National Labour Law Profile: Republic of Finland1
Constitution
The Finnish Constitution
(731/1999) was adopted on 17 July 1999 and entered
into force on 1 March 2000. The new Act replaced the 1919 Constitution
Act, the 1928 Parliamentary Act, and two other statutes, which were
formerly regarded as constitutional enactments. The rules on basic rights
and the main parliamentary, governmental and judicial functions are now
codified under a single statute.
According to the Constitution, Finland is not organised as a Federal
State. However, the Province of Aland (comprising a group of islands
between Finland and Sweden) enjoys extensive self-government.
The new Constitution has strengthened the position of the Parliament in
relation to the Government and to the President of the Republic. As a
result, the Prime Minister is elected by the Parliament. The candidate is
nominated by the President upon negotiations held among the parliamentary
groups, but if the nominee cannot win a majority vote, the Parliament may
finally elect another person who receives the most votes. Within the
four-year term of the Parliament, the mandate of the Prime Minister lasts
as long as he or she, or the whole Government, enjoys the confidence of the
Parliament. The President is elected by the people for a term of six
years. He or she may be re-elected for one consecutive term.
The Parliament is a unicameral body consisting of two hundred
Representatives. The legislative power is vested on the Parliament and the
President of the Republic. Although legislative motions can be submitted
by the Representatives, too, in practice nearly all important proposals are
initiated in the Parliament as Government Bills. Upon adoption of an Act
in the Parliament, the President confirms the Act, but exceptionally may
use a suspensive veto right (for the details of the legislative procedure,
see the
Ministry of Justice website,
and Chapter 3 of the Constitution).
As regards the impact of international law in national law, Finland follows
the dualistic model. Thus, obligations based on international treaties are
transformed into domestic law by means of a Parliamentary Act, or, as the
case may be, a Decree issued by the President (Sec. 94 and 95 of the
Constitution). In legal and administrative proceedings it is not unusual
that the interpretation of statutory provisions is influenced by
international treaties and especially EU law.
As Finland has joined the European Union it is bound by European Community
Law, namely the so-called primary legislation made up of the
Treaties establishing the European Communities, and by secondary
legislation based on the Treaties, which implies a variety of
procedures defined in different articles thereof. Secondary legislation
includes regulations and Directives. Not less important is European Case
Law, made up of judgements by the European Court of Justice and the
European Court of First Instance, which are binding on national courts.
The Finnish administration of justice follows roughly the division between
private law and public law. Jurisdiction in civil, commercial and criminal
matters is exercised by the regular courts, a system consisting of the
District Courts, the Courts of Appeal, and the Supreme Court.
Administrative cases, including tax appeals, are tried by the regional
Administrative Courts and, in the final instance, by the Supreme
Administrative Court. In addition to the regular court system, a number
of specialized courts have been established, the Labour Court being
perhaps the most important of them.
The Official languages of the country are Finnish (spoken by about 93.4 per
cent of the population), and Swedish (spoken by about 5.9 per cent of the
population). In this respect it should be recalled that until the early
19th Century, Finland was ruled by Sweden, which explains that
Civil Law in Finland is to a large extent influenced by Swedish Law. Also,
there are some minorities speaking Russian and arctic languages.
Chapter 2 of the Constitution provides for the protection of basic rights
and liberties, including fundamental labour rights. Under Sec. 18, the
right under law to acquire one’s living through work or trade of his
own choice is protected. The promotion of employment and
everyone’s right to work, as well as the protection of the labour
force are duties imposed on the public authorities. Everyone has the right
not to be dismissed from work without lawful reasons. The freedom to
organise in trade unions (as a positive and a negative right) is regulated
in Sec. 13 in connection with the right to arrange and participate in
demonstrations. These provisions are also considered to contain at least a
basic guarantee for the right to strike. The main function of the
constitutional rights discussed here is to imply tasks for the public
authorities. However, the provision on job security has, in legal
proceedings, been treated as an enforceable right for the individual. The
same applies to the rules of Sec. 6, concerning equality and ban on
discrimination, which are also considered to have a horizontal effect
between private parties.
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Labour regulation
The structure and role of the Finnish labour regulation reflects many of
the central features of the so called Nordic model of industrial
relations. Thus, the Finnish labour market is characterised by a high
level of organisation on both the employee and the employer side, and an
important role played by collective bargaining in labour regulation. The
basis of the regulation lies, however, in comprehensive and detailed
labour legislation which is complemented by collective agreements. It is
common for statutory rules to allow derogation by means of collective
agreements, usually concluded between national federations of employers and
employees. The impact of collective negotiations has evolved mainly after
the II World War. Since Finland’s affiliation to the EEA Agreement in
1994 and joining the EC the following year, European integration has had a
harmonising influence on the regulation as a whole.
The basic regulation of individual labour relations has in Finland
traditionally been codified in a statute called the Employment Contracts
Act. The first Act bearing this name was passed 1922 and was replaced by
the 1970 Act, which in turn has recently been repealed by the 2000 Statute
(Act 55/2000, in force as from 1 July 2001). The Employment Contracts Act
provides for the definition of the employment contract, the ways of
concluding and ending the contract, as well as the rules on job protection
and a number of basic rights and duties of the parties regarding e.g. equal
treatment, transfer of undertakings, family leaves, payment of wages, and
the determination of minimum terms of employment through generally
applicable collective agreements or collective agreements which are to be
observed by employers hiring out their workers. Aspects of the individual
labour relationship are regulated in separate statutes such as the Labour
Safety Act (1958), the Annual Holidays Act (1973). The Hours of Work Act
(1996), The Study Leave Act (1979), and the Act on Equality between Men and
Women (1986).
