Green Transition Strategies for SMEs | ESG & Sustainability in Practice | LKOS Law Office

Green Transition Strategies for SMEs: Transforming Business for a Better Tomorrow

Sustainability has become a popular topic, which is a good thing. However, I have come across ideas and comments that sustainability primarily concerns large corporations due to legislation as well as perceived high costs associated with it. In my view, this perception is outdated. Sustainability is equally relevant for SMEs and their competitive advantage. To lighten the overwhelming feeling caused by the myriad of legal regulations, standards, recommendations, and initiatives, there are a few practical steps that every company, regardless of size, can and should take.

If you want to turn ESG and sustainability into a strategic advantage for your company, you can also explore our ESG & Sustainability services.

Consumer demand

In an era where social media amplifies consumer voices, businesses are increasingly held accountable for their actions. Particularly among the younger generations, there is a growing emphasis on sustainability. Consumers are more informed and vocal about their preferences, often demanding companies to adopt sustainable practices. This shift in consumer behaviour makes it crucial for businesses to adapt in order to maintain their market relevance and customer base.

Beyond financial motives, there’s a growing recognition of corporate responsibility towards society and the environment. Ethical business practices resonate with consumers, employees, and stakeholders.

Regulatory compliance

The European Union, as an example, has been at the forefront of drafting and enforcing regulations that mandate businesses to be more sustainable and planet-friendly. The EU’s Circular Economy Action Plan is a notable initiative. It aims to transition from a linear to a circular economy, focusing on product lifecycle, design, circular processes, sustainable consumption, and waste prevention.

In addition, on 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) entered into force. This directive modernises and strengthens the rules concerning the social and environmental information that companies have to report. A broader set of large companies, as well as listed SMEs, will now be required to report on sustainability.

Cost savings

Sustainability often leads to rethinking and improving business processes, particularly in reducing waste, which directly translates to cost savings. Additionally, focusing on employee health and safety can reduce absenteeism and increase productivity, further cutting costs.

Large investors, including massive pension funds, are increasingly focusing on sustainability. Sustainable businesses often enjoy better long-term financial performance and may have more favourable access to financing. In addition, the shift towards sustainable finance is important to keep in mind.

Brand reputation and trust

Sustainable practices enhance a company’s reputation and build trust with consumers, investors, and partners. It reflects a commitment to ethical standards and social responsibility.

A sustainable supply chain is not only cost-effective but also essential for maintaining the integrity and reputation of the business. It ensures the business model is resilient and adaptable to future challenges.

Risk management

The adage “No planet – no business” encapsulates the existential risk of ignoring sustainability. Businesses that neglect environmental impacts may face substantial future risks, including resource scarcity and regulatory penalties.

Sustainable practices are often aligned with long-term business viability. They help ensure that businesses can thrive in a changing world, where resource constraints and environmental considerations are increasingly paramount.

Competitive advantage

Integrating sustainability into the core business strategy can be a source of innovation and competitive advantage. It encourages rethinking products, services, and processes, leading to new business opportunities.

Sustainability presents new market opportunities. By embracing sustainable practices, businesses can tap into new consumer segments and create innovative products and services.

Explore our ESG & Sustainability services

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Our Partner Speaking at Technology 2025 | Turning Regulation into Opportunity

Our Partner Speaking at Technology 2025 | Turning Regulation into Opportunity

Technology 2025 – The Leading Nordic Technology and Industry Event

LKOS Law Office Partner Oscari Seppälä has been invited to speak at Technology 2025, the leading Nordic technology and industry event. His presentation explores how increasing regulation can be turned into an opportunity for technology companies.

LKOS Law Office Partner to Speak on the Opportunities in Regulation

Regulation is increasing rapidly – but could it also be an opportunity for technology companies? LKOS Law Office Partner [Name] will address this question as a speaker at Technology 2025, held at Helsinki Expo and Convention Centre on 6 November 2025, 13:20–13:50.

Regulation as a Competitive Advantage

His presentation, “Increasing Regulation and Market Expectations – Can They Also Be an Opportunity for Technology Companies?”, explores how compliance can drive competitiveness and sustainable growth rather than merely impose obligations.

Technology 2025 is the leading Nordic technology and industry event, bringing together experts, companies, and decision-makers for three days (4–6 November 2025). The event showcases the latest innovations in smart and sustainable industry – from automation and digitalisation to quantum technology.

Join the Discussion at Technology 2025

📅 Mark your calendar and join the discussion on how regulation can be transformed into an advantage.

👉 Read more about the event: https://lnkd.in/dJt_QCb8

Public Consultation: Regulatory Measures to Improve the Operating Conditions in the Transport Sector

Public Consultation: Regulatory Measures to Improve the Transport Sector

The Ministry of Transport and Communications of Finland invites comments on a draft government proposal to amend the Act on Transport Services and several related acts.
The aim of the proposal is to improve the operating conditions of the transport sector and to promote the use of low-emission, alternatively powered vehicles.
Comments can be submitted until 19 November 2025.

The draft proposal refines the EU cabotage rules to make their implementation and supervision clearer and introduces national measures to facilitate the transition to cleaner transport technologies. The Ministry has previously, in spring 2025, assessed various regulatory measures that could strengthen the competitiveness and sustainability of the Finnish transport sector — this consultation now presents the concrete steps.

Key Proposed Changes

1) Clarification of Cabotage Rules (Section 23, Act on Transport Services)

• For freight transport, one cabotage journey may include:
1. one loading and one unloading location;
2. multiple loading points and one unloading point (final consignee as per waybill); or
3. one loading point and multiple unloading points (same sender as per waybill).
• For bus transport, cabotage would be allowed for up to seven consecutive days within a 30-day period.

Impact:
These clarifications harmonize Finnish law with other Nordic countries, ensuring consistent business practices and more effective roadside checks. The reform will improve legal certainty and operational predictability for companies and transport service purchasers

2) Administrative Penalties for Violations

• €5,000 for a cabotage violation.
• €3,000 for failing to obtain a required driver attestation.
  Penalties may be imposed on both natural and legal persons, with enforcement handled by the Legal Register Centre.

Impact:
A swift and proportionate penalty system will enhance compliance, curb undeclared work and unfair competition, and reduce the burden on criminal courts. Clear rules also strengthen oversight and equality between domestic and foreign operators.

