This article clarifies how to annul an employment contract during a trial period. For the sake of clarity, it is to be 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. Correspondingly, 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 and production 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. The employment relationship can also be treated as annulled, which ends the employment relationship in question.
The trial period is usually agreed in the employment contract. The trial period takes place at the beginning of the employment relationship. During the trial period, the parties will review e.g. the employee’s suitability for work tasks as well as competence. The trial period is a special institution within employment law.
When the employment contract is terminated during the trial period, the employment relationship ends immediately. The trial period can be used in both employment contract types: i) open ended and ii) in fixed-term employment contracts.
Section 1:4 of the Employment Contracts Act (55/2001, as amended) (“TSL”) enacts the trial period as following:
“The employer and the employee may agree on a trial period of a maximum of six months starting from the beginning of the work. If, during the trial period, the employee has been absent due to incapacity for work or family leave, the employer is entitled to extend the trial period by one month for every 30 calendar days included in the periods of incapacity for work or family leave. The employer shall notify the employee of the trial period extension before the end of the trial period.
In a fixed-term employment relationship, the trial period together with any extensions to it may comprise no more than half of the duration of the employment contract, and in any event may not exceed six months. If a person is hired by the user enterprise referred to in chapter 1, section 7, subsection 3 after the temporary agency work ends to perform the same or similar duties, the time, which the employee was assigned for use by the user enterprise, will be deducted from the maximum trial period, in accordance with subsection 1 of this section. Similarly, time spent by the employee performing the same or similar duties for the employer in a work trial arranged for the purpose of assessing suitability as referred to in chapter 4, section 5, subsection 1, paragraph 3 of the Act on Public Business and Employment Service (916/2012), prior to being hired for the employment relationship, shall be deducted from the maximum trial period.
If a collective agreement applicable to the employer contains a provision on a trial period, the employer must inform the employee of the application of this provision at the time the contract is concluded.
During the trial period, the employment contract may be cancelled by either party. The employment contract may not, however, be cancelled on discriminatory or otherwise inappropriate grounds with regard to the purpose of the trial period. The employer may not cancel an employment contract when it has neglected the obligation to inform laid down in subsection 3 of this section.”
How to annul employment contract during the trial period is clarified in herein below in more detail.
Legislation does not set substantive conditions for using the trial period, as is the case when hiring an agency employee. Instead, the time period of the trial period is regulated by law. The maximum duration of the trial period being six months.
Due to the nature of the trial period as a special institution in employment law, the usual employment protection has been waived in connection with it, but in other respects the employee’s legal protection has nevertheless been tried to be the same as in other situations of termination of the employment relationship.
For this reason, the obligation to report, the prohibition of using discriminatory grounds and the termination procedure, etc., correspond to the requirements of other termination situations, and are applicable also in connection with the termination during the trial period. It should be noted that, as stipulated in Section 1:4 and Section 2:2 of the TSL, the Equality Act (1325/2014 with amendments) Section 12 enacts for the prohibition of discrimination in a way that it is also applicable to recruiting. Therefore, the trial period term may not be included in the employment contract on discriminatory grounds. It should be noted that the employee is also bound by the trial period clause enacted in the TSL to not use discriminatory or otherwise inappropriate grounds for applying the trial period annulment (KKO 1993:42 – better compensation from another job).
There is also a termination protection agreement agreed between the employment market organizations. According to the guidelines for the application of the termination protection agreement (2001) between TT (EK) and SAK, the procedural provisions of Section 9:1-2 and Section 9:4-5 of the TSL must be applied to employment contracts terminated during the trial period.
As enacted in TSL § 1:4.4, during the trial period, the employment contract can be terminated by both parties. However, the employment contract may not be terminated on grounds that are discriminatory or otherwise irrelevant to the purpose of the trial period. If the employer has neglected to notify about the existence of the trial period when concluding the employment contract, then the employer may not terminate the employment contract based on the trial period clause.