The collective regulation of terms and conditions of employment
takes place within the framework of the Collective Agreements Act (1946)
which defines the competence of parties to collective agreements and the
legal effects of such agreements. During a period not covered by an
agreement the state may intervene in labour disputes of interest by virtue
of the Mediation in Labour Disputes Act (1962). Worker participation at
the enterprise level is based on the Co-operation Within Undertakings Act
(1978), the Act on the Representation of the Personnel in the
Administration of Enterprises (1990), and the Act on Personnel Funds
(1989).
The sources of labour law can be presented in a rough hierarchical
order as follows:
1) Mandatory rules of law;
2) Norms in a collective agreement which has been declared as generally
applicable;
3) Norms in a collective agreement which is binding by virtue of the
Collective Agreements Act;
4) Semi-mandatory statutory provisions from which deviations can be made
through a collective agreement;
5) Shop rules adopted in a co-operation procedure between the employer and
the representatives of the employees;
6) Clauses in individual employment contracts;
7) Optional rules of law and provisions of collective agreements, i.e.
norms which allow derogation based on individual contracts;
8) Customary law and established practice; and
9) Employer's orders.
A source mentioned in the list may, despite its hierarchical status,
usually be set aside by an agreement made in favour of the employee.
Directly effective EC law may also set aside conflicting national
provisions.
Case law, especially the jurisprudence of the Supreme Court and the Labour
Court, has an important role in clarifying the interpretation of the rules
of labour law, and is thus commonly observed by other courts. The regular
courts may also ask the Labour Court for an advisory opinion in a case in
which the application of a collective agreement is involved. This usually
takes place when the claim is based on a generally binding collective
agreement, a situation where the jurisdiction is vested in the regular
court. As regards the interpretation of statutory labour law, a special
tripartite body, the Labour Council, has been established to give advisory
opinions to other courts and authorities at their request. The practice of
the EC Court is also observed in the national courts.
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Contract of Employment
Permanent and fixed-term contracts of employment
Under the Employment Contracts Act, an employment contract is presumed to
have been made for an indefinite period unless it is expressly concluded
for a specified period for a valid reason. If such a reason is lacking
but the contract has nevertheless been made for a specified period at the
employer’s initiative, or if contracts for a specified period are
without a valid reason made one after another, the contract is also deemed
to have been made for an indefinite period (Chapter 1 Sec. 3). A contract
concluded for a period longer than five years may be terminated by both
parties after the fifth year as if it had been made for an indefinite
period. Shorter fixed-term contracts come to an end automatically at the
expiry of the contract period. The period must be specified in terms of
objective criteria, such as a given day or the completion of a given
project.
The new Act no longer specifies the valid reasons required for concluding a
contract for a fixed term. In this respect, the Government Bill (157/2000
pp. 60) makes reference to reasons stated in the 1970 Act. Thus, a
fixed-term contract may be made to replace temporarily another employee,
to complete a particular job etc. In this respect, flexible consideration
of varying situations in everyday working life is emphasised in the Bill.
In 2000, the share of male fixed-term workers was 11 per cent of all
workers in Finland, while the corresponding share of female fixed-term
workers was 18 per cent.
Special contracts of employment
The Employment Contracts Act is applicable to several groups of workers
engaged under both regular and atypical employment contracts. Thus,
part-time workers, fixed-term workers, home workers and workers of
temporary employment firms are all covered by the definition of employment
contract given in Chapter 1 Sec. 1 of the Act. It is another matter that
the Employment Contracts Act as well as a number of other statutes contain
some specific provisions regulating the terms of employment of these
workers. Seafarers, household employees and apprentices are subject to
somewhat more differing regulation. The status of civil servants and
certain other workers employed by municipalities and other public law units
is distinguished from employment contract and subjected to the rules of
public law.
Temporary agency work
There are only a few statutory rules regulating the operation of private
temporary work agencies. Such firms need not be licensed, but only
reported to the labour inspectorate. In addition, a TEA must give the
labour inspection and manpower authorities regular information of its
activities. The user firms are equally subject to only few restrictions as
regards the use of external workers supplied by a TEA. Utilization of
outside manpower is, however, a matter which must be handled in
negotiations under the Cooperation Within Undertakings Act. There are
also collective agreements according to which the use of outside manpower
should be limited for the levelling of work peaks or for special and
temporary tasks which cannot be performed by the undertaking’s own
staff.
The employment contract between a TEA and its worker is usually made on a
fixed-term basis for each assignment. According to a new rule adopted in
Sec. 9, Chapter 2 of the Employment Contracts Act, workers hired to work
for another employer under its authority enjoy certain basic protection
even if their own employer, such as a TEA, is not bound by any collective
agreement. In this case the minimum terms of employment to be observed are
normally those determined in the collective agreement applicable to the
user undertaking. The health and safety at work of temporary workers is
protected under a Government Decree issued in 1997 to implement EC
Directive 91/383.
Although the TEA business has been growing in recent years, the share of
supplied labour in Finland is still less than 0.3 per cent of the whole
workforce.
