Employment law review: The year 2024 in the rear-view mirror and 2025 appearing on the horizon

Several employment law reforms were introduced in 2024, aligning with the Government's labour market objectives. While some of the legislative reforms have already entered into force, 2025 will bring additional changes that will continue to shape employment law in Finland.

Legislative reforms and amendments in 2024

The Government's labour market reforms were widely discussed throughout 2024. The first major reform took place on 18 May 2024, when legislative amendments designed to improve industrial peace in the labour market entered into force. The said amendments limited the maximum duration of the right to political strikes to 24 hours and included a possible penalty of EUR 200 faced by an employee taking part in an industrial action that is ruled unlawful. The compensatory fine that could be imposed on a union for unlawful industrial action was also increased, with a new minimum of EUR 10,000 and a maximum of EUR 150,000, replacing the previous maximum of EUR 37,400. In addition, solidarity actions are now subjected to a proportionality assessment and notification requirements under the Act on Mediation in Labour Disputes. Going forward, lawful solidarity actions will be those defined as reasonable in relation to their objectives and only affecting the parties to the industrial dispute. The amendments do not affect the right to lawful strikes to improve one’s own working conditions.

In addition, the adult education allowance and job alternation leave systems were abolished during 2024. The Government's reasoning was that the adult education allowance and the alternation leave took employees temporarily out of the workforce and the benefits of the government-paid allowances were limited.

It is also worth noting that the EU Directive on Adequate Minimum Wages entered into force in the end of 2022 and was to be implemented by member states by 15 November 2024. Finnish legislation already met the level required by the Directive and therefore, no additional actions will be required from employers. However, Finland will have to periodically report to the European Commission on the rate of collective bargaining agreements' coverage, the lowest wage levels set in these agreements and the level of wages paid to workers not covered by collective bargaining agreements.

Legislative reforms and amendments in force from the beginning of 2025

As a part of the Government's labour market reforms, the revised provisions on local bargaining entered into force on 1 January 2025. In accordance with the Government programme, the scope of local bargaining agreements was extended by removing the prohibition of local agreements for companies that are not members of the relevant employer's association and that apply a collective bargaining agreement based on general applicability. Companies with a company-specific collective bargaining agreement can now derogate from the same provisions of employment legislation that could previously be derogated from with a national collective bargaining agreement, provided that the company-specific collective bargaining agreement is concluded either with a nationwide trade union or by an employee organisation that is a member of a nationwide trade union.

Provisions regarding employee representation were also amended in such a way that, if no shop steward has been elected and there are no provisions in the collective bargaining agreement on how to conclude local agreements without a shop steward, a local agreement could be concluded between the employer and the elected representative. In turn, the position of the elected representatives was also strengthened with the amendment, as employers will be required to promote the representatives' skills and knowledge of the work environment if they represent employees in local bargaining.

What to expect in 2025

There is still more to expect from 2025 regarding the Government's labour market reforms. Proposed amendments to the Co-operation Act will be implemented in two phases. In the first phase, the scope of application of the Act is intended to be raised to companies and organisations regularly employing at least 50 employees, whereas the Act currently applies to employers regularly employing at least 20 employees. However, certain requirements concerning employers employing 20-49 employees would be included in the amended Act, including the obligation to conduct a lighter dialogue at the workplace (as is in the current Act), as well as change consultations in situations where the employer is considering reducing the number of employees by at least 20 within a 90-day period. In addition, the aim is to reduce the minimum time required by the Co-operation Act to conduct change consultations in connection with workforce reductions by half. The government bill for these amendments was submitted to the Parliament in November 2024. The amendments are intended to enter into force on 1 July 2025.

Further, it will be evaluated later in the second phase whether the provisions on employee representation in the employer's board or other administrative body should be amended (currently applicable to employers with at least 150 employees). The amendments for the second phase will be evaluated by the Government during 2025.

In addition, the Government has proposed other amendments that are a part of a group of legislative proposals that aim to remove barriers to employment and to strengthen the operating conditions of small and medium enterprises. These amendments are to be presented to the Parliament mainly during the 2025 spring term.

1. Termination of an indefinite term employment contract on individual grounds would be sufficient with a proper reason. Currently, such termination requires a proper and weighty reason.
2. Fixed-term employment contracts up to one year could be concluded without a justified reason. Currently, a justified reason is required for fixed-term employment contracts initiated by the employer (regardless of the length of the fixed-term).
3. Notice period for temporary layoffs would be reduced to seven days from the current 14 days irrespective of the provisions of a collective bargaining agreement.
4. Re-employment obligation is expected to be abolished for businesses and organisations that regularly employ fewer than 50 employees irrespective of any provisions of a collective bargaining agreement. Currently, such a period is four or six months, depending on the length of the employee's employment relationship. The re-employment obligation means that the employer must offer re-employment to an employee who has been terminated for financial or production-related reasons, provided that the employer needs workforce for the same or similar work that the terminated employee had previously performed.
5. Another upcoming legislative reform is the amendment to sick pay. Under the current legislation, sick pay is paid for the day of falling ill and for the following nine days (excluding Sundays and bank holidays). The new legislation would remove the employer's obligation to pay for the first day unless otherwise specified in the applicable collective bargaining agreement or the employment contract. The proposed amendment would not apply to sick leave of five days or more, or when the incapacity for work is caused by an occupational accident or disease. This legislative amendment is expected to be proposed to the Parliament in the second half of 2025.

We will organise our traditional Krogerus employment law afternoon seminar on current and upcoming topics in Finnish employment law in March 2025. Invitations and further details of the seminar will be shared in the near future.