3) Driving Rights for Vehicles Using Alternative Fuels

• Holders of a B licence (car licence valid ≥ 2 years) could drive alternatively powered vehicles up to 4,250 kg total weight.
• Holders of a BE licence (valid ≥ 2 years) could drive combinations where the alternatively powered towing vehicle weighs up to 4,250 kg.
• Alternative fuels include electricity, hydrogen, CNG/LNG (including biomethane), LPG, and mechanical energy from vehicle systems.

Impact:
The change encourages companies to adopt low-emission vehicles earlier, improves driver availability, and supports Finland’s climate targets. Safety impacts are minimal, as the vehicles covered are subject to modern EU safety standards.

4) Driving Test Examiners – Easier Qualification and Better Availability

• The duty to conduct oral theory tests would be removed from the examiner’s role.
• Qualification requirements would be simplified: a valid driving instructor’s licence and a relevant training module (“Acting as a Driving Test Examiner”) would suffice.

Impact:
The reform would free up examiner capacity equivalent to approximately 12,000 additional driving tests per year, improving availability during peak seasons and ensuring smoother service nationwide.

Why It Matters for Businesses

• Clarity and predictability: Clear cabotage rules reduce interpretation disputes and inspection delays.
• Fair competition: Administrative penalties ensure a level playing field and reduce undeclared labour.
• Sustainability: Broader B/BE licence scope accelerates the shift to electric and low-emission fleets.
• Labour availability: More flexible driver qualification supports logistics continuity and national preparedness.

Invitation to Comment

The Ministry welcomes input from companies, industry associations, authorities, and other stakeholders. Feedback will help ensure that the new regulation is clear, proportionate, and effective in practice.
Deadline for comments: 19 November 2025.

How the New EU-US Tariff Deal Impacts Business

How the New EU-US Tariff Deal Impacts Business

Summary

On 27 July 2025, the EU and the United States announced a preliminary agreement that brings long-awaited reliefand opportunityto transatlantic trade. The deal reduces steep U.S. tariffs on EU goods, expands EU market access for selected U.S. exports, and paves the way for increased investment and regulatory cooperation.

But for businesses, this isn’t just political news it’s a call to action.

What Businesses Must Know

U.S. Tariffs on EU Goods Drop to 15%
Most EU-manufactured goods, including cars and car parts, will now face a single capped tariff of 15% in the U.S., reduced from the initially proposed 30%. This offers immediate cost savings and pricing predictability.

Steel and Aluminum Still Face High Tariffs
EU exports of steel and aluminum remain subject to a 50% tariff, though new tariff-rate quotas (TRQs) aim to protect historical trade volumes.

New Opportunities in Energy and Tech
The EU has committed to large-scale purchases of U.S. energy products and AI chips, signalling major investment flows. Finnish companies in related sectors should evaluate export and partnership opportunities.

Improved Access for U.S. Goods to the EU
The EU will reduce tariffs for select U.S. agricultural and industrial goods under new TRQs, while maintaining protection for sensitive sectors such as beef and poultry.

Reduced Non-Tariff Barriers & Regulatory Cooperation
Enhanced alignment of standards and conformity assessments will facilitate trade in sectors such as automotive, pharmaceuticals, and tech.

How This Affects Finnish Businesses

Exporters should reassess U.S. pricing models, trade agreements, and supply chains in light of reduced tariffs and regulatory clarity.

Investors may benefit from a favourable investment climate in the U.S., with EU companies planning over €550 billion in fresh investment by 2029.

Importers and manufacturers in Finland sourcing U.S. goods from tech to raw materials should re-evaluate duties and ensure compliance with TRQs.

Risk Management Alert: The agreement is political, not yet legally binding. Companies must stay alert as negotiations and implementation evolve. 

What Is Recommended To Do Now

1. Review your trade contracts and pricing structures
   
2. Reassess supply chain strategies with U.S. partners
   
3. Explore new growth avenues in transatlantic markets
   
4. Ensure ongoing compliance with evolving EU and U.S. regulations
   

Need help navigating these changes?

Our legal team supports businesses in international trade, cross-border contracts, and sanctions compliance. Contact us for further information.

Partner Oscari Seppälä Interviewed by Dow Jones News on Finland’s Sanctions Enforcement

Partner Oscari Seppälä Interviewed by Dow Jones News on Finland’s Sanctions Enforcement

We are proud to share that Oscari Seppälä, Partner at LKOS Law Office, was interviewed by Dow Jones Risk Journal for a feature article discussing Finland’s role as one of the EU’s most active enforcers of sanctions following Russia’s invasion of Ukraine.

The article, titled “Finland Probes Sanctioned Exports to Russia,” highlights Finland’s proactive legal and institutional approach in monitoring and prosecuting export-related sanctions violations.

Legal Expertise Recognised Internationally

In the article, Oscari offers expert commentary on how Finnish criminal law enables personal and corporate liability in sanctions cases, even when complex company structures are used to conceal unlawful exports.

“Finnish criminal law allows for individual criminal liability even when a corporate structure is used. If a person directs or controls a company in a manner that enables or conceals the offense, they may be held personally liable regardless of corporate separation,” Oscari explains.

He also outlines recent amendments to Finland’s Criminal Code introducing corporate criminal liability for sanctions violations, with companies facing fines of up to 5% of turnover or €40 million.

Finland’s Leading Role in Sanctions Enforcement

The article discusses how Finland’s geographic location, longstanding trade ties with Russia, and automated customs control systems have made it a central player in EU sanctions enforcement. Authorities have launched nearly 1,000 criminal investigations into sanctions breaches, many of which involve attempts to circumvent EU sanctions via Central Asia.

This includes suspicious export patterns such as 257 EU-based companies with no prior Central Asian trade history using Finland for clearance triggering red flags for enforcement authorities.

Why It Matters to Our Clients

This feature highlights not only Finland’s increasing scrutiny of international trade flows, but also LKOS Law Office’s position as a trusted legal advisor in complex sanctions, export control, and cross-border trade matters. Our deep understanding of EU and Finnish regulation combined with practical experience means we are well-placed to support companies facing increasing compliance demands.

Whether you require legal risk assessments, export licensing advice, or representation in enforcement matters, our team is here to help you stay compliant and protected.