Probation
An employment contract may be agreed to start with a trial period of not
more that four months, or in some cases, six months (1:4 Employment
Contracts Act). If the contract is made for a fixed term shorter than
eight months, only half of the contract term may consist of a trial
period. To be entitled to invoke a stipulation on a trial period coming
from a collective agreement, the employer must individually inform the
employee of the stipulation upon concluding the contract. During the trial
period, either of the parties may terminate the contract with immediate
effect. If the measure is taken by the employer, however, it may not be
based on unfair grounds.
Suspension of the contract of employment
The most important situations where the execution of the contract of
employment is suspended are the following:
- Industrial action, whether legal or not legal, means that employees
who are on strike or who are comprised by a lock-out do not work and will
not
receive their wages for the time of the action either. Their contracts are
not, however, automatically brought to an end due to the action. The
workers involved do not have a right to draw unemployment benefits, but
their loss of income may partly be compensated by strike assistance paid
by their union.
- In case of non-availability of work the employee’s right to pay
depends on the cause of the situation. Under Chap. 2 Sec. 12 of the
Employment Contracts Act, if the hindrance of work is due to circumstances
for which the employer is responsible (lack of raw materials, bad
organisation of work etc.), an employee who is at the disposal of the
employer shall continue to receive his wages, unless otherwise agreed. If
the impediment does not lie within the control of the employer or the
employee (e.g. fire), an employee whose work is thus prevented is entitled
to wages for a maximum period of 14 days. If, however, such an impediment
is caused by industrial action taken by other workers, and the action has
no connection with promoting the interests of the employee in question, the
period of remuneration is limited to 7 days. Following this period the
employee is entitled to unemployment benefit from public funds.
- The employer may have a right to lay off his employee for a fixed
period or until further notice. The grounds and procedure for this measure
are regulated in the fairly detailed provisions of Chapter 5 of the
Employment Act. Grounds for lay-off must be production-related, or
connected to the financial or economic situation of the employer. During
lay-off no work is done and no wages are paid while the employment
relationship prevails in all other respects. A lay-off may also take the
form of a reduction of the regular working hours of the employees in
question. Unemployment benefit is available for the time of the lay-off.
- Finally, the employee’s work may be suspended for the time of
leaves granted for illness, maternity, studies etc. These will be
discussed later.
Termination of the contract of employment
Termination of the contract of employment by means of notice is regulated
in Chapter 7 of the Employment Contracts Act. The formulations are partly
new but the provisions mainly reflect the status of case law developed in
the application of the 1970 Act and introduce only a few changes with the
improvement of job security as their goal. Further rules, related to
rescinding the contract, are to be found in Chapter 8, while the
termination procedure is governed by Chapter 9 of the new Act. Provisions
on terms of notice and some other general issues regarding termination are
given in Chapter 6.
In addition to the rules on general job protection, to be discussed below
in more detail, the Employment Contracts Act contains provisions which
guarantee special protection to certain groups of employees, such as
employee representatives, pregnant women or employees using their right to
family leaves. On the other hand, the termination has been made easier for
some circumstances, such as the death or bankruptcy of the employer or a
court-directed business reorganisation procedure.
Termination at the initiative of the employer
The contract may be terminated by notice issued by the employer on grounds
relating either to lack of work (collective termination) or to
reasons connected with the individual employee (individual
termination). In both cases, the termination is subject to the general
condition, laid down in Sec. 1 of Chapter 7, that the reason must be
objective and weighty. The substance of this condition may vary from case
to case, but in any event the ground for the termination must not be
discriminatory of in conflict with the employer’s loyalty duty.
The grounds for individual termination are specified in Sec. 2 in
which two types of reasons are described: serious violation or omission of
the employee’s essential duties, and incapacity to work resulting
from a change of conditions that belongs to the risks of the employee (e.g.
imprisonment). Save the most serious cases of misconduct, the employee
must be provided with a warning and an opportunity to change his behaviour
prior to the termination. The employer must also ascertain whether or not
the employee can be relocated in other work in the undertaking or within a
group of undertakings controlled by the employer. Sec. 2 further lists
grounds which in no event can be considered to justify a termination, such
as the employee’s illness which has not caused permanent disability
to work, participation in an organized industrial action, or the
employee’s political or religious opinions.
Under Sec. 3, a collective termination is justified if work has
reduced for economic or production-related reasons or reasons connected
with the reorganization of the firm’s activities, and the reduction
is both substantial and permanent. The employer’s relocation duty
applies to collective dismissals as well. Examples of unjustified grounds
for dismissal are given also in Sec. 3. The situations envisaged here
mainly relate to presumed cases of concealed individual terminations, such
as reorganization of work which in fact has not resulted in a reduction of
the work tasks. If the employer within nine months after a collective
termination needs manpower for similar work, such work shall in the first
place be offered to former employees seeking work through the local
Manpower Office.
Severance pay
An employee who has reached the age of 45 and has been dismissed on valid
collective grounds is entitled, if re-employment is considered difficult,
to severance payment from a public fund. The decisive condition is that
the applicant has lost his or her job for economic or production-related
reasons, i.e. for reasons not connected with the employee’s person or
behaviour. The overall payment consists of a basic amount of ca. 670 EURO
and other amounts relating to the employee’s age, wage, weekly hours
of work, and years in working life. In a typical case the severance
payment would be 1,500 EURO in all.
