Establishing compliant employment relationships in Finland requires a clear understanding of local labor law and the specific requirements for employment agreements. Finnish law provides a framework designed to protect both employers and employees, emphasizing fairness and transparency in the workplace. A well-drafted employment contract is fundamental to defining the terms and conditions of employment, ensuring clarity on roles, responsibilities, compensation, and other critical aspects.
Finnish employment law is primarily governed by the Employment Contracts Act, which sets out the minimum standards and requirements for employment relationships. While collective agreements often supplement or override certain provisions of the Act, the employment contract itself serves as the primary document outlining the specific terms agreed upon between the individual employee and the employer. Understanding the different types of contracts and their mandatory contents is crucial for any company hiring in Finland.
Types of Employment Agreements
In Finland, the primary distinction is between indefinite-term and fixed-term employment contracts. The law favors indefinite-term contracts, which are the standard form of employment. Fixed-term contracts are only permissible under specific, justified circumstances.
| Contract Type | Description | Legality |
|---|---|---|
| Indefinite-Term | Continues until terminated by either party according to legal grounds. | The standard and preferred type; assumed unless otherwise specified and justified. |
| Fixed-Term | Has a predetermined end date or is tied to the completion of a specific task. | Only permissible when there is a justified reason (e.g., temporary need, project work, substitute). |
Using consecutive fixed-term contracts without a justified reason is generally prohibited and can lead to the contract being considered indefinite.
Essential Clauses
Finnish law mandates that certain information must be provided to the employee in writing, typically within the employment contract itself or as an appendix. While an oral agreement is legally binding, a written contract is highly recommended and standard practice. Key mandatory terms include:
- Employer's and employee's names and domiciles.
- Date of commencement of employment.
- Date of termination of a fixed-term contract or its estimated duration.
- Location of work or principal place of work.
- Employee's main duties.
- Applicable collective agreement.
- Basis for determining remuneration and pay period.
- Regular working hours.
- How annual holidays are determined.
- Notice period for termination.
- Information about foreign employment if applicable (for work abroad exceeding one month).
Probationary Period
A probationary period (koeaika) can be agreed upon at the start of employment. Its purpose is to allow both the employer and the employee to assess the suitability of the employment relationship.
- The maximum duration for a probationary period is generally six months for indefinite contracts.
- For fixed-term contracts, the probationary period cannot exceed half of the contract's duration, and in any case, not more than six months.
- During the probationary period, the employment contract can be terminated by either party with immediate effect.
- Termination during probation must not be based on discriminatory or otherwise improper grounds.
Confidentiality and Non-Compete Clauses
Confidentiality clauses are generally enforceable in Finland, protecting the employer's trade secrets and confidential information during and after employment.
Non-compete clauses (kilpailukieltosopimus) are more strictly regulated. They can only be agreed upon if there is a particularly weighty reason related to the employee's position and access to sensitive information or trade secrets.
- A non-compete clause can restrict an employee from taking up employment with a competitor or engaging in a competing business after the employment ends.
- The maximum duration of a non-compete restriction is typically six months.
- A non-compete agreement for a period exceeding six months requires the employer to pay reasonable compensation to the employee for the restriction period.
- Non-compete clauses are not enforceable if they are unreasonable or if the employment is terminated by the employer without a particularly weighty reason related to the employee's conduct.
Contract Modification and Termination
Modifying the terms of an employment contract generally requires the agreement of both the employer and the employee. Unilateral changes by the employer are typically only possible if the change is minor or if the employer has grounds to terminate the existing contract and offer new terms (a process known as "termination for change").
Termination of an indefinite employment contract by the employer requires a just and weighty reason. Reasons can be related to the employee's person (e.g., serious breach of duties, inability to perform work) or related to the employer's operations (e.g., redundancy due to economic or production reasons).
- Termination requires observing statutory or collectively agreed notice periods, which vary based on the length of employment.
- Termination based on the employee's conduct or person usually requires prior warnings and an opportunity for the employee to rectify their behavior.
- Fixed-term contracts generally terminate automatically at the end of the agreed term or upon completion of the specified task, and cannot typically be terminated unilaterally during the term unless specifically agreed upon or for very serious grounds.