Learn More

🔗 The full article is available to Risk Journal subscribers here: LINK TO THE ARTICLE
📞 Contact us today to discuss how we can help your business navigate sanctions and export control regulations.

Sanctions Enforcement and Compliance in Finland | What Businesses Need to Know

Finland’s Strong Position on Sanctions Enforcement

Since the outbreak of the war in Ukraine, Finland has emerged as one of the EU’s most active enforcers of sanctions legislation. Authorities have launched nearly a thousand criminal investigations related to sanctions violations, with close to a hundred convictions—placing Finland among the leading EU countries in terms of enforcement activity.

This assertiveness is not due to more extensive legal powers than elsewhere in the EU. Instead, it reflects Finland’s unique geographic and institutional context: as Russia’s direct neighbour and a long-standing trade partner, Finland has developed extensive experience in managing cross-border trade risks, including customs fraud, tax evasion, and now, sanctions circumvention.

Customs Capabilities and Red Flags in Trade with Central Asia

One enforcement priority is the increasing use of Central Asian countries as transshipment points. Finnish Customs has publicly warned that companies should not be naïve about the true end-use of goods exported to countries such as Kazakhstan and Kyrgyzstan. For example, in early 2023, 257 EU-registered companies, none with a previous export history to Central Asia, used Finland for export clearances, prompting investigations.

Authorities rely on comprehensive evidence: customs records, transport documentation, falsified or manipulated paperwork, and cooperation with foreign customs. International intelligence and logistics data help trace onward movements of goods, especially when rerouted to Russia.

Legal Consequences for Individuals and Companies

Under Finnish law, aggravated sanctions violations (FI: törkeä pakoterikos) carry penalties ranging from four months to five years of imprisonment. Finnish legislation permits individual criminal liability even when a company structure is used. If a person directs or controls a company in a way that facilitates or conceals the offense, they may be held personally accountable regardless of corporate separation.

In 2025, Finland amended its Criminal Code to introduce corporate liability for sanctions violations and other trade-related offenses. Companies can now face fines of up to 5% of annual turnover, with a minimum of €850,000 and a maximum of €40 million.

How LKOS Law Office Supports Your Business

At LKOS Law Office, we help companies navigate the complex and rapidly evolving field of EU sanctions and export control compliance. Our services include:

• Risk assessments and compliance reviews

• Advice on dual-use goods and licensing obligations

• Drafting internal policies and due diligence procedures

• Representation in enforcement or criminal proceedings

• Strategic consultation on trade structuring and supply chain integrity

We understand that sanctions compliance is not just a legal issue—it’s a strategic business concern. Our practical, business-minded approach ensures that your company meets legal obligations without compromising operational efficiency.

Contact Our Sanctions & Trade Law Experts

If your business is engaged in cross-border trade, manufacturing, or logistics, you face potential exposure to sanctions risks. Our team is here to help you stay compliant, mitigate liability, and act decisively if issues arise.

📍 Contact LKOS Law Office to speak with one of our sanctions law experts.

Road Transport Cabotage Reform and Licensing Changes – 2026 Legislative Update

New regulations for road cabotage and transport sector in Finland – coming into force in 2026

In spring 2025, the Finnish Ministry of Transport and Communications launched a legislative project aiming to clarify cabotage transport regulations and improve the operating conditions of the transport sector. These changes align with the current government's goals to reduce unnecessary regulation and support entrepreneurship.

Key proposed changes

1. Clearer cabotage rules: The legislation aims to increase transparency for both businesses and enforcement authorities.
2. Penalty reform: Fines for unauthorised transport operations may be replaced by administrative fees.
3. Driving license reform: A category B driving license could permit driving up to 4,250 kg vehicles powered by alternative fuels, if held for at least two years.
4. Promotion of cleaner vehicles: The reform supports the use of low-emission vehicles, especially light trucks, in goods transport.

Why is the reform important?

As 90% of goods and people move by road in Finland, improving the legal framework for domestic road transport benefits the entire economy. The reform aims to enhance safety and reduce regulatory uncertainty for operators.

What happens next?

The legislative work continues with stakeholder consultations and a public hearing. The changes are expected to be finalised by June 2026, depending on the timeline for the new EU driving license directive.

Contact your expert at LKOS Law Office

Want to understand how the upcoming legislation may affect your business? Reach out to your legal expert at LKOS Law Office – we help ensure your operations remain compliant and future-proof.

LKOS Law Office Advised Signet Bank AS on Refinancing and Collateral Arrangements

LKOS Law Office advised Signet Bank AS on the Finnish law aspects of its EUR 5 million refinancing loan facility agreement and related collateral.

About Signet Bank
Signet Bank is Latvia’s leading investment bank, founded in 1991 as one of the first banks in independent Latvia. The bank offers sustainable financing and investment solutions to local entrepreneurs and businesses. Since 2021, Signet Bank has raised over EUR 500 million for more than 40 Latvian companies through bond and equity issues. As of 2024, funds under management have reached EUR 1.6 billion. Signet Bank is the leading arranger of corporate bond and equity issues in Latvia and one of the top stockbrokers in the Baltics.

Our Role
When Signet Bank AS sought legal support for a refinancing arrangement involving cross-border elements, they turned to us for guidance on Finnish legislation governing security and guarantees. Our role was to ensure that their approach complied with local requirements—clearly, efficiently, and without unnecessary complication.

Working closely with the client, we helped structure and implement the collateral arrangements needed to support the refinancing. In addition to advising on the legal framework, we coordinated the practical steps essential for smooth execution.

This matter reflects the kind of work we do best: helping clients move forward with confidence, backed by legal advice that is both precise and pragmatic.

Signet Bank’s shareholders include eighteen Latvian and international private investors. The largest shareholders are Signet Acquisition III (whose sole shareholder is U.S. investor Aleksandrs Solovejs), AS “RIT Group” (a Latvian company owned by the Rapoport family), and SIA “Reglink” (founded by banking professional Irīna Pīgozne).

LKOS Law Office at the 14th Baltic Arbitration Days 2025

Partner Liene Krumina from LKOS Law Office will be participating in the 14th Baltic Arbitration Days, taking place on 15–16 June 2025 in Riga and Jurmala.

