Time for lay-offs or redundancies?
Productive and economic conditions can lead to lay-offs or redundancies. Employment relationships can also end for other reasons. Read more about employee cooperation negotiations, layoffs and alternatives to them.
If your company’s financial situation is heading downhill, laying off employees or making them redundant will of course be one of the first solutions that come to mind. However, it is worth also finding out about the other options, especially if the tight situation looks like it will only be temporary.
Using working hours arrangements, such as a work hours bank, you can regulate the working hours and create flexibility for seasonal work. In this way, you can provide more work for your employees during busy periods and use this extra time to accumulate paid leave for them during quiet periods. During busy periods, special consideration must be given to employees’ work capacity.
You can also potentially avoid lay-offs or redundancies by transferring annual leave. Remember, however, to first negotiate with the employee about this.
Through further training, alternatively, you can develop your employees in order to respond to the changing work environment. Before making training decisions, discuss with the employee about their interest in further training and the possible changes it would bring to their work duties.
Offering other available work before making employees redundant is a one of an employer’s legal obligations. As an employer, you must always find out whether there would be another open position in your company for the employee that is facing employment termination. You are also obliged to arrange any further training for the new duties if this is reasonable from both the employer’s and the employee’s perspective.
Employer/employee negotiations refer to joint activities involving both the employer and the personnel which are aimed at developing the opportunities for the personnel to influence their working conditions.
In practice, however, employer/employee negotiations are often connected with situation where the workforce needs to be reduced.
Employer: if you have at least 20 workers in regular employment and you are facing either changes that impact the workforce and work arrangements, cessation of business activities or actions which may lead to lay-offs or redundancies, you have a legal obligation to engage in negotiations.
Employer/employee negotiations take place between the employer and the employees, and often each party has a separate representative. Negotiations involve fixed time periods, and violating these can incur compensation payments or fines. Carefully read through the instructions on employer/employee negotiations.
If you employ less than 20 people, the employer/employee negotiation legislation does not apply to you, but you must nevertheless provide employees with an explanation of the reasons for the redundancy and the alternatives to it before making them redundant, and you must also give them information about the employment services available from the TE Offices.
- Act on Collaboration Negotiations (yrittajat.fi, in Finnish)
- Act on Employer/Employee Negotiatiations (finlex.fi, in Finnish)
If working hours arrangements or further training are not able to solve the challenging situation faced by your company, you can avoid permanent redundancies by laying off personnel. In such cases, the employee’s work and salary are stopped, but the employment relationship is not.
Lay-offs are temporary and require a justifiable reason, which may be either
- the economic or productive situation, or
- hat the ability to offer work has temporarily deteriorated and the employee cannot be given further training
You can only lay off permanent employees or fixed-term employees that are substituting for permanent ones. If the ability to offer work has temporarily deteriorated, the maximum lay-off period is 90 days. Please note, however, that lay-offs do not need to be full-time: they can also simply involve reductions in daily or weekly working hours.
As an employer, you must report the lay-offs to those affected by them at least two weeks beforehand. In addition, you must produce a written explanation of the reasons for the lay-off and its length. You can read more about the obligations relating to lay-offs and view a prepared form on the Occupational Safety and Health Administration website.
The change security service becomes relevant when productional or financial reasons force companies to serve notices of redundancy to workers. The change security service provides support to workers who have been dismissed after being made redundant.
The goal of the change security service is to help the employee who has been made redundant move forward and to make the redundancy process easier for you as well. The change security service for the employer includes increased information, an employment action plan prepared with the staff, and the ability to offer assistance to personnel who are being made redundant.
As an employer, you must notify the TE Office when you start the redundancy process. The change security service also includes other employer obligations. Obligations depend on the number of redundancies and the number of people you employ.
The effect of staff numbers
If you employ at least 30 people on a regular basis, those who have been made redundant must be given the opportunity to participate in employment promoting coaching or training, paid for by the employer. This training must be made available either during the notice period or at the beginning of unemployment. This applies the personnel who have at least five years of service.
The effect of the number of redundancies
When there are more than ten redundancies, you need to prepare an employment action plan with the staff.
When there are fewer than ten redundancies, the redundancy process must include proposals for ways of supporting employees to seek other work, training and TE services during the notice period.
Advice on the change security service is available from the telephone service and from the TE Office's change security experts.
The actions involved in ending an employment relationship depend on whether the employment relationship is permanent or fixed-term and whether the party terminating the relationship is the employee or the employer.
Employer - if you have to give notice to an employee with a permanent work contract, you must have a justified reason for this. Remember also to abide by the notice period, which is determined depending on the length of the employment relationship involved. You must also consult the employee before ending the employment relationship.
A fixed-term employment relationship ends by default either at the time agreed beforehand or when the work covered by the employment contract has been completed. Giving notice during the employment relationship is also possible with fixed-term employment if you have made agreement on this with the employee either in the employment contract or during the employment.
If an employee fails in a serious way to fulfil their work obligations, it may be appropriate to dismiss them. With dismissals, the employment relationship ends immediately, without any notice period. No special reason is needed for dismissing an employee who is still in a trial period. Comprehensive instructions on different types of employment termination can be found on the Occupational Safety and Health Administration webpages:
In special cases, you may also cancel the employment relationship without any notice period if the employer has seriously violated their obligations. If there is a trial period at the start of the employment, you may cancel the employment relationship during this period without any special reason. Comprehensive instructions on different types of employment termination can be found on the Occupational Safety and Health Administration webpages.
Are you looking to advance as an employer or entrepreneur but you don’t have any idea how to proceed in practice?
We have listed situations and services that may be useful when you need support as an employer or entrepreneur. They can help you find a good employee, become a better leader or act in a constructive manner in conflicts, among other things.
Is your business growing or are you thinking of taking it in a new direction? We can direct you to analysis and consulting services, information services and other points of assistance that we hope will help your business. You can also find information on the possibilities of transferring the ownership of the company.
You should also find out more about the municipal business services in your area.
Is it time to take your business into a different direction? Building new competence can be multidimensional: It can mean learning new skills, improving communication or operating methods or improving the atmosphere in the work community. Make diversity an asset in your work community.
A good employee is a major investment and can bring the employer a lot of value. You can search for suitable employees by logging into Job Market Finland and creating a job ad or browsing jobseeker profiles. We have also compiled a list of different services that are available to support your recruitment process.
Do you have a job with rather rare required competence or specialised skills? You can search for jobseekers with suitable skills by logging into our service and searching for profiles with different criteria.
Depending on the position, you may also be able to train the employee or contract an entrepreneur for the task. We can also provide guidance on recruiting from abroad if suitable experts might be found internationally.
The goal of human resources is to put the right people in the right positions in the workplace and ensure everyone’s well-being in the work community. You can find advice and help through the information and services listed below if you need help as an employer or with Human Resources.
Sometimes you don’t notice that the employee, job or the employer are incompatible until after hiring. There are different alternatives to terminating the contract, and it might also be possible to develop the employee's skills in the desired manner. Sometimes the best solution is the termination of the employment.