Notice
The terms of notice range from 14 days in employment relationships
that have continued for one year at the most, to six months in employment
relationships which have lasted more than 12 years. These rules of Sec. 3
Chapter 6 of the Employment Contracts Act can be departed from by
agreement.
Under Sec. 4, Chapter 9 of the Employment Contracts Act, notice can be
delivered electronically, but only if delivery in person is not possible.
The preparatory works of the provision reveal that the security of this
method had been under consideration. According to Government Bill N:o
157/2000, electronic delivery is explained as referring to the use of
telefax, e-mail or other reliable electronic method. Burden of proof would
lie with the party who maintains that delivery has taken place.
In the most serious cases of individual nature a notice period need not be
observed. This is the case when the employer rescinds the contract with
immediate effect on grounds laid down in Sec. 1 Chapter 8 of the Act. A
rescission is permissible for an especially weighty reason constituted by
the employee’s serious violation or omission. Also contracts made
for a fixed term can be thus terminated before the end of the contract
period. The right to rescind must normally be exercised within 14 days
after the employer has learned about the cause.
The procedural rules on termination require that the employee shall be
accorded an opportunity to be heard about the reasons for an intended
rescission or an individual termination. In cases of collective
termination, the reasons and alternatives for the projected measure shall
in good time be presented to the employees in question or to their
representative. Where the Cooperation Within Undertakings Act is
applicable, the matter must be submitted to negotiations under that Act.
Further rules on the details of the termination procedure are given in
Chapter 9 of the Employment Contracts Act and in collective agreements.
Remedies in case of unjustified dismissal
The effect of a termination is that the employment relationship ceases even
when the termination is not justified. Neither can the relationship be
reinstated without the consent of both parties. Instead, an employee who
is illegally dismissed from work is entitled to compensation under the
provisions of Chapter 12 of the Employment Contracts Act. The compensation
sum may amount to 24 month’s wages and is determined on the basis of
a number of criteria, such as loss of earnings suffered by the employee,
unemployment benefits awarded to compensate such loss, duration of the
employment relationship, and degree of guilt found on the side of the
employer.
Termination at the initiative of the employee
An employee may terminate an employment contract, concluded for an
indefinite period, by giving notice to his employer. The notice period to
be followed is 14 days or one month, depending on whether the employment
relationship has lasted for five years or a longer time. No grounds are
required for such termination. But if the employee intends to rescind the
contract with immediate effect, he must be able to present an especially
weighty reason for doing so. Also in other respects the employee must
follow the provisions which correspond to those which the employer must
observe when rescinding the contract (Chapter 8 of the Employment Contracts
Act).
According to Sec. 2 Chapter 12 of the Employment Contracts Act, if the
contract is rescinded by the employee on grounds relating to the
employer’s wilful or negligent action envisaged in Sec. 1, Chapter 8,
the employee is entitled to compensation as if the contract had been
unjustly terminated by the employer.
A specific provision on constructive dismissal in connection with a
transfer of undertaking is included in Sec. 6, Chapter 7 of the Act. In
line with Art. 4(2) of the Transfer of Undertakings Directive, the employer
is deemed liable if the employment contract is terminated due to a
substantial change in working conditions to the detriment of the employee.
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Hours of work
The Hours of Work Act was passed in 1996 to implement the EC Working Time
Directive (93/104/EC). The new Act also replaced a number of previous
statutes regulating working time in different branches. The sphere of
application of the Hours of Work Act is general, and only seafarers and
household workers, as well as workers employed in road transport and
bakeries, are still subject to a separate working time regulation.
Under the Hours of Work Act, working time includes the time actually worked
and the time the employee is obliged to be at the work-site at the disposal
of the employer. The maximum normal working time is eight hours a day and
40 hours a week. The weekly limit may, however, be exceeded by means of a
schedule, laid down by the employer in advance, providing for working hours
not exceeding 40 a week on average over a period of 52 weeks. The Act
further provides for a number of alternative ways of arranging the normal
working time within certain limits. This is possible in branches,
enumerated in Sec. 7 of the Act, where periodic work is allowed, and
generally if the arrangement is agreed upon individually or, as the case
may be, through a nation-wide collective agreement. Working time
arrangements based on collective agreements which in turn permit local
deviations are quite common. Night work, shift work, Sunday work as well
rest periods are subject to rules and conditions which in the main follow
the regulation in the Working Time Directive.
Overtime work presupposes the employee’s individual consent,
given for every separate occasion or for a certain shorter period.
Overtime is allowed up to 138 hours within a period of four months, and up
to 250 hours during a calendar year. The yearly maximum can be exceeded
with at most 80 hours on the basis of a local agreement. Emergency work,
necessitated by an accident or some other unforeseen circumstance, can be
done for a period of two weeks at most regardless of any other limits set
by law or agreement. Overtime work and emergency work in excess of the
normal daily hours of work shall be paid with time and a half for the first
two hours and with double time for any extra hours. If merely the normal
weekly hours of work are exceeded, the hours so worked shall be paid with
time and a half. The compensation just explained may be replaced with
corresponding paid free time, if so agreed.
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Paid leave
Under the Annual Holidays Act, 1973, employees earn their holiday in much
the same way as they earn their wage. Every employee is entitled to a paid
vacation of usually two and a half weekdays (Saturdays but not Sundays
included) for each month of service. Every calendar month with at least 14
days or, in some cases, 35 hours worked is counted. For this purpose, also
days of absence due to sickness, lay-offs etc. are regarded as working
days.