Baltic Arbitration Days brings together arbitration practitioners, academics, and experts from across the globe to discuss key developments in international commercial and investment arbitration, with a particular focus on Central and Eastern Europe. Over two days of lectures, discussions, and networking, participants will have the opportunity to exchange knowledge and insights on some of the most current topics shaping the arbitration landscape.

We are looking forward to interesting discussions, new ideas, and meeting colleagues from around the world.

See you in Riga and Jurmala!

The LKOS Law Office Team

New Electricity Market Act 2025 – Key Changes and Impacts | LKOS Law Office

The New Electricity Market Act 2025 – Key Changes and Impacts

A major reform is coming to Finland's electricity market with the new Electricity Market Act, scheduled to enter into force in autumn 2025. The purpose of this reform is to increase market flexibility, clarify pricing models, and improve the utilization of the electricity grid. This article presents the key changes and compares them with the current legislation.

Why is the Electricity Market Act being reformed?

The reform is driven by the implementation of EU directives and the Finnish government’s objective to modernize the electricity system. The primary goals are to promote a smart electricity system, enhance customer participation, and bring energy production and consumption geographically closer together.

Key changes compared to the current situation

1. Construction and ownership of networks above 110 kV

The reform will allow distribution network companies to build and own local networks above 110 kV. Previously, this was only permitted for the transmission system operator (Fingrid).

2. Flexible use of connection lines

The new law introduces flexible connection line arrangements for networks of at least 110 kV, encouraging production and consumption to be located closer to each other.

3. Integration of energy storage

The integration of energy storage facilities into connection lines will be allowed on a broader scale, which particularly supports the efficient use of renewable energy production.

4. Power-based connection fees

Fingrid proposes that connection fees be converted to power-based fees. This would allocate costs more accurately to customers who create new investment pressures for the grid.

5. Introduction of combined invoicing

Customers will be offered voluntary combined invoicing, where electricity sales and distribution services are invoiced on a single bill. This simplifies consumer billing and increases cost transparency.

Impacts on businesses and consumers

Impacts on businesses

Companies will especially benefit from power-based pricing, which allows for more accurate cost predictability. Additionally, flexible connection options and the integration of energy storage open up new business opportunities in the energy sector.

Impacts on consumers

Consumers’ positions will significantly improve with combined invoicing and market-based load control. Customers will have better opportunities to influence their electricity costs through their own consumption habits.

Comparison to current legislation

Compared to the current legal framework, the new Act significantly increases flexibility and clarifies cost allocation. In particular, the ability to construct networks above 110 kV and the shift to power-based pricing represent major changes aimed at encouraging more efficient energy use and optimized location choices.

Timeline and next steps

The legislative proposal will proceed to Parliament and committees in spring 2025. The legislative amendments are planned to enter into force between August and September 2025. Companies and other stakeholders should prepare for the changes in good time.

Contact Us to Ensure Your Business is Prepared

If you need further information about the Electricity Market Act reform or its implications for your business, contact our experts. LKOS Law Office’s specialists are ready to help you understand the changes and ensure your company is fully prepared for the upcoming reforms.

Finland’s Co-operation Act reform enters into force July 2025 – key changes for employers

The Finnish Co-operation Act Will Be Revised in July 2025 – What Employers Need to Know

The amendments to Finland’s Co-operation Act will enter into force on 1 July 2025. The reform raises the applicability threshold and streamlines negotiation procedures. The objective is to reduce the administrative burden especially for smaller companies and to allow employers to respond more quickly to changes in their operating environment.

Applicability threshold raised – impact on companies with fewer than 50 employees

Currently, the Co-operation Act applies to employers with at least 20 employees. After the reform, the applicability threshold will increase to 50 employees.

However, companies employing fewer than 50 people will still have certain simplified obligations:

• Ongoing dialogue remains, but its procedures will be significantly simplified.

• Co-operation negotiations are required only when the employer considers measures affecting at least 20 employees within a 90-day period.

• Negotiations are not required for temporary layoffs (maximum 90 days) due to a temporary reduction in work.

• Provisions on business transfers, mergers, and demergers remain unchanged.

Duration of co-operation negotiations will be shortened

The minimum duration of negotiations related to workforce reductions will be halved:

• Current 6 weeks → 3 weeks

• Current 14 days → 7 days

The duration depends on company size and matters under discussion.

New deadline for labor authority notifications

If the employer plans to terminate at least 10 employees for economic or production-related reasons, the employer must:

• Submit a negotiation proposal to the labor authorities.

• Ensure that dismissals cannot take effect until 30 days have passed after submitting the proposal.

Changes to employee representation under preparation

The government has decided to lower the threshold for employee representation from companies with at least 150 employees to those with at least 100 employees. Representation must be arranged either at board or management team level. A tripartite working group is preparing the changes as part of the second phase of the reform.

Stay up to date with changing employment legislation

If you want to ensure that your company’s processes, negotiations, and HR practices comply with the new law — our experts are ready to assist you.

👉 Contact your advisor.

Planned changes to the statute of limitations for working hours and annual leave claims in Finland

Planned Changes to the Statute of Limitations for Claims on Working Hours and Annual Leave in Finland

A legislative reform may be coming to Finnish labor law, as a working group appointed by the Ministry of Justice is reviewing the statute of limitations for claims related to working hours and annual leave. The goal is to clarify the current legislation, where court practice has revealed conflicting interpretations, particularly regarding applicable limitation and filing periods.

Current statute of limitations for working hours and annual leave claims

The statute of limitations and filing deadlines for claims related to working hours and annual leave currently depend on whether the claim is based directly on the law or on a collective agreement.

• The Supreme Court of Finland (KKO) has ruled that the limitation period under the Working Hours Act also applies to claims based on collective agreements. This results in a shorter filing period.

• The Labour Court (TT), on the other hand, has ruled that for claims based on collective agreements, the longer limitation periods of the Employment Contracts Act apply.

Similar uncertainty exists for annual leave claims when the right to leave is based on a collective agreement. These conflicting rulings have created legal uncertainty for both employers and employees.

Ministry of Justice examines need for legislative clarification

Due to these differing interpretations, the Ministry of Justice has appointed a working group to assess whether the rules on limitation and filing periods should be clarified. The group's task is to prepare a possible legislative proposal that would bring greater clarity and predictability to the statute of limitations for working hours and annual leave claims.

Why are these changes significant?

