Layoffs in Finland

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In these extraordinary circumstances, many companies are preparing to layoff their employees. Or they have already done so. Here we’ll take a look at what the labor laws currently say about layoffs in Finland. Our online tutorial on the Finnish labor laws goes more into actual terminations.   

What are layoffs

In a situation where the work in a company has diminished temporarily, the company may layoff some or all of its employees temporarily. Companies take this action usually when they anticipate that the problem they have encountered is a temporary one. Layoffs mean that the company’s responsibility to pay the employees stops. (Another term for these temporary layoffs is furlough.)

Layoffs can be full or part-time. Part-time layoffs mean that the employer can cut the employee’s hours from eight hours a day to, say, four hours a day. Full-time layoffs mean that the employer cuts all hours. 

Layoffs can be fixed-term or they can be in effect for the time being. For companies, fixed-term layoffs lasting less than 3 months are normally a bit easier to execute. Essentially the effects on the employee are the same. The salary stops running. 

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What usually happens before layoffs in Finland

Before the employer decides to lay off its employees, the employer needs to explain the situation to them. The employer needs to clarify:

  • why layoffs the company is considering layoffs, 
  • what is the anticipated length of the layoff, 
  • what type of layoff it will be (partial or full-time), 
  • when the layoff will begin, 
  • and how long the company expects it to last. 

If the company is considering laying off more than one employee, it can give this explanation to all of its employees at the same time. The employer can also give this explanation to the employee representative.

At this stage, the employee or employees affected or their representatives have an opportunity to go over the situation with the employer. 

In larger companies, the co-operation process (yhteistoimintamenettely) covers these steps. The cooperation process has its own legally mandated steps and often the field-specific collective agreements also have provisions relating to it. Those provisions also often include specific time limits for things. Thus, this process never happens overnight. 

The economic hardship caused by the Coronavirus pandemic has made it necessary to adjust these normal processes. We’ll talk about those changes a bit later on in this blog.

When and how will you find out?

The normal rule is that your employer should notify you of your layoff 14 days before it happens. In some fields, the collective agreements include special provisions for this Corona situation. These provisions shorten this notice period in these fields. For example, in the restaurant and hospitality industry, the notice period is 5 days and in retail, it’s 7 days.

Your employer should notify you in person whenever possible, but written or electronic notifications are ok. Make sure that the written notice you receive includes justifications for the layoff, the form of the layoff (partial or full-time), the beginning date, the estimated length of the layoff, or the exact ending date. You will need this layoff notice when you file for unemployment benefits. 

When the time comes and your employer is able to resume its operations, your employer should notify you seven days in advance. If your layoff has a fixed ending date, you will not receive a separate ending notice.

You are laid off, now what?

Finnish residents are entitled to receive unemployment benefits when they are laid off if they fulfill the condition for previous employment at the time they become employed. Whether or not you are a Finnish resident for this purpose and whether you fulfill the criteria is determined by the office that issues the unemployment benefit. 

Two separate organizations issue unemployment benefits in Finland. Unemployment funds operated by the labor unions issue earnings-based unemployment benefits. You don’t need to be a member of a labor union to join their unemployment fund. But if you do want to receive a higher, earnings-based unemployment benefit, you must be a member of a fund. Otherwise, you will receive just the basic unemployment benefit, which Kela grants. We have more on unemployment funds and benefits in our tutorial. 

The basic process to follow is the same whether or not you are an unemployment fund member. 

When you are laid off

When you are laid off you are allowed to work elsewhere. You must, however, remember that you cannot take on work that is in direct competition with your employer. Such actions may result in your termination altogether. 

If you have your employer’s phone, your employer can take that away from you. Your employer can also take away your other benefits for the duration of the layoff. However, if you are living in an apartment your employer has rented for you, your employer cannot kick you out. Your employer can charge you rent, though. This can happen down the line, not right away. 

NOTE: Temporary changes to these normal provisions

The government of Finland announced on March 20 that they are making it temporarily easier and faster for companies to lay people off during this Corona crisis. These new regulations took effect on April 1. They are temporary in nature and are in effect until June 36, 2020.

Under these new rules, the notification period shortens from 14 days to 5 days in smaller companies. In larger companies, the normal cooperation process has also been sped up.

They also allow laying off fixed-term employees in a similar manner to permanent employees. Normal rules do not allow laying off a fixed-term employee unless she/he is temping for a permanent employee who would be laid off in these same circumstances. Now fixed-term employees can be laid off without this restriction.

Under normal circumstances, it is not possible to terminate the employee’s employment relationship during the trial period for financial hardship reasons. Now it is possible if the employer cannot transfer the employee to another position.

More about labor legislation in Finland

This is one of our several blog posts about Finnish labor rules. Thus far we have, for example, written about:

You can learn much more about employment relationships in Finland from our online tutorial Working in Finland

This is your ultimate guide to rules governing Finnish employment relationships. Get it from our online store!

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