News & Views

Crisis Package Proposed by Central Labour Organisations Introduces Changes to Employment Legislation to Help Companies Struggling with Corona

20 March 2020

Author: Susanna Hernberg

On 18 March 2020, the central Finnish labour market organisations negotiated a joint proposal, a so-called “crisis package”, which introduces changes to employment legislation in order to mitigate the financial impact of coronavirus. Today, 20 March 2020, the Government announced that most of the suggested changes will be implemented as such. The amendments will come into force once the legislation has been passed. Based on the current information, this may take a few weeks. However, some of the changes may already be implemented on union level by means of collective bargaining agreements.

The changes are intended to be temporary and stay in force for three months. Before you take action based on the information below, please contact us to confirm whether the suggested provisions have been implemented, in what form, and for which term.

Changes to Employers’ Rights to Lay Off Employees

  • Employers will be entitled to lay off fixed-term employees in the case of a temporary decrease of work.
  • Notice period for lay-offs will be reduced from 14 days to five days.

Changes to the Co-Operation Negotiation Obligation

  • The duration of co-operation negotiations under the Act on Co-operation within Undertakings (the “Co-operation Act”) will be reduced from the minimum duration of 14 days and the maximum duration of six weeks to five days.
  • The provision of the Co-operation Act on postponing the co-operation negotiations when there are particularly weighty unforeseen reasons harming the productive or service operations or the finances of a company can be applied to a situation where coronavirus has caused a sudden and severe decrease in the demand of a company’s products or services. This means that the co-operation negotiations will not need to be carried out before making decisions on temporary lay-offs but the company will, however, need to fulfill the negotiation obligation immediately thereafter, in practice immediately after making the decisions. The main reason for applying this special provision would be the fact that it allows faster decision-making and in practice a shorter period for which the employer needs to pay salary when the negotiations and the period of notice of the temporary lay-off run simultaneously. However, this alternative could only be considered when the only reason for the temporary lay-offs is the decrease in work due to coronavirus.
  • With respect to the item above, it should be noted that the current Co-operation Act already allows employer and employee organisations to deviate from the provisions of Chapter 8 of the Co-operation Act, which concerns the co-operation procedure when work force is reduced, by agreeing to such deviations in collective bargaining agreements. Some employer and employee organisations have already agreed to such deviations in order to simplify the co-operation procedure in the case of lay-offs.

Changes Concerning Terminations on Financial and Production-Related Grounds

Cancellation of an employment relationship during a trial period will also be allowed on financial and production-related grounds (normally cancellation during a trial period is only possible on individual grounds).

  • An employer’s obligation to re-employ an employee who has been terminated on financial and production-related grounds will be prolonged to nine months when the employee has been terminated during these temporary changes to employment legislation (normally the obligation to re-employ is either four or six months depending on the length of the employment relationship).

Changes to Employees’ Pension Insurance “TyEL”

  • Employers’ TyEL contribution will be temporarily reduced to 2.6%.
  • TyEL payments can be postponed by three months.
  • Finnvera will grant companies guarantees needed for premium loans in order to enable the companies’ TyEL payments by way of premium loans.
  • Pension insurance companies should restrain from the payment of client bonuses while easements are made to the pension insurance companies’ macroprudential rules and employers’ TyEL contributions are reduced.

Changes to Unemployment Security

  • The qualifying period for unemployment benefit will be removed, i.e. laid-off or terminated employees will be entitled to unemployment benefit from the first day of unemployment.
  • Employees who have agreed to be laid off will be entitled to unemployment benefit as well.
  • The Government will prepare to support the unemployment funds during 2020 by EUR 20 million in accordance with separately agreed principles.
  • The work requirement employees have to meet in order to be entitled to basic unemployment allowance will be reduced from 26 weeks to 13 weeks for the employment relationships that have started after 1 January 2020 and ended on or before 31 December 2020.