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End of employment in Finland

Employee Termination Procedures & Guidelines in Finland

Termination procedure

An indefinitely valid employment agreement can be terminated with a notice to terminate. The notice periods are specified in the regulation or in the applicable collective agreement, and the employment agreement must be observed.
 
The employee doesn’t need to provide any particular grounds for ending their employment, however, they must observe the notice period.
 
On the other hand, the employer may not terminate an employment relationship without a proper and weighty reason. The proper and weighty reason can be related to the employee’s person or financial and production-related grounds.
 

Employer obligations in case of a termination

 
The employment agreement cannot be terminated on financial and production-related grounds if the employee can be placed in or trained for other duties.
 
Employees should primarily be offered work equivalent to that defined in their employment agreement. If no such work is available, they shall be offered other work equivalent to their training, professional skill, or experience.
 
The employer must provide employees with training required by new work duties that can be deemed feasible and reasonable from the point of view of both contracting parties.

Grounds for termination

Termination on grounds related to the employee’s behaviour or circumstances

Acceptable grounds for termination related to the employee include:
  • serious breaches of the terms and conditions of the employment agreement
  • serious law violation
  • serious neglect of integral to the employment relationship duties
  • any significant change in the employee’s circumstances that prevent them from performing the work
Personal circumstances that cannot be used as grounds for termination include:
  • illness, disability, or injury, except in cases where those substantially reduce the employee’s ability to work for extended periods, and the employer cannot reasonably be expected to continue the employment agreement
  • participation in industrial action covered in the Finnish Collective Agreements Act or on their trade union’s orders
  • political, religious, or other views, as well as participating in social activism or associations
  • exercising legal remedies.

Financial and production-related grounds for termination

Employers have the right to terminate employment agreements if the amount of work they can offer diminishes substantially and permanently due to financial or production-related reasons or restructuring. Financial grounds for termination include a company’s reduced or inadequate performance and anticipating such circumstances. Production-related grounds for termination and grounds arising from restructuring refer to any changes in the employer’s production process that substantially and permanently impact the amount of work available.

 
Employment agreements cannot be terminated on financial or production-related grounds if employees can be reassigned or retrained. As a rule, employees who can be reassigned should be offered work that corresponds to their employment agreement. If no such work is available, employers should offer other work that corresponds to their qualifications, expertise, and experience.
 

Special cases for termination

Right to terminate in connection with a transfer of business

Transfer of business refers to the assignment of an enterprise, business, corporate body, foundation, or an operative part of these to another employer in cases where the transferred business remains unchanged or similar after the transfer. Employees can give notice to terminate their agreements when the employer transfers the business to a third party. They must have been notified of the transfer by the employer or the assignee no later than one month before the transfer date. Employees informed later than that are entitled to give the notice to terminate their employment agreements as of the date of transfer or later, but not later than one month after being informed of the transfer.

Termination in connection with a reorganisation procedure

The employer can give two months’ notice to terminate an employee’s employment agreement. In cases where the notice period applied to the employment agreement is shorter than two months, the employment agreement may be terminated under this notice period. Acceptable grounds include an arrangement or a measure carried out during the reorganization procedure to avoid bankruptcy, which causes the work to cease or decrease substantially and permanently. However, termination notice may not be given if the employer can offer employees other job duties to which employees, considering some professional skills and competence, can be assigned with reasonable retraining.

Deeming an employment agreement cancelled after more than one week's absence without leave

If the employer or the employee is absent from the workplace for a set period without a valid reason, the other party may deem the employment agreement cancelled. However, if notifying the other party of a valid reason was impossible because of an acceptable impediment, the cancellation of the employment agreement is voided.

Unfair Dismissal Guidelines in Finland

Employee termination protection

The employer cannot terminate an employment agreement because an employee is pregnant or because the employee is exercising the family leave right. If the employer terminates the employment agreement of a pregnant employee or an employee on family leave, the termination shall be deemed to have taken place based on the employee’s pregnancy or family leave unless the employer can prove there was some other reason. The employer can terminate an employee's employment agreement on maternity, special maternity, paternity, parental, or childcare leave on financial and production-related grounds only if its operations cease completely.
 

Cancellation of employment agreement

 
The employer requires an extremely weighty cause to be able to cancel an employment agreement with immediate effect, regardless of the applicable period of notice or the duration of the employment agreement. Such a cause may be deemed to exist in case the employee commits a breach against or neglects duties based on the employment agreement or the law. This may render it unreasonable to expect the employer to continue the contractual relationship even for the notice period.
 
Correspondingly, the employee can terminate the employment agreement with immediate effect if the employer commits a breach against or neglects their duties based on the employment agreement or the law. That means they may not even have to keep the notice period if the breach is so severe. 
 

Penalties for unfair dismissal

If the employer has terminated an employment agreement contrary to the termination grounds, it must be ordered to pay compensation for the unjustified termination of the employment agreement.

Other End of Employment Guidelines in Finland

Notice period

Unless otherwise agreed, the notice periods laid down in the regulation apply.
 
The employer terminates the agreement.
 
 
Column 1 Column 2
Length of employment Period of notice
Up to 1 year 14 days
1 to 4 years 1 month
4 to 8 years 2 months
8 to 12 years 4 months
12+ years 6 months
 
The employee terminates the agreement.
 
 
Column 1 Column 2
Length of employment Period of notice
Up to 5 years 14 days
5+ years 1 month
 
The employer and the employee may agree on the periods of notice. However, the notice period may not be longer than six (6) months. Furthermore, the period of notice that the employee must observe may not be longer than the period that the employer must observe.
 
In addition, collective agreements may contain provisions on periods of notice. If the periods of notice laid down in the collective agreement differ from the statutory periods of notice, the employer and the employee must observe the periods of notice laid down in the collective agreement unless the collective agreement provides for other arrangements concerning the periods of notice.
 

Non-observance of the notice period

An employer that terminates an employment agreement without observing the notice period must pay the employee full pay for a period equivalent to the notice period as compensation. Employees that leave before their notice period must pay the employer a lump-sum compensation equal to the pay of their notice period.

Unemployment funds

Employees dismissed from their jobs may receive basic unemployment allowance from KELA or earnings-related unemployment allowance from an unemployment fund. The grounds for receiving basic or earnings-related allowance are otherwise the same, but the unemployed person needs to be a member of an unemployment fund to receive the allowance.
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