Clear and unambiguous legislation would:

• Reduce uncertainty in the labor market

• Make dispute prevention easier

• Better safeguard the legal rights of both parties

• Decrease the number of court proceedings

As the working group's review progresses, it is important to closely monitor any legislative developments, as they directly affect employer practices and claim filing deadlines.

We will continue to follow the legislative process and keep our clients informed of any updates.

Do you need expert advice on employment law in Finland?

Our specialists are happy to assist you with questions related to working hours claims, annual leave claims, and contract practices.

👉 Contact your advisor.

The EU AI Act: Legal Compliance, Risks & Strategic Guidance for Businesses

Why the EU AI Act Matters for All Companies

The EU Artificial Intelligence Act is the first major regulatory framework for AI—and its impact will extend far beyond the tech sector. Whether you're using AI to screen job candidates, forecast supply chain needs, personalize marketing, or automate logistics, your company is already exposed to AI compliance obligations.

Even if you’re not building AI systems yourself, you are still responsible for their use. That means risk management, legal documentation, and oversight cannot be left to chance.

Business Risks of Non-Compliance with the EU AI Act

Under the EU AI Act, companies face serious consequences if they fail to meet compliance obligations:

• Fines of up to €35 million or 7% of global annual turnover

• Suspension of AI systems

• Legal claims from customers or employees

• Reputational damage due to unethical or opaque AI use

• Loss of trust among partners, suppliers, and investors

Practical Compliance Strategies for Businesses

To reduce risk and ensure readiness, companies should:

• Map current AI use across all departments — from HR to operations

• Review all third-party AI systems for hidden compliance risks

• Update contracts to include AI-related warranties and audit rights

• Train legal, procurement, and IT teams on AI governance and documentation

• Establish internal AI policies defining approval processes and responsibilities

AI Compliance Clauses: A Must-Have in Contracts

To protect your business legally and financially, contracts with AI vendors and service providers should include:

✅ AI Compliance Warranties

• Vendor confirms EU AI Act compliance

• Risk assessments conducted

• Prohibited AI practices excluded

✅ Audit and Transparency Rights

• Right to request documentation

• Regular audits allowed

• Real-time explanation of AI decisions

✅ Liability Provisions

• Vendor assumes liability for non-compliance

• Indemnification clauses for damages and fines

• Immediate contract termination for violations

These clauses are particularly critical in regulated sectors such as finance, health, insurance, and logistics.

What Boards Should Discuss About AI Risk and Governance

The responsibility doesn’t end with legal and compliance teams. Boards must take an active role in AI oversight and risk mitigation. Here are 5 key questions every board should ask:

1. What AI systems are we currently using?

2. Are our vendors contractually bound to comply with the EU AI Act?

3. Do we have an internal process to identify and manage AI risks?

4. Are our teams trained on the risks and obligations of AI use?

5. Do we have a clear policy on responsible and ethical AI?

Board-level leadership is crucial in building long-term trust and resilience in an AI-powered business landscape.

Conclusion: Turning Compliance Into Competitive Advantage

AI can transform your business—but only if used responsibly and compliantly. The EU AI Act isn’t just a legal requirement; it’s an opportunity to embed trust, ethics, and accountability into your operations.

At LKOS Law Office, we help companies navigate AI risks, revise contracts, and develop strategic compliance frameworks tailored to their industries and jurisdictions.

📩 Need support drafting AI-compliant contracts and safeguarding your business?
Our legal team at LKOS Law Office is here to help you navigate the EU AI Act and embed compliance into every agreement.

👉 Contact us today to ensure your contracts protect—not expose—your business.

Contract Strategies for a Volatile World | Tariffs & Trade

🌍 Tariffs & Trade: Contract Strategies for a Volatile World

In today’s volatile global trade landscape, tariffs are more than just taxes—they’re geopolitical tools that can significantly impact international supply chains and cross-border business relationships.

What Are Tariffs?

Tariffs are customs duties imposed on goods that cross international borders. While they can apply to both imports and exports, they are most commonly imposed on imports—as seen in recent U.S. trade policy. Tariffs are often product-specific, but they can also be geographically targeted. Whether used to raise revenue or serve strategic political goals, tariffs directly influence the cost and flow of international trade.

How Do Tariffs Affect Cross-Border Trade?

Tariffs directly affect your cost base, pricing structure, and delivery schedules. If your goods become more expensive to import, the impact will ripple through your supply chain—and potentially your customer base.

But here’s the key: who actually pays the tariff may depend on your contract, not just customs regulations. Without clear terms, the importer may be left with the burden. Well-structured contracts, however, can shift, share, or control that cost exposure.

What Contract Clauses Can Mitigate Tariff Risk?

Here's how to protect your business from tariff-related shocks through thoughtful contract design:

✅ Cost Allocation & Incoterms®

Start with delivery terms. Incoterms® 2020 are internationally recognized trade terms that define who pays what during international delivery—including tariffs and duties.

For example:

• Under EXW (Ex Works) or FCA (Free Carrier), the buyer bears import costs.
• Under DDP (Delivered Duty Paid), the seller takes on those duties.

Be explicit about:

• Who is the importer of record
• Whether prices are inclusive or exclusive of duties
• What happens if new duties are imposed mid-contract

This avoids confusion and ensures that risk is aligned with commercial intent.

✅ Price Adjustment Clauses

Tariff fluctuations can blow up profit margins overnight. A price adjustment clause provides relief by allowing changes to the contract price in response to new duties or increased costs.

These mechanisms can take several forms:

• Automatic adjustments, based on a formula or index
• Renegotiation triggers, activated when tariff changes exceed a certain threshold
• Cost-sharing arrangements, where increases are split between parties

Such clauses offer commercial flexibility, reduce the risk of disputes, and help maintain business continuity when unexpected costs arise.

✅ Force Majeure

Force Majeure provisions excuse non-performance due to unforeseeable, uncontrollable events—but they typically apply when performance becomes impossible, not just more expensive.

Tariffs rarely qualify unless the clause is drafted to include:

• Governmental actions,
• Trade restrictions, or
• Specific references to economic events like sudden tariff surges.

Review your Force Majeure clause to confirm what it covers—and consider broadening the scope to include trade-related disruptions if relevant to your sector.

✅ Hardship Clauses

Unlike Force Majeure, hardship clauses address situations where performance is still possible but has become excessively burdensome or uneconomic due to unforeseen events—like dramatic tariff increases.

