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Employers will have more options for recruiting workers on fixed-term contracts in Finland thanks to the new amendments to the country’s Employment Contracts Act (Työsopimuslaki). The most impactful change enables a fixed-term contract for up to 12 months, using no justifiable reason to avoid such a contract.
In the past, there was still a need to provide an objective reason for the hiring: absence of a replacement worker, seasonal work, etc. or a project. The new framework is a significant step in the direction of increased flexibility in the working life of people with disabilities, however, there are protections in place against multiple short-term hires.
What Is the New 12-Month Fixed-Term Rule?
The new definition allows the employer to provide a reasonless fixed term contract, the maximum duration of which will be 12 months. This flexibility is not meant to provide the option to have temporary work redoing routinely, though.
The provision is applicable when an employee enters their first employment relationship with the company or if the employee is still employed at the company, and at least five years have passed since the last employment relationship with the company. HR therefore have to review their past employment data before they start using the new provision.
The 12-Month Limit Is a Critical Safeguard
The Act sets a secure limitation on reasonless fixed term contracts. An employer is not allowed to repeatedly contract employees who have temporarily suspended their contracts to serve in the same role for subsequent periods in excess of the maximum time allowed.
When statutory conditions are not met or where the 12 months period is exceeded then the employment relationship may be considered to be an employment of indeterminate duration. Multinational businesses based in Finland cannot afford to rely on inaccurate tracking – this is crucial for the proper execution of a contract.
Employees Gain a Mid-Term Exit Option
Another feature which is very important, is that the contract could be ended by either party after six months of work, provided that it is lawfully allowed in accordance with the law guiding the work. Gives more flexibility for an employer and employee in the middle of your contract.
HR requests will find the provision an informative checklist. The six-month period can be used as a marker when companies should evaluate their business needs to determine if ongoing employment is commercially suitable.
Broader Changes to Finnish Employment Rules
The fixed-term measure is part of other amendments that will enable businesses to be more flexible in the face of an evolving economy. The time period of temporary layoff (“lomautus“) regarding has been shortened from 14 days to seven days.
Companies need to review applicable collective bargaining agreements, however, as an industry or company level contract may have differing requirements. The statutory amendments may not have any effect on contractual/collective obligations.
New Re-Employment Rules for Smaller Companies
The measures also impact on the width of the re-employment liability. The new framework sees the need for the requirement for businesses with at least 50 workers employed regularly.
This duty is waived for companies having less than 50 employees. The number of employees to be considered relevant in the Finnish context should thus be one aspect of HR compliance for multinational groups.
What Corporate HR Teams Should Do Now?
RDP and CVI should be revised and effective reminders about the important dates in the contracts should be set up to be reminded periodically. A review at month 5 can help to get managers ready for the six-month review mark and a month-11 review can help avoid unwanted violations of the 12-month review point.
HR professionals should also review past employment relationships and review relevant collective bargaining agreements. Especially for international companies that are not familiar with the robust collective-labour system of Finland it is important to do these checks.
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Why the Reform Matters for Global Employers?
The changes in Finland are a prudent measure to combine flexibility in the labor market with workers’ protection. The employers get a new option for the management of the unpredictable nature of employment, while the 12-month limit and red herring conversions ensure that the system does not become the “door to temporary permanent jobs”.
The bottom line for global HR leaders is that the changes open up opportunities for companies that have a well-defined contract management system and record-keeping procedures, and are better equipped to understand the legal complexities of collective bargaining in Finland.
FAQs
Are employers in Finland now able to make up a set of reasons for providing a fixed-term contract?
Yes. If the statutory eligibility conditions are met the new reasonless fixed-term provision for contracts of 12 months or less can be utilised by employers.
What kind of person is eligible for a “reasonless” fixed-term contract?
The provisions are for new hires or employees who come back to work after a cooling-off period of five years or more.
Are 12-month contracts Open Ended contracts?
No. The reform will not let employers get around a permanent job by entering into a series of unreasonable contracts.
