Finnish government proposes new rules on employee holidays

The Finnish government is proposing changes to the Annual Holidays Act. The proposed changes are proposed to take effect at the beginning of the next holiday credit year on 1 April 2013.

The proposed changes include:
– an employee’s right to request that the holiday is postponed as from the first day of falling ill during the annual holiday;
– the modification of rules for calculating the holiday pay if the employee’s working hours and salary change during the holiday credit year; and
– the change of divisor when calculating the daily salary for an employee’s holiday remuneration.

Employee’s illness during the annual holiday

It is proposed that the employee is entitled to postpone the annual holiday as from the first day of falling ill during the annual holiday. Under the currently valid provisions of the Annual Holidays Act, the employee may request that the annual holiday is postponed only if the illness continues for more than seven days. Currently, the first seven days of illness are considered as qualifying period, which means that the employee is not entitled to postpone the holiday for these first days of illness even if the illness continues for more than seven days.

The Court of Justice of the European Union has delivered a judgment according to which this regulation is in violation of the directive (2003/88/EC) concerning certain aspects of the organisation of working time.

Therefore, it is proposed that the employee is entitled to postpone the holiday already from the first day of illness in case the employee falls ill during the holiday. Thus, the change means that the seven-day qualifying period is waived. The requirements for postponing the annual holiday are that (1) the employee is ill during the annual holiday and (2) the employee requests without undue delay that the holiday is postponed. Additionally, the employee shall provide a medical certificate or other reliable evidence of the illness.

The employee is entitled to sick pay for the period of illness in accordance with the Employment Contracts Act or the applicable collective agreement.

Changes in the working hours and salary

Changes regarding the calculation of the holiday pay of an employee who is paid monthly or weekly salary are proposed. The changes would only concern situations when the working hours and salary of an employee change during the holiday credit year.

It is proposed that in connection with such changes, the holiday pay is calculated percentage based. Previously, the holiday pay was calculated percentage based only if it was separately agreed between the employer and the employee. It is proposed that the percentage-based calculation shall be the main rule and no longer requires an agreement. The change does not affect the calculation of holiday pay for holidays that have accrued prior to 1 April 2013.

According to the proposed rules, the holiday pay for the whole holiday credit year is calculated as a percentage-based holiday pay if the employee’s working hours and salary change during the holiday credit year. The rules are applicable when the employee’s working hours are extended or shortened during the holiday credit year. The percentage-based holiday pay is calculated in accordance with the currently valid Section 12 of the Annual Holidays Act.

The changes in the working hours and salary only affect the holiday pay for the holiday credit year during which the change has taken place. Therefore, the changes in working hours and salary do not affect the calculation of holiday pay for the holidays that accrue in the coming holiday credit years.

The new rules are applicable when the change in working hours is agreed between the employer and the employee, such as part-time pension, part-time disability pension or if the employer changes the employment into a part-time employment in accordance with Chapter 7 Section 11 of the Employment Contracts Act. In such situation, no separate agreement on the calculation of the holiday pay is required. The rule is, however, not applicable for temporary lay-offs where the employee’s working hours are reduced to part-time work.

The calculation of the holiday remuneration

When the Annual Holidays Act took effect in 2005, the rules for calculating the holiday remuneration were changed. Prior to 2005, the holiday remuneration was calculated by using 25 as a divisor when determining the daily salary of an employee with a monthly salary.

After the change in 2005, the divisor was no longer explicitly determined in the Annual Holidays Act, but the rule was not changed. The rules for calculating the holiday remuneration have been considered unclear and, therefore, it is proposed that the 25 is set as a divisor again.