A robust hardship clause should:

• Define what constitutes a hardship (e.g. tariff increase >10%)
• Allow for renegotiation of pricing or other key terms
• Include a fallback mechanism if no agreement is reached (e.g. termination or third-party decision)

This clause provides a structured, contract-based path to flexibility without breaching the agreement.

✅ Termination Rights

When all else fails, having a clear termination clause can be a vital safety net.

Consider including:

• A termination for convenience clause (with or without a notice period)
• Termination rights linked to cost thresholds
• Exit triggers tied to supply disruptions or economic shifts

These provisions allow both parties to part ways without unnecessary legal risk if the contract becomes commercially untenable.

✅ Resilience in Future Contracts

To build long-term protection into your supply chain, consider these drafting best practices:

• Be explicit about tariff responsibilities and cost-sharing
• Choose the right Incoterms® rule
• Include dynamic pricing and renegotiation mechanisms
• Broaden your Force Majeure and hardship clauses to reflect real-world trade risks
• Define clear termination pathways in case of prolonged disruption

🔍 With international trade facing increasing uncertainty, businesses must review existing contracts, renegotiate where needed, and build protective clauses into new deals. The goal? Maintain agility and fairness in the face of rising trade complexity.

📌 Need support navigating tariffs, trade risks, or cross-border contract terms?

Our team at LKOS Law Office is here to help. Whether you're reviewing existing agreements, drafting new international trade contracts, or allocating tariff-related costs—we’ll ensure your contracts are resilient and future-proof.

🔍 Questions about tariffs, supply chain clauses, or international trade law?
Contact Oscari Seppälä for expert legal advice tailored to your business needs.

HOW IS AN EMPLOYMENT CONTRACT TERMINATED ON A PERSONAL BASIS

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

Grounds for termination based on personal reasons | Employment contract

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

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

Other conditions for terminating the employment relationship when citing personal reasons

* * *

Contact our employment law expert, who is on this subject field Oscari Seppälä. We will be happy to tell you more about our expertise and how we can successfully solve your challenges related to business law and employment related disputes.

About us | LKOS Law Office | A leading business law service provider in Finland

LKOS Law Office regularly assists its clients in Mergers and Acquisitions, Corporate law, Contracts law and Transport law matters. We are a reliable and internationally awarded business law office and Mergers and Acquisitions in our industry. 

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.

Employment Law in Finland: A Comprehensive Guide

Employment law in Finland

Employment law in Finland is designed to balance the rights and responsibilities of both employers and employees, ensuring fair practices and workplace equality. With a well-regulated legal framework and extensive collective bargaining agreements (CBAs), Finland boasts one of the most structured labor markets globally. This guide provides an in-depth overview of key aspects of Finnish employment law.

Legislation Governing Employment in Finland

The legal foundation of employment relationships in Finland is built upon several statutes. These laws ensure that employees enjoy robust protection while enabling employers to manage their workforce effectively:

• Employment Contracts Act (55/2001, as amended): The cornerstone of employment law, governing employment contract formation, terms, and termination.
• Working Hours Act (872/2019): Regulates standard working hours, overtime, rest periods, and flexible work arrangements.
• Annual Holidays Act (162/2005): Defines employee rights to paid annual leave, public holidays, and holiday pay.
• Codetermination Act (1333/2021): Ensures employee participation in decision-making processes within larger organizations.
• Occupational Safety and Health Act (738/2002): Establishes employer obligations to provide a safe and healthy working environment.
• Equality between Women and Men Act (609/1986): Promotes gender equality and prohibits gender-based workplace discrimination.
• Non-Discrimination Act (1325/2014): Covers broader anti-discrimination measures, including protections based on age, religion, disability, ethnicity, and sexual orientation.

In addition to statutory regulations, collective bargaining agreements (CBAs) play a crucial role in shaping employment conditions. Many industries have generally binding CBAs, meaning they apply even if the employer is not a member of an employer association.

Employers must also consider international choice-of-law rules for cross-border employment relationships. The Rome I Regulation (EC 593/2008) applies to employment contracts signed after December 17, 2009, allowing parties to choose governing law while ensuring minimum protections under Finnish labor law.

Termination of Employment and Redundancy in Finland

Grounds for Termination

Employment contracts can be terminated based on:

• Personal Grounds – Serious misconduct, failure to meet work expectations, or other substantial contract breaches.
• Economic or Production-Related Grounds – Layoffs due to financial difficulties, reorganization, or redundancy. Employers must demonstrate that alternatives, such as retraining or reassignment, were considered before termination.

Notice Periods

Notice periods vary depending on the duration of employment:

• Less than one year: 14 days
• 1–4 years: One month
• 4–8 years: Two months
• 8–12 years: Four months
• Over 12 years: Six months

Employees may also terminate their contracts but must follow the agreed notice period unless otherwise specified.

Consultation Obligations

Under the Codetermination Act, employers with at least 20 employees must engage in consultation procedures before layoffs or major contractual changes. These discussions allow employees to express their views and influence decision-making.

Types of Employment Contracts in Finland

Employment contracts in Finland can take several forms, offering flexibility to both employers and employees. Regardless of the contract type, clear and comprehensive documentation is essential.

Indefinite and Fixed-Term Contracts

• Indefinite Contracts: The default form of employment, offering stability and security.
• Fixed-Term Contracts: Allowed only for legitimate reasons, such as project-based work or temporary substitutions. Without valid justification, fixed-term contracts are considered indefinite.

Written and Oral Contracts

While oral contracts are legally valid, written contracts are highly recommended to prevent disputes. Employers must provide written documentation outlining key employment terms, including:

• Names and domiciles of the employer and employee.
• Job title and description of duties.
• Start date and, for fixed-term contracts, the end date or justification for the term.
• Working hours and remuneration details.
• Holiday entitlements and applicable CBAs.
• Notice periods and trial periods (if any).

This written information must be provided within seven days of employment commencement, with additional details supplied within one month.

Trial Periods

A trial period of up to six months may be agreed upon. During this time, either party may terminate the contract without notice, provided it is not discriminatory or otherwise unlawful.

