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.

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