Employee protection against dismissal will be weakened

The Government has submitted a proposal to amend the grounds for dismissal related to an employee’s person. The draft law was circulated for comment and the amendments were discussed in a tripartite working group. As before, the views of the employee representatives were not taken into account in the working group.

In conjunction with other employee organisations, Akava submitted a dissenting opinion on the working group’s report, as well as Loimu. According to current information, the legislative amendments would enter into force on 1 January 2026.

Loimu criticises the proposed changes

Loimu is very critical of the proposed changes. The Employment Contracts Act is legislation intended to protect employees. The current Government is planning to change this structure in many respects. The Government’s justification for the draft law is that ”the aim is to remove barriers to employment and to strengthen the operating conditions of small and medium-sized enterprises in particular. Small companies in particular consider the legal risks of dismissal to be a significant obstacle to employment.”

Good cause for termination is no longer required

At this stage of preparation, the draft law contains many elements that, in practice, weaken the employee’s legal protection. At the very least, the uncertainty of the employee will increase even further, as it will take years before new case law on the application of the amended law is available. In contrast to the current Employment Contracts Act, the provision would no longer require that the reason for termination must be compelling, but the employer may terminate an employment contract valid until further notice solely for “a reason related to the person of the employee”. The proposed amendment is intended to lower the threshold for termination.

Underperformance may be grounds for termination

In the future, the law would state what can be considered an appropriate reason for dismissal. According to the draft, such grounds could be, for example, continuous deficiencies in the employee’s work performance. Underperformance would mean that the employee does not perform their duties in a manner considered reasonable or in the same way as other employees in a similar position. How this reasonableness would be assessed in practice will depend on future case law, which means that in practice, the employee’s position is uncertain for an extended period of time.

According to studies, many experts do a lot of so-called grey work, i.e. overtime that is not compensated, and flextime balances are also very high in many workplaces. In practice, if a so-called unhealthy work culture has formed at a workplace, in which those working as experts are constantly “flexible”, there is a risk that the work performance of an individual employee is compared to the current practice, where the results of other employees seem better because they have already worked so-called free overtime hours in fear of being fired.

The warning procedure is further simplified

Regulations on the warning procedure are being weakened. In the future, for example, dismissal could also be possible without giving a warning if the grounds for the dismissal are such that the employee should have understood the seriousness and reprehensibility of their conduct even without a warning.

Warning situations may often come unexpectedly without there having been any signs in advance. In order to strengthen the employee’s legal protection, provisions should be made for the employee to be informed in advance that a warning is being given, the employee to be heard when a warning is given and the employee to have the right to use an assistant in the situation.

Termination too easy and cheap in Finland

The preparation of the Act has progressed rapidly. There is no research evidence that there is a real need for such an amendment. In practice, even at present in Finland, it is possible to dismiss a highly qualified expert on (alleged) personal grounds easily, at least on the basis of contacts with Loimu. Often, however, in these situations, the matter is not brought before the courts, but it is settled quietly by means of an agreement concerning the termination of employment. In practice, the level offered in these agreements is at least partially linked to the compensation for unlawful dismissals in accordance with the Employment Contracts Act. The scale is currently low and has not been renewed since the 1990s.

The European Committee on Social Rights has already considered that the Finnish State has violated the requirements of Article 24 of the revised European Social Charter, as the employment relationship of an unlawfully dismissed employee does not need to be restored and the compensation paid for unlawful dismissal has been set at a maximum of 24 months’ salary. (Finnish Society of Social Rights vs. Finland CC 106/2014.) In practice, easier and cheaper dismissal of employees will drive skilled workers and workplaces to leave Finland. 

The legislative proposal creates uncertainty for employees and is in no way balanced from the point of view of the principle of employee protection. At the very least, the compensation paid for unlawful dismissal in accordance with the Employment Contracts Act should be increased in connection with the proposed legislative amendment.

Text by Anna Kytömaa, lawyer