It should be noted that the termination of an employment contract may not be completed before the beginning of the employment relationship. As in such case, it has not been possible to test the employee’s suitability for work. For this reason, the employment contract terminated before the start of the employment relationship is evaluated in accordance with the normal termination regulations.
Usually, the employment relationship is terminated during the trial period for reasons related to work performance. In this case, objectively evaluating the work result should be such that they are not satisfactory to the employer. Such a reason can be, for example, not reaching the workplace’s targets. Deficiency can also be revealed by an external party, i.e. through a customer complaint. Unauthorized tardiness and unauthorized absences can also be acceptable grounds for terminating the employment contract during the trial period. Unsuitability or inability to adapt to work has also been sufficient grounds for dismissal.
The trial period annulment must be completed within the trial period. For example, if the agreed trial period is 6 months and if the employment started on 1.1. then the employment contract must be terminated by 30.6 at the latest. The rules of the chapter 9 of the TSL also apply to trial period annulment. For this reason, the right to be heard about the reasons for termination should be reserved for the employee. The employee has the right to use an advisor during the hearing.
In addition, upon the employee’s request, the employer must immediately notify in writing the date of termination of the employment contract and the reasons for termination, based on which the employment contract was terminated. Referring to the above, according to the termination protection agreement, the employer must inform the employee in writing of the known reasons for the termination during the trial period at his request.
When terminating the employment contract during the trial period, the employer can state the trial period as the reason for terminating the employment relationship. Naturally, in connection with the employee’s consultation, the reasons for the termination are discussed. Failure to provide reasons for the termination is a breach of a procedural obligation and does not, in principle, cause the employer to be penalized for illegal termination of the employment relationship. However, the employee may have a justified reason to file a lawsuit, when the grounds for termination have not been made known through other means.
Compensation for illegal trial period rescind is enacted in § 12:2 of the TSL. However, the three-month minimum amount does not apply to the compensation amount. Factors to be taken into account when assessing the amount of compensation are, depending on the reason for rescind the employment contract, e.g. loss of earnings as well as duration of unemployment, duration of employment, employee’s age and the possibility of getting a new job, the reason given by the employee for the decision, and other matters comparable to these. For this reason, the compensation to be paid basically leads to a low compensation obligation.
In case the reason for the rescind during the trial period has not been stated or the reason has been stated incorrectly, this can be taken into account in possible litigation as a circumstance that increases the compensation. Furthermore, this fact can be taken into account when deciding on the reimbursement of legal costs, so that the costs of unnecessary legal proceedings must be compensated for the employee.
Correspondingly, when an employee has intentionally or negligently violated his obligations arising from the employment contract or the law, the employee must compensate the employer for the damage he caused in his work in accordance with the criteria laid down in the Damages Compensation Act.
We hope that how to annul employment contract during a trial period is sufficiently clarified in this post.
* * *
Contact our specialist for further information and to receive practical legal solution applicable to your specific matter.
Oscari Seppälä has worked on demanding international and domestic business law assignments throughout his career. He has worked both as a corporate lawyer, as an attorney in a high-profile attorney office and as an entrepreneurial partner in a business law office. Seppälä has extensive practical experience regarding providing business savvy legal advice and representing domestic and international companies in legal proceedings and litigations.
He started his career at DSV, one of the world’s largest logistics companies, later he worked as an attorney at the attorney office Borenius before co-founding his own business law office. Currently, Oscari Seppälä works as a Specialist Partner, entrepreneur, in the LKOS Law Office he co-founded.
LKOS Law Office regularly assists its clients in Mergers and Acquisitions, Corporate law and Transport law matters. We are a reliable and internationally awarded business law office and one of the strongest financially in our industry. You can get more information about this topic and our services by contacting our experts by email or by phone (+358 40 672 4285).
Get in touch, we’ll be happy to tell you more.
** The article is intended for information and is not intended as a legal advice.