Several Temporary Amendments to Employment Law Provide Relief in Covid Crisis

The Finnish Government has taken action to provide flexibility to the labour markets and the related legislation to mitigate the effects of the crisis caused by the coronavirus (COVID-19). The amendments to the Employment Contracts Act, the Seafarers’ Employment Contracts Act and the Act on Co-operation within Undertakings entered into force on 1 April 2020 and will remain in force until the end of June.

This temporary legislation will make it easier for companies to adapt to the rapid change in their operating environment and sudden drop in their business.

Accelerated Lay-Off Process: 5 + 5 + 5

Perhaps the most anticipated amendment is the shortening of the notice period for lay-offs: the minimum period is now five days rather than fourteen. The minimum duration of co-operation negotiations relating to lay-offs has also been shortened to five days from the normal fourteen.

It is now possible to complete the lay-off process in 15 days: the negotiation proposal must be given five days before starting negotiations, the negotiations last another five days and the lay-off can start five days from the lay-off notice being issued. The amendment also makes it possible to lay-off fixed-term employees in addition to permanent employees.

Extended Re-employment Obligation to Protect Employees

This temporary legislative amendment will continue to be applied after June 2020 if the lay-off began during the validity of the amendment. This amendment protects employees by extending the employer’s obligation to re-employ employees in the same or similar work to nine months if the employee was terminated on production or financial grounds during the validity of the temporary amendment.

Cancellation during Trial Period also Possible on Production and Financial Grounds

In normal circumstances, it is not possible to cancel an employment relationship during the trial period on production and financial grounds, but one of the temporary amendments has now opened up this possibility.

However, trial period cancellation is still not allowed if it is based on a temporary reduction in work. In such a case, the employees work is not considered to have been permanently reduced in the manner required to apply production and financial grounds.

Collective Agreements and Their Emergency Provisions Supersede the Law

In the context of temporary legislation, it is important to remember that collective agreements and any amendments made to them take precedence over even temporary laws—for better or for worse. Over the past few weeks, numerous relaxations and emergency provisions have been agreed to both normal generally applicable collective agreements. For example, the lay-off notification period in some collective agreements may of shorter or longer than five days. Such temporary changes have already been made to the majority of collective agreements.

What Happens after June?

The above amendments were very welcome, and many employers have already put them to use.

If the current uncertainty is still with us in June, it will be extremely important to extend these temporary amendments. If the crisis caused by the coronavirus drags on, it will also become necessary to look at simplifying and accelerating the co-operation procedures for terminations as well as expanding the opportunities for employers and employees to make local agreements.

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The coronavirus outbreak is a rapidly developing situation. This information reflects the situation at the time it was published 17 April 2020 and is subject to change.