Employment law seminar and what to expect in the field of employment law 

May, 2024 - Elmeri Simpanen

Our Employment and Benefits practice group recently organised an afternoon seminar focusing on current and upcoming topics in the field of employment law and within the labour market in Finland. This article dives deeper into some of the topics discussed during the successful afternoon at Krogerus and gives a brief overview on what to expect in the coming months in the field of employment law.

The afternoon began with an overview of the latest developments within employment law in Finland by our own employment law experts, after which the Finnish National Conciliator Anu Sajavaara gave a presentation on her role and the many challenges that a National Conciliator may face in the Finnish labour market. Finally, a panel discussion was held featuring some of the leading experts from all sides of the labour market in Finland. The discussion focused on the employment-related reforms specified in the current Government Programme.

The National Conciliator's role and the labour market

The Finnish labour market system occasionally goes through heavier turmoil, when the terms of collective bargaining agreements are expiring, and new agreements need to be concluded. At times, the parties to the collective bargaining agreements struggle to reach a common ground, leading to industrial action and hindrances to the businesses and the industry as a whole.

Recently, political industrial actions took place nationwide, not directly due to difficulties of reaching new collective bargaining agreements but instead, due to legislative changes proposed by the Government. As the Finnish labour market is currently facing challenging times, it may lead to prolonged negotiations regarding new collective bargaining agreements as well. Sometimes, the parties attempting to agree on the terms of a new collective bargaining agreement may need help from a third party, which is where the National Conciliator's Office comes in.

The National Conciliator is a part of the labour dispute conciliation system. The conciliator's powers and the procedures are laid down in the Act on Mediation in Labour Disputes. Annually, approximately 20 disputes are conciliated. In her presentation, National Conciliator Anu Sajavaara elaborated on the challenges faced when mediating labour disputes and the current atmosphere in the Finnish labour market. The challenges are sometimes related to unique attributes of the negotiating parties or industries, but generally the Finnish labour market tends to be rather confrontational by nature.

Besides the challenges of the labour market, another key theme was the duality of the National Conciliator's duties. In addition to acting as the chair of the conciliation process with the aim of reaching a settlement on the collective bargaining agreements based on the parties' own proposal, the National Conciliator's role includes promoting the relationship between employers and wage earners. Especially in the current atmosphere within the Finnish labour market, the importance of promoting the relationship between the parties is emphasized. A healthier relationship between the two sides of the labour market would not only make negotiations for collective bargaining agreements more feasible but would limit the political turmoil that is sometimes inevitable due to the confrontational nature and other challenges of the labour market. Despite not being responsible for finding solutions to the political stoppages that have taken place recently, a busy winter can be expected for the National Conciliator's Office, as labour market parties attempt to agree on the terms of new collective bargaining agreements.

Proposed changes to legislation pursuant to the Government Programme

The panel discussion, moderated by our Employment & Benefits practice's Partner Carola Möller, brought together experts from all sides of the labour market: employees' and employers' organisations were represented by Atte Rytkönen-Sandberg from the Federation of Finnish Enterprises, Markus Äimälä from the Confederation of Finnish Industries and Samuli Hiilesniemi from the Central Organisation of Finnish Trade Unions as was the Ministry of Economic Affairs and Employment by Nico Steiner.

The discussion focused on the Government Programme and its proposed reforms on labour legislation. In February, the Government presented a proposal (HE 12/2024) aimed at improving industrial peace in the labour market, which has since been approved and has entered into force. As a result of the changes, the maximum duration of industrial action for political purposes is now limited to 24 hours for work stoppages and two weeks for other forms of action, respectively. Further, unlike before, solidarity action can now be restricted if it causes disproportionate consequences. A revision of the sanctions for unlawful political industrial action was also made. Views regarding the means for improving industrial peace differed across different sides of the labour market, as the employers' side viewed the proposal more favourably than the employees' side.

The panellists also touched on the proposed amendments to legislation concerning local bargaining, regarding which a draft proposal has been made. Local bargaining is a topic that has been at the forefront of employment law related discussion for some time. The Government proposes to remove current restrictions regarding the ability to locally bargain for employers who are not members of any employers' association. The aim is to add flexibility to the labour market and support employment, economic growth, competitiveness, and productivity. The panellists appeared to agree that local bargaining, in general, has a positive effect in the context of the Finnish labour market. However, the discussion raised a question on the effect this proposed change may have on the negotiations for new collective bargaining agreements during the upcoming winter. Employers who are not parties to a collective bargaining agreement having the right to locally bargain has been seen by some in public discussion as something that discourages employers from joining employers' associations, undermines the system of generally binding collective bargaining agreements and can therefore negatively affect the Finnish labour market. Subsequently, it has been speculated whether the employees' side will attempt to limit local bargaining in the collective bargaining agreements.

The panellists also briefly discussed the Government Programme's aims of dismantling barriers to employment. Among things proposed to change are, for example, the grounds for termination on personal grounds to be amended so that proper grounds would be sufficient instead of the current 'proper and weighty' grounds. In addition, on the horizon are changes enabling the use of fixed-term employment contracts for one year without the need for a specific reason as well as changes that would remove the obligation to pay the employee's salary for the first day of sick leave. As these proposed changes are still in the early stage of preparation, it remains to be seen to what extent this will be implemented.

What to expect next

There is plenty to be on the look-out for in the coming months and the rest of the year, as new legislation is scheduled to enter into force and new proposals are scheduled to be submitted. Firstly, the proposal regarding changes in local bargaining is scheduled to be submitted in June, as preparational work continues after the consultation round ended on 12 April 2024. Further, the changes described above regarding industrial peace have entered into force on 18 May 2024.

In addition to the proposals described above, the Government also aims to develop the negotiation system by strengthening the export-driven labour market model to boost Finland's long-term competitiveness. Changes to the Act on Mediation in Labour Disputes are proposed to be implemented, according to which the general level of pay adjustments could not be exceeded by a settlement proposal issued by the National Conciliator's Office or a conciliation board. Currently, a tripartite task force is working with the aim to publish a government proposal in September 2024, enabling the changes to come into force by December 2024. Changes to the Co-operation Act are also being proposed, including changes to the scope of application based on the number of employees, the duration of change negotiations as well as board representation of employees. A working group was appointed in December 2023, and it is scheduled to present a report in the form of a government proposal by 20 June 2024.

All in all, interesting times are ahead in the field of employment law in Finland, as the implementation of the Government Programme into legislation has truly kicked off and is set to continue over the summer and during the autumn, extending into next year. Meanwhile, it remains to be seen what is going to happen in the upcoming collective bargaining agreement negotiations and how the legislative changes or the current atmosphere of the labour market will affect them.


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