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Measures approved by the Finnish government concerning temporary changes to the employment legislation

  • Finland


    On 18 March 2020, a list of proposals aimed at relieving the situation of companies in the coronavirus crisis has been agreed by the trade unions and employers. The labor market organisations have jointly submitted a proposal to the Finnish Government on the necessary measures to amend labour law and reduce the financial burden on businesses. The government has accepted the following measures which were announced in its press conference on 20 March 2020.

    The measures are applicable to all companies, associations and foundations and they are implemented by making temporary changes into the legislation and collective bargaining agreements.

    The government has not yet given any precise information of the date when these changes will become effective. According to preliminary information, the measures will be valid until 16 June 2020.

    The employers’ pension contributions will be temporarily reduced with 910 million euros

    • The employers’ pension contribution is temporarily reduced by 2,6 percentage, which means a temporary exception to the 50/50 rule of payment changes.
    • This includes a reduction of 910 million euros to the employers in the private sector, if the effective date would be on 1 June 2020. The effect of the temporary reduction will be compensated during years 2022-2025 so that the employer’s payment is increased temporarily.

    Postponement of payment of earnings-related insurance contributions 

    • The employers in the private sector and pension insurance companies are encouraged to agree on postponing the payment of pension contributions by 3 months.
    • The companies’ ability to pay back their earnings-related pension insurance contributions is improved by relending so that Finnvera provides the companies with the collateral required for the loan.
    • The pension insurance companies will refrain from paying bonuses for the period during which their solvency rules are eased, and employers’ pension contributions are reduced.

    Temporary changes to the employment legislation valid until 16 June 2020

    • The minimum negotiation times regulated in the Act on Co-operation within Undertakings are reduced from the current 14 days and 6 weeks to 5 days in the event of lay-offs.
    • The right to lay off is also extended to fixed-term employment contracts.
    • In the event of a lay-off, the employee has the right to unemployment benefits and the right to terminate the employment contract despite its fixed-term nature.
    • The 14 days’ notice period for lay-offs regulated in the Employment Contracts Act is shortened to 5 days.
    • The sudden and severe decline in the demand for the company's products or services caused by the coronavirus, which causes the company to lay off a significant proportion of its employees, constitutes an exceptional situation regulated in Section 60 of the Act on Co-operation within Undertakings. The assessment is made case by case and the co-operation negotiations must be commenced immediately when the grounds for deviations of the co-operation obligations have passed.
    • It is also allowed to terminate an employment relationship on a trial period due to financial and production related grounds. In these situations, the waiting and qualifying periods related to unemployment benefits are not applicable.
    • The obligation to re-employ an employee is extended to 9 months instead of the current 4 or 6 months, if the employment relationship has been terminated during the temporary changes to the employment legislation.

    Securing the unemployment benefits temporary

    • The waiting days for the unemployment benefits are deleted and the maximum time for the unemployment benefits does not run during the lay-offs.
    • The employee is entitled to unemployment allowance also in the situations where the employee and the employer have agreed on the lay-offs.
    • Unless the condition for previous employment is otherwise fulfilled, the employment condition is 13 weeks for employment relationships commenced after 1.1.2020.
    • The state will temporarily contribute to the financing of the lay-off allowances.
    • The state prepares to support the operation of unemployment benefit funds during the year 2020 with 20 million euros according to the principles which are agreed on separately.

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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