An employer may terminate an employment contract if the work available has been substantially and permanently reduced for economic, production or organisational reasons. A temporary reduction in work does not justify dismissal. An undertaking which regularly employs at least 20 workers must deal with the dismissal in the framework of the change negotiation procedure provided for in the law on collective bargaining.
Grounds for dismissal
According to the Employment Contracts Act, an employer may terminate an employment contract if the available work has been substantially and permanently reduced for economic, production or restructuring reasons. A temporary reduction in work does not justify dismissal. It is generally held that a reduction in work lasting more than 90 days is required for an employee to be dismissed. If the reduction in work is only temporary, the employer can lay off the employee, but not dismiss him. Our website has a separate article the dismissal of an employee.
An employment contract of indefinite duration can only be terminated for a valid and serious reason. An employment contract may not be terminated if the employee can be redeployed or trained for other duties. There are no grounds for dismissal, at least not if the employer has either before or after the dismissal taken on a new employee for similar work or if the reorganisation of work has not resulted in an actual reduction in work.
However, the employer does not have to wait until the actual reduction in work before dismissing the employee, but can anticipate the future reduction in work. Namely, if the employer knows that there will be a substantial and permanent reduction in work at a given time, he can dismiss the employee in advance so that the notice period ends at the earliest at the beginning of the known reduction in work. However, the employer must ensure that the conditions for dismissal remain in force at the time the employment relationship is terminated.
Employer's obligation to clarify
Before the employer terminates the employment contract on economic and production grounds, the employer must explain the grounds and alternatives for termination to the employee as early as possible. The alternatives are usually the offer of another job, training for new tasks, redundancy or part-time work. This explanation does not have to be given in writing, but it is advisable in order to establish both the grounds for dismissal and the obligation to provide it.
If the dismissal concerns several employees, the prior declaration may be given to the employees' representative, the shop steward or, if the employees have not chosen a representative, to the employees collectively. There is no time limit on how long it must take from the date of the advance notice to the date of the notice of dismissal. However, it must be given before the dismissal and as far in advance as possible.
However, in order to avoid duplication of information and consultation obligations, there is no obligation to provide explanations if the employer is obliged to consult the workers or their representatives on the grounds for dismissal. In practice, it is the employer's obligation to negotiate changes.
Notice of termination of employment contract - notice of termination
The notice of termination of employment must be delivered to the employee in person. If this is not possible, the notice may be given by letter or electronically. In such cases, the employee shall be deemed to have received the notice no later than the seventh day after it was sent. However, if the employee is on annual leave, the notice sent by electronic means or by letter shall be deemed to have been given no earlier than the day following the end of the leave or leave.
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It is advisable to give notice of termination in writing.
The termination notice should state the reason for the termination of the employment contract in detail. In any event, the employee must, at his request, be informed in writing of the date of termination and the reasons for termination.
The termination notice should be made in two copies, one of which must be signed by the employee to acknowledge receipt. The employee is not obliged to sign the notice of termination, but on the other hand, the employee does not accept the termination by signing it either. If the employee does not sign the notice of dismissal, a witness should be called to verify that the notice of dismissal has been delivered. The dismissal itself is valid without the signature of a witness or the employee, but it may be problematic to verify it in the future.
The law on collective bargaining and negotiations on changes
A company with a regular number of employees of 20 or more must deal with dismissal issues through the change negotiation procedure under the Collective Bargaining Act. We recommend that companies consult a lawyer before entering into such negotiations, and in all other matters relating to termination of employment, as errors in these matters usually result in substantial compensation. Our website also contains a brochure on collaboration and change negotiations.
Employer's notification to the Employment and Economic Development Office
The employer must inform the Employment and Economic Development Office when dismissing employees on production and economic grounds. The obligation to notify arises if there are at least ten employees to be dismissed. The notification must state the number of employees to be made redundant, their occupations or jobs and the dates on which their employment contracts end.
Employer's checklist
- the dismissal process must be organised through negotiations on changes in accordance with the Co-operation Act, if the employer regularly employs more than 20 people,
- workers can only be dismissed on production and economic grounds if the job losses are substantial and permanent,
- temporary job losses (usually less than 90 days or so) entitle workers to lay-offs, not dismissals,
- the employer must explain the reasons and options for dismissal to the workers before the dismissal, unless the dismissal is carried out through a process of change negotiations,
- the collective agreement may contain specific provisions on the dismissal process, so the terms of the collective agreement should be clarified before dismissal,
- it is advisable to give written notice of termination,
- the employer must notify the TE Office if it intends to dismiss at least 10 workers,
- we recommend that you consult a lawyer about any dismissal.
Jari Sotka
Lawyer, MBA
Tel. 040 544 0610
[email protected]
Amos Attorneys at Law Oy
www.amoslaki.fi
The author has worked as a lawyer and advocate for more than 25 years, focusing throughout his career on preventing and solving legal problems for small and medium-sized enterprises.