Working Hours and Annual Leave

Working Hours

The Working Hours Act sets the framework for employees' regular working hours, which are typically:

• Regular Hours: Eight hours per day, 40 hours per week.
• Flexible Arrangements: Agreements may allow varied working hours based on operational needs.

Employees are entitled to rest periods, including at least 11 consecutive hours of daily rest and 35 hours of weekly rest.

Annual Leave

Employees accrue annual leave based on their length of service:

• Less than one year: Two days of leave per month.
• Over one year: 2.5 days of leave per month.

The Annual Holidays Act ensures employees receive their full salary during annual leave and guarantees compensation for unused leave if employment ends.

Employee Salaries and Fringe Benefits

Salaries in Finland are typically agreed upon in the employment contract and must comply with the minimum standards set by CBAs. Employers must pay salaries on time, usually on a monthly basis.

In addition to monetary compensation, many employees receive fringe benefits, such as:

• Meal vouchers or subsidized lunches.
• Company cars or mobile phones.
• Health insurance or wellness allowances.

Performance-based bonuses and commissions are also common, particularly in sales and senior roles.

Workplace Equality and Non-Discrimination

Equality is a fundamental principle of Finnish employment law. Employers must ensure fair treatment and equal opportunities for all employees, regardless of gender, age, ethnicity, religion, disability, or sexual orientation.

Equality Measures

• Gender Equality: The Equality between Women and Men Act mandates equal pay for equal work and promotes gender balance in the workplace.
• Broader Equality: The Non-Discrimination Act prohibits unfair treatment during recruitment, employment, and termination processes.

Violations of these principles can result in legal sanctions, including compensation for affected employees.

Employee Representation and Collective Agreements

Employees in Finland have the right to representation, particularly in larger organizations. The Codetermination Act grants employees the ability to appoint representatives to participate in company decision-making processes.

Collective Bargaining Agreements

CBAs often define sector-specific employment terms and conditions, superseding individual employment contracts when to the employee's benefit. Employers are obligated to adhere to these agreements, which may cover:

• Minimum salaries and bonuses.
• Work hours and overtime compensation.
• Workplace dispute resolution procedures.

Immigration and Employment Permits in Finland

Foreign nationals wishing to work in Finland must comply with immigration and residence requirements:

• EU/EEA Citizens: No work permit needed but must register residence if staying over three months.
• Non-EU Citizens: Require an employee residence permit. Processing times vary, with fast-track options available for urgent cases.
• Nordic Citizens: Enjoy simplified procedures with no work permit requirements.
  

Get Expert Legal Guidance on Employment Law in Finland

Navigating Finnish employment law can be complex, especially when balancing compliance with business needs. Whether you're hiring employees and need an employment agreement, your business is undergoing changes, or you're a foreign company expanding to Finland and want to understand Finnish employment law, our team of experienced legal professionals is here to assist you.

📞 Contact us today for personalized advice and support (+358 40 672 4285).
📍 Töölönkatu 4, 00100, Helsinki, Finland

**This article is for informational purposes only and does not constitute legal advice. 

SANCTIONS: A LEGAL LABYRINTH FOR BUSINESS LAWYERS

Don’t Let Sanctions Uncertainty Put Your Business at Risk

Business lawyers dislike uncertainty. Nevertheless, many business lawyers describe various sanction regimes as vague and inconsistent. In addition, conflicting sanction regimes create headaches for international businesses operating across borders.

Despite the common belief that sanctions are primarily a concern for the financial sector, they have quietly evolved into a significant business risk for companies across all industries. As a result, businesses of all sizes must identify and manage the various applicable sanction regimes to minimize both financial risks and the reputational damage caused by sanctions violations.

Further complicating compliance, sanction lists are frequently updated—sometimes daily—and are issued by different governmental and international bodies. These lists are not always harmonized across different regimes, adding yet another layer of complexity.

Navigating the legal labyrinth of sanctions has become a daily reality for multinational and multi-jurisdictional companies. To support businesses in tackling this challenge, we have compiled a brief guide addressing key questions about sanctions and how to comply with them.

What are sanctions? | Introduction

Sanctions are preventive measures designed to influence the policies or actions of certain high-risk individuals, groups, or states when such policies or actions pose a threat to international peace and security.

Sanctions may target the government of a specific state, as well as individuals or entities affiliated with that government. They may also target specific groups or industries. In addition to these, sanctions can restrict the availability of certain products, services, materials, technologies, or know-how that might otherwise contribute to the targeted activity.

Sanction regimes | Legal labyrinth

Checklist for businesses. Sanctions Compliance Process | Key to mastering multiple regimes

1. Screen Business Partners

2. Assess the Product or Service

• Verify whether the goods, services, or technology being traded are restricted or require special licensing.
• Check for dual-use goods (products with both civilian and military applications).
• Ensure compliance with sector-specific sanctions (e.g., energy, defense, telecommunications).

3. Evaluate the Destination and End-Use

4. Review Financial Transactions and Payment Flows

5. Establish a Compliance Policy and Ongoing Monitoring

• Implement a Sanctions Compliance Policy that sets clear internal procedures.
• Train employees, sales teams, and suppliers on sanction risks and compliance obligations.
• Continuously update sanction lists and screen transactions to remain compliant with changing regulations.

Our recommendations | To-Do list

When drafting and implementing a Trade Compliance Policy, companies should:

✅ Review all applicable sanction regimes relevant to your business activities.
✅ Draft and implement a comprehensive Sanctions Compliance Policy—and update it frequently.
✅ Integrate sanction screening tools into operational processes.
✅ Follow best practice principles, including strong documentation to support compliance decisions.
✅ Adopt a conservative interpretation of sanction rules to reduce legal risk.
✅ Engage with a trusted business law partner for legal guidance and industry-specific know-how.

LKOS Law Office Wins Finland’s Best Transport Law Firm Award 2025

LKOS Law Office Recognized as Transport Law - Law Firm of the Year in Finland 2025 

We are pleased to share that LKOS Law Office has been awarded the "Transport Law – Law Firm of the Year in Finland – 2025" by Global Law Experts (GLE).

This recognition highlights our firm's expertise in transport law, a field where precision, strategic thinking, and industry knowledge are essential. The GLE awards are based on independent research, client feedback, legal rankings, and the impact of law firms in their respective practice areas.

At LKOS Law Office, we are committed to helping businesses navigate the complexities of transport law, ensuring compliance, risk management, and strategic legal solutions that drive success.