The annual vacation shall normally be given as one continuous period during
the holiday period of 2 May through 30 September. However, the part of the
vacation that exceeds four weeks may be given as a winter vacation. Within
these and certain other limits provided for in the Act, it rests with the
employer to determine, upon hearing the opinion of the employee, the time
of the vacation. One of the exceptions to this main rule is that the
employee has the right to save six days of his summer vacation to be used
in later years. In addition to their normal wage which under the Act is
payable before the time of the vacation, employees are, according to most
collective agreements, entitled to a vacation bonus, usually 50 per cent of
the vacation pay.
A tripartite Committee has been set up in the spring of 2001 to prepare a
reform of the regulation on annual holidays.
As regards public holidays, a special Act has been passed in 1937 to
guarantee that employees get their normal pay also on Independence Day, 6
December. Should work be done on Independence Day, it is remunerated as
Sunday work. The same applies to work done on a number of Church festivals
which have been transferred to Saturdays. Some festival days, such as New
Year’s Day, Good Friday and May Day, may coincide with usual working
days, and for these cases collective agreements generally include
provisions according to which employees are entitled to a full week’s
wage in spite of the holiday.
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Maternity leave and maternity protection
The protection of women workers during pregnancy and after childbirth is
mainly arranged by means of maternity leave. Additional protection is
granted to pregnant workers whose work involves a risk to the health of the
worker or the foetus. If the risk cannot be eliminated, the worker should,
in the first place, be transferred to other tasks more suitable to her. If
this is not possible, the worker may have a right to a special maternity
leave, which is designed to workers who are exposed to health risk caused
by certain chemical substances, radiation or contagious disease (tobacco
smoke being one of the risks recently added to the law).
The right to family leaves is regulated in Chapter 4 of the Employment
Contracts Act. Maternity, paternity and parental leave is granted for the
period to which the corresponding benefit, governed by the Sickness
Insurance Act (1963, as amended), is deemed to relate. Thus, maternity
leave normally begins 30 weekdays before the calculated date of
confinement and lasts 105 weekdays. Paternity leave is granted for
6 to 12 weekdays in connection with the confinement and for another 6 days
at a later time. Maternity leave is followed by a 158 weekdays’
parental leave, which can be used by the mother or the father according
to their choice. According a reform plan, which has already been agreed
upon politically, one month of the parental leave will be reserved for the
father only. The benefit payable to the employee amounts to 70 per cent of
the previous earnings at most. Under the Employment Contracts Act, the
employer has not duty to pay wages for the time of family leaves. However,
according to some collective agreements the employee is entitled to full
pay for the first two or three months of the maternity leave.
The Employment Contracts Act also provides for a child care leave
which begins after the parental leave and may last until the child reaches
the age of three years. A child care benefit is payable for this period to
families which choose not to place their child in municipal day care.
Furthermore, the parents of small children have a right to a four
days’ temporary child care leave in case of a sudden illness
of the child, as well as a right to shortened working hours until the child
goes to school (partial child care leave). These leaves are unpaid.
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Other leave entitlements
Sick leave
Disability to work due to illness or accident is an exception to the
general rule according to which remuneration need only be paid for work
actually done. After one month’s employment, an employee is entitled
to sick pay during the first nine working days after the disability began
(Chap. 2 Sec. 11 of the Employment Contracts Act). This is normally the
period after which the employee begins to draw daily benefit under the
compulsory sickness insurance. If the employment has lasted less than one
month, the employee is entitled to one-half of his wages for the disability
period. The right to sick pay is subject to the condition that the
disability is not caused by the employee himself wilfully or by gross
negligence.
Other special leave
Study leave is granted under the Study Leave Act (1979) to employees
with at least one year’s full-time service with the same employer.
The leave may be taken for general, vocational, professional, or trade
union education and training. The maximum amount of study leave is two
years in the course of five year’s service. No wages are paid
during the time of the study leave.
Furthermore, its is common that collective agreements provide for trade
union courses and other educational leaves. Professional courses arranged
by the employer, as well as courses for workers’ representatives,
generally include compensation for the time off.
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Minimum age and protection of young workers
According to the Young Workers’ Act (1993), a valid employment
contract may be concluded by a person with 15 years of age on condition
that he/she is no longer liable to compulsory school attendance. A child
who has attained or will during the calendar year attain the age of 14 may
be employed in very light work for a short period outside school hours on
the consent of the person having care and control of the child. That
person has, on the other hand, the competence to rescind the contract of a
person under 18 in the interest of the education, development or health of
the minor.
Special protective measures, such as training, education and medical
examination, must be taken by the employer in connection with the
employment of a minor (Sec. 9-11 of the Act). The regular working time of
a young person over 15 is the same as that of an adult employee in the same
kind of work. As for overtime and emergency work, night work, shift work,
and minimum daily rest, more restrictive conditions are prescribed in Sec.
4-8 of the Act. Thus, no more than 80 hours of overtime work per calendar
year is permitted (without dispensation) for a young worker, and the
working hours may not exceed 9 per day and 48 per week. The minimum daily
rest is 12 consecutive hours and the minimum weekly rest is 38 hours,
correspondingly. The hours of work shall fall between 6 a.m. and 10 p.m.
