannot reasonably be expected to continue the employment relationship, the conditions stated above do not have to be followed, as enacted in the 7:2.5 §of the ECA (warning and replacement).

The purpose of issuing a warning is to inform the employee that his behaviour and actions have been reprehensible and are not acceptable. By giving a warning in situations enacted by the ECA as well as replacement in another job, are normal obligations of the employer. Violation of these obligations of the employer results in illegal termination of the employment contract, and the employer can be ordered to pay compensation for unjustified termination of the employment contract, as enacted in the 12:2 § of the ECA. The compensation for employee in case of unjustified termination is in minimum three months or maximum of 24 months’ salary (note: an increased amount of compensation applies to shop stewards and elected representatives).

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** The article is intended for information and is not intended as a legal advice.