🔹 What this means for our clients? This award reinforces our ability to deliver reliable, business-focused legal support in transport and logistics law, whether it’s contract structuring, dispute resolution, or regulatory compliance.

"A big thank you to our clients, partners, and team for their trust and collaboration. We look forward to continuing to serve the transport and logistics sector with dedication and expertise", said Oscari Seppälä.

📍 Read more about our legal services: www.lkoslaw.fi

Sanctions Legislation Changes | Sanctions Crime and Sanctions Violation | Finland

Sanctions Legislation Changes | Finland
New Legislative Amendments – Sanctions Crime and Sanctions Violation

The Finnish government is proposing amendments to the Criminal Code to implement the obligations of the EU Sanctions Crime Directive at the national level. The directive aims to ensure that violations of sanctions are punishable in all member states and that penalty provisions meet the common EU minimum standard.

Proposed New Provisions on Sanctions Crimes

The following new criminal offenses are proposed to be added to the Finnish Criminal Code:

• Aggravated Sanctions Crime
• Sanctions Crime
• Negligent Sanctions Crime
• Sanctions Violation

At the same time, provisions related to regulatory offenses would be amended so that they no longer cover violations of sanctions.

Entry into Force

The proposed legal amendments are intended to take effect on May 20, 2025, which is the latest deadline for implementing the Sanctions Crime Directive.

What Are Regulatory Offenses in Practice?

Regulatory offenses mainly relate to violations of export and import bans. Typical cases include:

• Providing incorrect information in customs declarations
• Exporting sanctioned goods without customs clearance
• Circumventing export bans through third countries
• Hiding products in vehicles
• Transporting money or goods on behalf of others

There have also been cases where individuals have been misled with false information regarding control and ownership structures. Recently, the methods and channels for violating sanctions have become increasingly complex.

Corporate Criminal Liability and Fines

Corporate criminal liability would apply to sanctions crimes, aggravated sanctions crimes, and negligent sanctions crimes. The maximum corporate fine would be set at five percent of the entity’s turnover, with a minimum of €850,000and a maximum of €40 million.

Exception to the Dual Criminality Requirement

The amendments introduce an exception to the dual criminality requirement. This means that a Finnish citizen or a person equivalent to one could be convicted of a sanctions crime even if the act was not criminalized in the country where it was committed.

Sanctions Violation and Its Significance

A sanctions violation refers to minor infractions, such as violations involving low-value assets or procedural breaches, which serve more administrative than criminal law purposes.

Whistleblower Protection for Reporting Sanctions Violations

Individuals who report sanctions violations would be protected under the Whistleblower Protection Act, which guarantees certain rights and safeguards against potential retaliatory actions.

Objective of the Amendments

The goal of these legal amendments is to strengthen compliance with sanctions and enhance their enforcement both nationally and at the EU level.

***

Our international trade law experts, Liene Krumina and Oscari Seppälä, are available to assist you. Please feel free to get in touch.

Security Rights and Aircraft Liens in Finland

Lien Rights Under Finnish Law

The exact equivalent of a lien under Finnish law remains unclear. In Finland, the term is often used to describe security rights arising from retention rights, explicit statutory provisions, or hypothecation/pledge. For this article, a lien under Finnish law refers to a statutory right entitling a creditor to a preferred claim over the value of a specific object. This right is protected against title changes without requiring a declaration of intent from involved parties. Our air law specialists will guide you through every aspect of aircraft liens and aviation law.

Distinction Between Lien and Right of Retention

Theoretically, a lien and a right of retention differ. The latter allows a party to retain possession of an object as security for payment of claims related to that object. Similar to a lien, the right of retention remains unaffected by title changes and, under certain conditions, enables the sale of the retained property to meet the claim. This closely aligns with the legal effects of a lien.

Aircraft Liens in Finland

Definition of Aircraft and Registration Requirements

Under the Finnish Aviation Act (864/2014), an aircraft is defined as a device deriving lift from air reactions rather than ground or water surfaces. Aircraft with Finnish nationality must be registered in the Finnish Transport Register, managed by Traficom. Registration requirements include clear identification, even for aircraft under construction.

Priority Claims and Security Rights

The Aircraft Mortgage Act (211/1928) prioritizes claims, such as:

1. Claims secured by a creditor's right of retention.
   
2. Damage claims under the Aviation Act.
   

Such rights, while not matching the strict legal definition of a lien, produce similar legal effects and are treated as liens in this context.

Registration of Aircraft Liens

While Finland lacks a specific registration mechanism for aircraft liens, certain rights, like unpaid service charges, can be recorded in the Aircraft Register. Priority liens as defined in the Mortgages on Aircraft Act automatically outrank registered mortgages without requiring further registration.

Salvage Liens on Aircraft

The Aviation Act mandates search and rescue operations, with the state compensating participants for injury or damage under the Damages Act (412/1974). However, inconsistencies in legislative updates mean salvage costs no longer enjoy a lien under the current framework.

Contractual Liens and Hypothecation

Finnish law does not recognize contractual liens per se, but hypothecation provides a comparable security arrangement. Hypothecary rights are formalized through registered mortgages, which create valid security only when entered into the Aircraft Register with the owner's written consent.

Enforcement and Priority of Aircraft Liens

Priority Order of Claims

The Mortgages on Aircraft Act establishes the priority order:

1. Retention rights with accrued interest.
   
2. Damage claims under the Aviation Act.
   
3. Registered mortgages, ranked by filing order.
   

Enforcement Mechanisms

Retention rights can be enforced through public auction without court intervention. For damage liens or mortgages, a court judgment is required before selling the aircraft via public auction or voluntary sale. The proceeds are distributed based on statutory priorities.

Unpaid Airport Charges: Detention Rights

Airport operators can detain aircraft for unpaid fees but cannot sell them without a court order. While departure on scheduled international flights cannot be prevented for non-payment, detention serves as leverage for fee collection.

Contact aircraft lien specialist in Finland

Secure Expert Guidance on Finnish Aircraft Liens Today.

Navigating the complexities of aircraft liens in Finland requires precise legal knowledge. Our team offers tailored advice to safeguard your interests and optimize your legal strategy. 

Contact us today for expert support in aviation law!

Disclaimer: This article is for informational purposes only.