Browse through brief employment and labor law updates from around the globe. Contact a Littler attorney for more information or view our global locations.

Amendments to the Employment Contracts Act

Enacted Legislation

Author: Jukka Pello, Partner — Dottir Attorneys Ltd

The amended Employment Contracts Act entered into force on January 1, 2017. The key changes include the following: Maximum length of an employee’s trial period was extended from 4 to 6 months. The employer’s re-hire obligation period (applicable in case of termination of employment on collective grounds) was shortened from 9 to 4 months. However, if the employment relationship lasted for 12 years, the re-hire period is 6 months. The employers were also granted the right to sign a fixed-term employment contract with a long-term unemployed jobseeker without a justified reason for a maximum duration of one year.

Changes Resulting from the Competitiveness Pact

Enacted Legislation

Author: Jukka Pello, Partner — Dottir Attorneys Ltd

Effective January 2017, the reform package negotiated between the central labor organizations in 2016 (Competitiveness Pact) has brought the following changes in labor legislation: The employer’s salary-related costs have been reduced by reducing the employment pension contribution, unemployment insurance contribution and social security contributions. On the other hand, the employer’s obligations towards terminated employees have been extended in organizations employing at least 30 employees on regular basis. In case of termination on collective grounds the employer is now obliged to provide redeployment training after the termination as well as maintain the statutory occupational health care services for a further 6 months after the work obligation ends. However, these improvements on the employee’s position are only available to employee’s, whose employment has continued at least 5 years.

New Public Sector Pensions Act

Enacted Legislation

Author: Jukka Pello, Partner — Dottir Attorneys Ltd

The public sector pension reform entered into force on January 1, 2017. As a part of the reform, the Local Government Pensions Act, the State Employees’ Pensions Act and the Evangelical Lutheran Church Pensions Act were combined to form a new Public Sector Pensions Act, which also applies to the employees of the Social Insurance Institution (Kela). The pension reform introduces, among other changes, the following: Pension starts to accrue as early as age 17. Starting in 2018, the lowest age limit for retirement will rise gradually from 63 to 65. The yearly accrual rate decreases from 1.7 % to 1.5% and is calculated from the whole of the income (including pension insurance contribution, contrary to before).

Competitiveness Pact as Means to Improve Finland’s Relative Economic Competitiveness

New Regulation or Official Guidance

Author: Jukka Pello, Partner — Dottir Attorneys Ltd

The Competitiveness Pact is a reform package negotiated by the central labor market organizations in 2016. It aims to improve the competitiveness of the Finnish labor market and businesses, boost economic growth and create new jobs. As a result of the Competitiveness Pact the annual working time was extended by an average of 24 hours in full-time work without any impact on earnings as of the start of 2017. The unions have adopted different ways to implement this change in their respective sectors.

Government on the Mission to Improve Competitiveness

Trend

Author: Jukka Pello, Partner — Dottir Attorneys Ltd

The Changes of the Finnish Employment Contracts Act and the Competitiveness Pact are part of the government's efforts to improve the competitiveness of the Finnish labor market and businesses, raise the employment rate, boost economic growth, create new jobs and support fiscal adjustment. According to Statistics Finland’s Labor Force Survey, the number of unemployed individuals in January 2017 was 242,000, which was slightly lower than a year ago. The unemployment rate was down by 0.1 per cent unit from January 2016, at 9.2 per cent.