The dismissal of an employee is one of the most debated issues between employer and employee, and there are many aspects to it. For the employer, dismissing a difficult or incompetent employee can seem like a difficult but necessary decision to keep the company running efficiently. For the employee, dismissal can be a profound personal crisis.
In Finnish society, the legislator has wanted to ensure that there are sufficient legal safeguards against dismissal. Under the Employment Contracts Act, an employment contract can be terminated in two main situations: 1) either when the employer's ability to offer work has been substantially reduced for economic, production or restructuring reasons, or 2) when the reason for termination relates to the employee's person. Both situations are also governed by their own procedural rules, which differ in some respects. In this text, we will focus on the grounds for dismissal relating to the employee.
Termination of an employment contract requires a reason for termination
According to the Employment Contracts Act, a person related to an employee is relevant and weighty serious breach of or failure to comply with obligations arising from the employment contract or the law which substantially affect the employment relationship, or a substantial change in the personal working conditions of the worker which make it impossible for him/her to carry out his/her duties. There is no explicit and exhaustive list of permissible grounds for dismissal. It is a matter of case-by-case discretion. In our case law, certain types of situations have developed in relation to the different grounds for dismissal, but the need for case-by-case discretion will never disappear.
An employer considering dismissal must therefore assess when, for example, an employee's late arrival at work constitutes a sufficiently valid and serious reason to terminate the employment contract or when the employee's underperformance exceeds the threshold for dismissal. On the other hand, an employee subject to dismissal proceedings may wonder whether everything went right if, for some reason, he or she did not wake up to the sound of the alarm bell a few mornings ago and the employer has indicated that it considers this to be a reason for dismissal. A good rule of thumb is that a mismatch of personal emotions is not usually sufficient grounds for dismissal.
According to the current government's programme document, the regulation of the personal grounds for termination of employment will be amended so that in future it will be sufficient to have a valid reason for terminating an employment contract. If the amendment is passed into law, it is still difficult to assess how much the amendment will actually affect the threshold for dismissal.
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How to terminate an employment contract?
There are specific rules on the termination of an employment contract. Before termination, the employee must be given a warning so that he or she has the opportunity to correct his or her behaviour. If, after the warning - within a reasonable period of time - the employee fails to comply with the obligations of the employment relationship, dismissal may be an option. However, the dismissal must take place within a reasonable time after the employer has been informed of the grounds for dismissal. The passage of time makes it difficult to use the grounds for dismissal.
The worker must be consulted before the dismissal
The employer must give the employee the opportunity to be heard before dismissing the employee. The hearing is not a negotiation, but the employee is informed of the reasons for the dismissal. The employer must also find out whether the dismissal could be avoided by reassigning the employee to other duties. For example, if the reason for dismissal is the employee's reduced capacity to work, it is justified to examine whether there are jobs for which the employee's capacity to work would be sufficient. On the other hand, if the dismissal is based, for example, on the employee's violent behaviour, there is usually no need to look for other jobs.
Unlawful dismissal and the employer's liability to pay compensation
If an employee is dismissed in breach of the Employment Contracts Act - i.e. without legal cause or by wrongful dismissal - the employer is not obliged to reinstate the employee if the employment relationship has ended on a personal basis. The employment contract is therefore deemed to have been terminated, even if the conduct was unlawful. If the dismissal is later found by a court to be unlawful, the employer can be ordered to pay compensation to the employee for the wrongful dismissal. For the legal protection of both parties, it is important that the dismissal is based on the right grounds and is carried out in the right way, in order to avoid lengthy and burdensome legal proceedings.
Termination of employment by mutual agreement
The employer and the employee can also agree to end the employment relationship jointly. The initiative can come from either party. In this case, it is advisable to conclude an agreement setting out the terms of termination. Typically, the employer pays the employee a termination payment and the employee agrees not to make any other claims. It is advisable to have a lawyer help you draw up or review the agreement.
Amos Law Office provides legal advice on employment contracts and employment relationships. If you have a question regarding termination of employment, please contact us and we will help you with your problem! Article written by a lawyer Santeri Valkamo. You can always call him free of charge on 010 299 5090. You can check our price list Here.