The work of an employee under 15 is subject to even more far-reaching
restrictions as regards working time.
A separate Decree on the Protection of Young Workers (1986, as amended)
contains an enumeration of jobs considered unsuitable for persons under 18
or 16. These jobs include work involving risk of exposure to detrimental
radiation, work performed alone under risk of violence, work with
psychiatric patients etc. However, the competent labour protection
authority may grant exceptions from these rules on condition that such an
exception is deemed necessary and the young person in question will work
under proper surveillance. Exceptions from the rules on minimum age,
explained above, may also be granted for cases where a child under 14 is
occupied as a performing artist or an assistant in an artistic or cultural
performance.
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Equality
The prohibition to discriminate on the ground of sex, age, origin,
language, religion, conviction, opinion, health, disability or other such
ground is laid down in Sec. 6 of the Constitution. The prohibition is
subject to the condition that there is no acceptable reason for different
treatment. The Employment Contracts Act, 2:2, repeats the main content of
the provision, adding trade union activity to the list of grounds on which
discrimination within the employment relationship is forbidden. The
discrimination ban must be observed also in hiring new employees.
Furthermore, the provision of the Employment Contracts Act imposes on the
employer a duty to treat his employees impartially in other respects as
well, unless an exception is warranted by justified reasons.
Sex discrimination is regulated specifically in the Equality Act,
originating from 1987 but containing several amendments designed mainly to
implement the requirements of EC sex discrimination law. In the general
clause of the Act (Sec. 7), discrimination is defined as placing women and
men in different positions on the basis of gender. Gender-based reasons
are further defined to cover any reason relating to pregnancy, childbirth
or parenthood, the liability to support one’s family, or any other
reason directly or indirectly connected with sex. To constitute
discrimination, it is sufficient that the persons in question are factually
put in different positions on account of sex. The comparators need not
represent different sexes (say, in the case of two female job applicants of
which only the other has family responsibilities). The Act, which has
general applicability, contains further detailed rules on discrimination in
working life, specifying the kinds of practices which are considered
discriminatory, as well as the permissible forms of positive discrimination
(e.g. protection of pregnant women; see Sec. 8-10).
Besides prohibiting sex discrimination, the Act also imposes on the
employer duties to promote equality. He shall endeavour to have
both women and men seeking jobs, try to create equal career opportunities,
and adjust the working conditions suitable to both sexes (Sec. 6 and 6 a).
One of these positive obligations is the duty to ensure as far as possible
that no employee is subjected to sexual harassment or derangement.
Non-fulfilment of this duty is regarded as a form of prohibited
discrimination and may, as in the case of the other forms, render the
employer liable to pay to the victim a pecuniary compensation which is
normally adjusted between 15,600 - 51,900 FIM (ca. 2,600 - 8,700 EUR). The
supervision of the Equality Act is entrusted with the Equality
Ombudsman and the Equality Delegation. A major reform of the
Equality Act is under way at the moment.
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Pay issues
The amount of pay is not fixed directly by law in Finland. Pay is normally
determined in collective agreements or between parties to individual
employment contracts. The provisions on pay, included in the Employment
Contracts Act, merely regulate the time, place and manner of payment and
related issues. However, the Act also provides for the general
applicability of collective agreements and in this way forms a
statutory basis for the regulation of minimum wage and other minimum terms
and conditions of employment as well. Within this system, even
non-organized employers shall observe the minimum provisions of a
collective agreement which has been declared as generally applicable in the
field. Should there be no collective agreement applicable to a particular
work, and no stipulation on pay in the employment contract either, the
Employment Contracts Act provides that “customary and reasonable
wage” shall be paid (2:10). Thus far there is no experience of the
matter, and the application of the new provision can be expected to have
only minor significance in practice. One could assume that the criteria
for reasonable wage would be found e.g. in a collective agreement
regulating similar type of work. In case of dispute, the matter shall be
brought before a regular court to be tried in normal order.
In case the payment of indisputable claims are delayed at the end of the
employment, the employee is entitled, on certain conditions, to a wage for
six waiting days. In the event of the employer’s bankruptcy or
insolvency, the payment of wages is assured by the Government under the Act
on Guaranteed Payment of Wages (1998). The guarantee covers the
employee’s wages and all other debts arising out of the employment
contract but is limited to debts which have not been due for more than
three months and do not exceed a certain maximum amount. The
employee’s claim can be filed with the local Manpower Office.
The guarantee is in the first instance met out of public funds but can then
be recovered from the insolvent employer, or, in the last instance, from
obligatory unemployment fees collected from all employers.
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Trade union regulation
Trade union freedom, comprising also the right not to belong to an
association or to resign from one, is guaranteed by the Constitution, the
Employment Contract Act, and also the Criminal Code. In addition, most
collective agreements include clauses on freedom of association. Employers
are equally covered by the rules envisaged, and workers enjoy protection
against actions taken by their fellow-employees as well. The regulation in
effect prohibits closed shop arrangements.
Trade unions as well as employers’ associations are governed by the
general rules of the Associations Act (1989). No specific pattern for trade
unions is provided for. A union gains legal personality upon registration
which cannot be denied if the formal requirements are fulfilled.
