We receive a lot of questions from both employers and employees about employment contracts. Employment law is one of the areas of law that most tangibly affects people. We have put together some basic facts about employment contracts below.
”The questions reveal a major shift in the wider world of work, including teleworking, zero-hours contracts, the definition of working time, light entrepreneurship and the employment relationship.”
The employment relationship is subject to ”YES” answers to the questions below:
-
- Has an agreement been reached?
- Is work being done?
- Do we work for each other?
- Do you get paid for your work?
- Do you work under management and supervision?
The law does not prescribe a specific form for an employment contract. An employment contract can be oral or written - or even implied. The safest way for all parties is definitely a written employment contract. The most important consequence of meeting the five criteria of the Employment Contracts Act is that the employment relationship is deemed to have been created. The contract is also considered to be an employment contract and is subject to the Employment Contracts Act.
Sometimes situations can be open to interpretation. If there is a contract between the parties and the other elements of the Employment Contracts Act are met, but the work is not carried out under the direction and control of the employer, or if the work is done for free, it is not an employment relationship.
In Finland, the principle of freedom of contract prevails in principle. According to this principle, the parties to a contract have the right to decide with whom contracts are concluded, what their content is and in what form they are concluded.
However, employment contracts have a special status compared to many other types of contracts, and in particular the freedom to decide on the content of contracts is severely restricted. Employment contract law is what is known as a 'mandatory right' in favour of the employee. This means that if an employment contract reduces the rights and benefits to which the employee is entitled under the law, the terms of the contract will in most cases be null and void. In addition to the employment contract, the content of the employee's employment relationship may be determined by collective agreements, for example. This may lead to situations where there is a conflict between the provisions of the employment contract and those of the collective agreement. In these situations, the employee is protected the preferential conversion rule grounds.
The more favourable conversion rule obliges the employer to comply with a provision that is more favourable to the employee. To illustrate the rule of preferential treatment, a brief example can be given: if an employee's contract of employment stipulates a salary of €2,000, for example, but the minimum salary for the job in question under the collective agreement applicable in the sector is €2,100, the employee is entitled to a higher salary.
The employer's ability to terminate an employment contract is severely restricted. Under the Employment Contracts Act, an employer can only terminate an employment contract for good and valid reasons. The reason for dismissal requires the fulfilment of a materiality criterion, such as a serious breach of the obligations of the employment relationship or a substantial reduction in the work available. For contracts of indefinite duration, the employee does not need a specific reason for termination, but is obliged to respect the notice period.
”By investing in employment contracts and drafting them carefully, potential disputes are avoided. This is always in the interest of both the employer and the employee.”
Despite its specific features, an employment contract is a contract and contracts are subject to the principle of contractual validity. An employment contract is binding on both parties, the employee and the employer.
Our next article on employment law will deal with the issues that should at least be agreed in employment contracts.
Article written by a trainee lawyer Santeri Valkamo
Related articles:
Coronavirus and the employer's right to lay-offs
Who is allowed to read my work emails?
[avatar user=”amoslaki” size=”352″ align=”left” link=”https://amoslaki.fi/ajanvarauskalenteri/” target=”_blank” ]Attorney Tuula Rainto, Amos Attorneys at Law. You can always call her free of charge, tel.010 299 5090[/avatar]