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Notice periods in Finland
Termination of employment in Finland
Post-termination restrictions in Finland
Waivers in Finland
Transfer of undertakings in Finland
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End of employment in Finland
There are various ways in which an employment relationship can come to an end. An employee might quit for a new position or be dismissed for reasons related to either them or the company. In the worst-case scenario, employees may need to be laid off if your company goes out of business.
Whatever the situation, there are various rules and regulations that apply to the end of an employment relationship in Finland. In this section, we’ll discuss the notice periods that apply to both employers and employees and the rules for firing employees in Finland.
We’ll also talk about the post-termination restrictions employers can impose on employees in Finland, plus what happens to employees after a transfer of undertakings. In short, we’ll discuss everything you need to know to manage the end of your employment relationships in Finland effectively and compliantly.
Notice periods in Finland
Statutory notice periods in Finland are set by the Employment Contracts Act, an important piece of employment legislation. In some cases, collective bargaining agreements between employers’ organisations and trade unions also include specific provisions. Regardless of the collective agreement that applies, notice periods in Finland can’t be longer than six months.
Notice periods for employers and employees in Finland
In Finland, notice periods for both employers and employees depend on how long the employee has been engaged. If an employer terminates the employment contract, the notice period is as follows:
- Up to one year of employment: 14 days.
- 1–4 years of employment: One month.
- 4–8 years of employment: Two months.
- 8–12 years of employment: Four months.
- 12+ years of employment: 6 months.
If the employee terminates the employment contract, the standard notice period in Finland is 14 days if they have been employed for up to five years, and one month if they have been employed longer. Again, collective bargaining agreements or individual employment contracts may provide for a different notice period.
Severance pay in Finland
There is no statutory requirement for severance pay in Finland. However, some companies include this provision in their employment contracts.
Probationary periods in Finland
Including a probationary period in an employment contract is a customary practice in Finland. The law states that probationary periods can’t exceed six months, or half the length of the contract for fixed-term engagements. During the probationary period, neither party needs to give notice to terminate the employment contract.
Termination of employment in Finland
There are strict rules for the termination of employment in Finland, which employers should be aware of before employing workers. Employers must give the employee the correct amount of notice as defined by Finnish labour law or the relevant collective agreement, except in certain rare circumstances. Employers must also have a valid reason for termination of employment in Finland, which may be related to the employee or the business.
Grounds for termination related to the employee in Finland
Employers in Finland may terminate an employment contract because of the employee’s behaviour, actions, or performance. For example, an employee violating a law or breaching their terms and conditions of employment would constitute a valid reason for termination. A change to the employee’s circumstances that means they are no longer able to perform their work is also a valid ground for termination.
Employers may not terminate an employee’s contract due to the employee’s illness or disability unless this significantly impacts their ability to perform the work and the employer cannot reasonably be expected to continue the employment. The employee’s political, religious, or other personal views or their participation in social activism or industrial action are also not justifiable grounds for termination.
Grounds for termination related to the business in Finland
Employers in Finland can also terminate an employment contract for reasons related to their business. For example, employers may need to lay off employees if the amount of work they can offer substantially decreases, or if the company’s financial performance is reduced.
In these cases, employers should try to reassign or retrain employees before resorting to layoffs. Employees should first be offered work that corresponds to their employment agreement. If no such work exists, they should be offered other work that matches their qualifications, expertise, and experience.
Termination of employment without notice in Finland
Termination of employment without notice is only possible in limited circumstances in Finland. Employers may be able to terminate an employee without notice if they have committed a serious breach or seriously neglected their duties. Similarly, an employee may be able to terminate their contract if the employer has seriously breached or neglected their responsibilities as an employer.
Post-termination restrictions in Finland
Post-termination restraints (or post-termination restrictions) are restrictions that employees can impose on their employees’ actions after the termination of an employment contract. These are generally only permissible when there’s a genuine need to protect the interests of the business. The main types of post-termination restrictions that employers can impose on employees in Finland are:
- Non-compete agreements.
- Non-solicitation agreements.
- Confidentiality agreements.
Non-compete agreements in Finland
Non-compete agreements prohibit employees from working for or setting up a business that competes with their former employer. In Finland, non-compete agreements are legal but are subject to certain conditions.
First, the maximum period for a non-compete agreement is one year after the termination of the employee’s contract. Employers must compensate their former employees during the restricted period, at a rate of 40% of their former salary for periods of up to six months, or 60% for longer agreements.
Employers are allowed to terminate a non-compete agreement in Finland during the course of their employment and don’t need any specific grounds to do so. However, it’s not possible for an employer to terminate a non-compete agreement after an employee has resigned.
Non-solicitation agreements in Finland
This type of restriction prohibits employees from soliciting or poaching employees or customers from their former employer. Non-solicitation agreements are not regulated by the law in Finland, but they are possible and common. In some cases, non-solicitation agreements may be comparable to non-compete obligations, and therefore subject to the same requirements.
Confidentiality agreements in Finland
Confidentiality agreements prevent employees from sharing trade secrets or other confidential information with others after their employment is terminated. Again, this type of agreement is not specifically regulated by law in Finland. However, they are common in practice.
Waivers in Finland
In certain circumstances, employees in Finland may waive some of their rights. In Finland, this is only possible as part of an exit or settlement agreement and is subject to certain conditions. Employees cannot waive mandatory rights provided by employment laws but may be able to waive other rights granted by an employer or a collective agreement.
Transfer of undertakings in Finland
A transfer of undertakings is when one company acquires all or part of another company, including its employees. Employees in Finland are protected by the Employment Contracts Act, which contains provisions concerning what happens in the case of a transfer of undertakings.
Employee rights after a transfer of undertakings in Finland
When a business is transferred in Finland, employees are automatically transferred to the new business along with their existing terms and conditions. Employees must also maintain continuity of service, meaning that they continue to accrue any statutory benefits at the same rate as before the transfer. The rights and obligations set out in employment contracts transfer to the new business.
A transfer of undertaking is not a valid ground for termination of employment in Finland. However, employers may be able to dismiss employees based on business reasons brought about by the transfer, such as the closing of a location.
Information and consulting requirements in Finland
Before a transfer of undertakings can take place, both the transferor and the transferee are required to inform employee representatives and provide them with specific information including the date of the transfer, the grounds, and the consequences for employees. There are no formal requirements for how this information must be presented.
Can employees object to a transfer of undertakings in Finland?
Employees don’t have the right to object to a transfer of undertakings in Finland. However, employers must give employees at least one month’s notice before the transfer. Employees who don’t wish to be transferred can choose to give notice and end their employment as of the transfer date.
Avoid risk and missed opportunities with our end-to-end employment solutions
There are many different ways an employment contract can come to an end. But whatever the situation, you need to understand the rules that cover the end of employment in Finland — or you could end up facing legal issues.
Our solutions ensure your business is protected from risk when a relationship with a worker comes to an end — whatever the reason. We can also help you to avoid missed opportunities by re-deploying talent where possible.
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