The Finnish labour market is characterized by three dominating central
confederations on the worker side. The largest one is the SAK, the Central
Organization of Finnish Trade Unions, representing nearly 1,100,000
wage-earners. The member associations of the SAK are 23 federations which
are in general formed on an industrial basis. They are fairly independent
in their collective bargaining activity which covers manufacturing, private
services, transport, local government, and the state sector. The
federations in turn are composed of local unions which may comprise
employees of one single large employer, or employees of all workplaces of
the industry in the locality.
While the SAK is essentially a confederation of blue-collar employees,
white-collar employees are organized in the two other confederations. The
Finnish Confederation of Salaried Employees STTK represents over 650,000
employees such as nurses, technical engineers, police officers, and
secretaries. The Confederation of Unions for Academic Professionals in
Finland (Akava) watches over the interests of 375,000 professional and
managerial employees. Especially in Akava the member federations are
organized on a professional basis.
In the private sector, the employers are organized mainly in two
associations. The Confederation of Finnish Industry and Employers (TT) has
member federations and associations in the fields of manufacturing,
construction, transportation and maintenance, whereas the Employers’
Confederation of Service Industries (PT) represents employers, mostly small
firms, in trade, banking, insurance, hotels and restaurants etc.
As from 1968, most collective agreements have included clauses on
collection of union dues by check-off. Upon an authorization, given
in writing by the worker, the employer shall deduce union dues from wages
and salaries and remit the amounts thus deducted to the trade union in
question. The system is generally applied and plays an important part in
the stability of the trade unions’ economy.
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Collective Bargaining and Agreements
Regulation and basic concepts
Collective bargaining is regulated in the Collective Agreements Act, 1946.
As a precondition for the application of the Act, three basic
characteristics of a collective agreement, relating to its parties,
contents and form, are required to be at hand.
Under Sec. 1 of the Act, a collective agreement shall on the employer side
be concluded by an employers’ association or by an employer, whereas
on the employee side a trade union must appear as a party. The agreement
may also have more than two signatory parties, e.g. one employee federation
and two federations from the employer side. Regarding contents, the
agreement must set conditions to be observed in employment contracts or
otherwise in employment relations. This widely interpreted definition
refers to the so called normative clauses of a collective agreement
which regulate the terms and conditions of individual employment
relationships (pay, working hours etc.). A collective agreement may, in
addition, contain obligatory clauses which are intended only to have
legal effect between the contracting parties, e.g. a commitment to develop
new pay systems. Finally, to be legally valid a collective agreement must
under Sec. 2 of the Act be concluded in writing.
The structure and the levels of collective bargaining
The collective bargaining mechanism in Finland can roughly be described to
consist of three levels:
- At the top level, the employees’confederations negotiate
general and framework agreements with the central employers
confederations regulating general wage increase, hours of work, the status
of shop stewards, and other matters broadly pertaining to working life.
These agreements normally become binding after they have been incorporated
in collective agreements concluded by the federations. It is common
practice that also the state takes part in such central negotiations
which then may result in an incomes policy agreement covering
social policy and tax solutions etc.
- Most of the of collectively agreed terms of employment come into being
at the level of nation-wide federations. Usually there is one
leading, comprehensive collective agreement in the industry in question.
However, where the organization of the trade union is based on craft, the
union negotiates an agreement with the employers’federation in
each industry.
-
Local agreements of various types have gained importance in
recent years. An industry-wide agreement may refer certain issues to be
solved locally, or allow derogation from its contents by means of local
agreements. There are also independent company agreements concluded
between an employer and a local or an industry-wide trade union.
Effects of collective agreements
Under Sec. 4 of the Collective Agreements Act, the subjects bound by the
agreement are:
1) the parties to the agreement themselves and those who have in writing
joined the agreement, and, 2) the associations as well as individual
employers and employees which are, directly or through intermediary
associations, members of associations which are parties to the agreement.
Employment terms included in the normative clauses of a collective
agreement become automatically and with obligatory effect
applicable within employment relationships covered by the agreement.
Moreover, an employer who is bound by the agreement shall observe its terms
vis-à-vis his employees who are not themselves bound by the
agreement (usually non-organized employees) but who perform work covered by
the agreement. The employment terms stipulated in a collective agreement
may, however, usually be exceeded by means of individual employment
contracts. A compensatory fine is provided for in the Act to give effect
to compliance with obligations ensuing from the agreement.
Associations bound by a collective agreement are under a duty to
supervise that their members do not violate any provisions of the
agreement. Finally, a labour peace obligation enters into force for
the agreement period as a statutory effect of the conclusion of a
collective agreement.
Unless the agreement is concluded for a fixed period, it can be terminated
by way of notice. According to a common clause the terms of the agreement
shall continue to be observed until a new agreement has been concluded or
the negotiations have broken down.
Generally applicable collective agreements
The scope of certain collective agreements may be extended so that they
have an obligatory effect also on employers not otherwise bound by the
agreement. Under Sec. 7 of Chapter 2 of the Employment Contracts Act, the
general applicability of collective agreements presupposes that the
agreement is nation-wide and can be deemed as representative in the field
in question. In the consideration of the said criteria several factors
are taken into account, the point of departure being that about one-half of
the employees in the field concerned are covered by the agreement already
by virtue of the Collective Agreements Act. The procedure for declaring a
collective agreement to be generally applicable is regulated in a specific
Act (2001), passed in connection with the new Employment Contracts Act. A
generally applicable collective agreement will not involve a labour peace
obligation, nor any other obligations to the employee side.
