Finland Employment Law Update

Finland Update: Employment law update: the year 2022 in the rear-view mirror and 2023 appearing on the horizon

Year 2022 included several significant legislative reforms in the field of employment law. As we have now entered 2023, it is a good time to take a look back to the previous year and to have a look at reforms and amendments coming up during 2023 within the field of employment law.

Legislative reforms and amendments in force from the beginning of 2023

The long-awaited Whistleblower Act is finally here as the implementation of the Whistleblower Directive was completed, and the new Finnish Whistleblower Act entered into force on 1 January 2023. The new Act imposes an obligation on all private and public sector organisations with 50 or more employees to set up an internal whistleblowing channel, which is the primary method for reporting. Companies regularly employing at least 250 employees must establish their internal reporting channels by 1 April 2023. Companies employing less than 250 employees must ensure that their internal reporting channels comply with the Act by 17 December 2023.

The aim of the new Act is to encourage and enable employees to report on suspected misconducts and unethical behaviour covered by the specific areas of the Act within their organisation. The Act introduces a special protection against retaliation for whistleblowers and thereby prohibits countermeasures against the whistleblowers. In an employment context, this means, for example, postponing a promotion, issuing a warning, or termination of employment. Organisations must ensure that any reports received from the whistleblower are diligently registered, processed and followed up on. In addition, employers must remember to carry out dialogue with personnel representatives in accordance with the Co-operation Act when introducing the internal whistleblowing channel.

Further, the year 2023 has brought changes to unemployment security as extended unemployment benefits, so-called additional days, will be abolished for all age groups by 2030. The current pension model allows employees who become unemployed close to retirement age to claim unemployment benefits for an extended period until their retirement. The said scheme, including its additional days of employment security, which are funded by the employer’s liability component (payments collected from the employers) will be abolished over a period of time as employees born in 1965 or later are no longer eligible for the extended unemployment benefits.

In addition, as part of the unemployment security reform, a new restructuring protection package was introduced on 1 January 2023. The new restructuring protection package contains restructuring protection allowance and restructuring protection training which are funded by restructuring protection fees collected from the employers. Such fees are collected if the employer has made redundant an employee aged 55 or over who has been employed for at least five years at the same employer. It must be noted that the restructuring protection fee applies only to employers whose payroll exceeds a specific minimum level in the year preceding the date of redundancy, which is approximately 2.25 million euros in 2023. This means that small employers are exempt from these fees.

Transitional periods expired as of 1 January 2023

The legislative changes concerning post-employment non-competition covenants entered into force at the beginning of 2022 imposing an obligation on employers to pay compensation for all post-employment non-competition covenants. The amendment included a transitional provision under which the new provisions will apply to non-competition covenants concluded before 1 January 2022 only as of 1 January 2023. During the transitional period, employers also had a possibility to terminate the old non-competition covenants without observing any notice period. As the transitional period has expired, all post-employment non-competition covenants are now subject to compensation during their validity, unless terminated by the employer by observing a notice period of at least 1/3 of the restriction period and in any event at least 2 months. Further, the employer cannot unilaterally terminate non-competition covenants after the employee has resigned.

The new Co-operation Act, which entered into force at the beginning of 2022, included a transitional period. The new Act obliged employers to update their existing personnel and training plans to meet the requirements of the new workplace development plan introduced by the Act by the end of 2022. The workplace development plan is a document drafted and maintained in cooperation with the personnel representatives for long-term and systematic development of the workplace which is mandatory for all employers with at least 20 employees.

What to expect in 2023

In addition to a busy start with several changes entering into force in the beginning of the year, there is more to expect during 2023. A government bill on amendments to the Act on the Protection of Privacy in Working Life was given on 24 March 2022. The government bill would amend the provisions on collection of personal data of employees from sources other than the employee. It is expected that the legislative process in the parliament will continue during Q2/2023 and the amendments are due to enter into force as soon as possible after the approval.

It is proposed that the employee’s consent is not required when the employer collects the employee’s personal data during the employment relationship for the purpose of executing the employer’s rights and duties stipulated by law. However, processing of the employees’ personal data, both with and without consent, will continue to be restricted by the necessity requirement.

Another ongoing legislative reform relates to clarification of characteristics of an employment contract. The amendments are intended to enter into force on 1 June 2023. Under the proposed amendments, the scope of application of the Employment Contracts Act would be clarified by including an overall assessment provision for situations where existence of employment relationship between the parties is unclear or open to interpretation. The aim is to prevent employment relationships from being misclassified as other contractual relationships and thereby to reduce uncertainty in the labour market.

We also have the Parliamentary elections coming up in March 2023, and it remains to be seen what kind of government will be formed thereafter, which will certainly have an impact on the legislative initiatives in the coming years also within the field of employment law.

By Krogerus, Finland, a Transatlantic Law International affiliated firm.

For further information or for any assistance, please contact finland@transatlanticlaw.com

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