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Workers’ representation in the enterprise
The most important workers’ representative in the enterprise is the
shop steward. Chief stewards and department shop stewards are
elected at the workplace by members of the local trade union. The system
is based on collective agreements, and the shop steward is considered to
represent the local union especially in negotiations concerning the
application of the collective agreement. However, the shop steward has
certain statutory tasks and rights as well. The Employment Contracts Act
has further accorded workers not represented by a shop steward a right to
elect a workers’ delegate. Under the occupational health and
safety legislation, all workers of the undertaking have, regardless of
union membership, a right to take part in the election of a labour
safety representative for an office of two years at a time.
All workers’ representatives, mentioned above, enjoy special job
security as well as statutory protection against discrimination. They also
have rights pertaining to information in their respective fields, and a
right to compensation for loss of earnings. Shop stewards have the most
extensive rights, determined in detail in collective agreements.
The organization ofworker participation is under the Co-operation
Within Undertakings Act (1978) arranged on the basis of the workers’
representation just explained. Matters subject to the co-operation
procedure may be discussed with the individual workers affected, but, if
the matter concerns the personnel more generally, it is negotiated with the
representatives, normally the shop stewards, of the personnel groups in
question. Sec. 6 of the Act contains an extensive list of issues to be
handled in the procedure prior to the employer’s decision-making.
The most important of these issues relate to business reorganizations
leading to collective dismissals or a transfer of the undertaking or a part
thereof. In these respects the Act has been adjusted to meet the
requirements, regarding scope and content of the information and
consultation duties, envisaged in the relevant EC Directives.
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Strikes and lock outs
Industrial action is permissible within the limits laid down in the
Collective Agreements Act and procedure regulated in the Act on Mediation
in Labour Disputes (1962).
Under Sec. 8 of the Collective Agreements Act, the peace obligation
is connected with the conclusion of a collective agreement and remains in
force together with the agreement. During this period all those bound by
the agreement, except individual employees, are under a duty to refrain
from taking industrial actions - meaning strike, lock-out, overtime ban,
blockade, mass dismissal etc. - directed against the agreement as a whole
or any of its individual stipulations. In addition to this so called
passive peace obligation, parties bound by the agreement are under an
active duty to ensure that their members respect industrial peace.
In case of a comprehensive collective agreement, there remains little
margin for exerting lawful pressure against the opposite party in labour
relations. Political actions and genuine sympathetic actions are, however,
permissible even during the agreement period.
An employer or an association may, under Sec. 8 of the Collective
Agreements Act, be ordered by the Labour Court to pay a compensatory fine
for a breach of the peace obligation. According to the Employment
Contracts Act, individual employees participating in an industrial action,
legal or not legal, are protected against dismissal on condition that the
action is decided by a trade union (7:2). Thus, the legal consequences of
organized industrial action are confined to the sphere of collective
labour law rules only.
The procedural rules of the Act on Mediation in Labour Disputes become
applicable when the peace obligation is not in force. Under Sec. 7, any
one intending to commence a strike or lock-out has to give notice
to the opposite party and to the office of the National Conciliation
Officers at least 14 days beforehand. The Ministry of Labour may defer the
intended labour stoppage for another 14 days, if essential general interest
are threatened and extra time for mediation is deemed necessary. Upon
receiving the prior notice mentioned above the competent conciliator shall
take measures to settle the dispute. Such measures may include presenting
a draft settlement to the parties, if negotiations convened by the
conciliator have not lead to a solution. No compulsory measures are,
however, available to stop the projected labour stoppage or to enforce a
settlement the parties are not willing to accept.
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Settlement of labour disputes
Individual labour disputes over rights, referring to labour legislation or
to employment contracts, are heard and tried by the regular courts
following the same procedure as applies e.g. to other contractual
disputes. Accordingly, the Supreme Court is the last instance in these
cases.
The Labour Court is a single special court established to deal with
disputes connected with collective agreements. The jurisdiction of the
Court is reflected in its tripartite composition, consisting of neutral
members and members representing employers and employees, all nominated for
a three-year period. The competence of the Court covers disputes
concerning interpretation of collective agreements, and breaches against
duties ensuing from collective agreements (such as violations of individual
agreement clauses or the peace obligation). The parties to lawsuits at the
Labour Court are normally the parties to the collective agreement in
question. In recent years, approximately 100 suits per year have been
brought before the Labour Court.
Legal proceedings at the Labour Court may only be instituted if the dispute
has not been settled in a grievance procedure, if provided for in
the collective agreement. The procedure usually implies that disputes
concerning the application of the agreement shall be handled in
negotiations which are started at the level of the workplace and, if
necessary, continued at the federation level. Remaining disputes can then
be taken to the Labour Court which gives a final decision in the case.
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Web Links
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Bibliography
Last update, 31.10.2001
1. Contributed by Jorma Oskari
Saloheimo. LL.D. 1988 (Jur. Dr.), Vice President, the Labour Court in
Finland, Lecturer of Labour Law, University of Helsinki. Author of several
books and other publications on labour law in general, equal treatment,
occupational health and safety, workers' participation and EC labour law.
Address: Jorma Saloheimo, Labour Court, P. O. Box 165, FI‑00141
Helsinki, Finland, email: jorma.saloheimo@om.fi
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