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Light at the end of the tunnel – what after COVID-19?

 

In spring 2020 Finland and rest of the world fell in to the COVID-19 crisis. There is no doubt about it. Hundreds of thousands of employees were laid off. One remarkable point was that most of them probably were made using shorter negotiation and notice periods accepted by the Finnish government. These layoffs are valid up to 90 calendar days. In other words about 3 months. Therefore companies and their employees face a new situation in June or July – What next?

Sad scenarios

If the light at the end of a tunnel is not an exit but an oncoming train there are basically are two choices:

1) Continuing layoffs

or

2) Termination of employments due to economical reasons.

Temporary changes in labor legislation are in force between 1st April and 30th June 2020. During this period negotiation and notice period for layoffs are shorter than normally. There are no formal decisions that these provisions would continue after the end of June. But labor market organizations and the Finnish Prime Minister have stated that there might be a prolonging with these temporary laws. Therefore, we must be prepared that from the beginning of July all labor legislation is again as normal but there might be a prolonging. We will see.

Continuation of layoffs

Companies with less than 20 employees in Finland do not have to follow the Co-operation legislation but only provisions of the Employment Contracts Act. The continuation of layoffs demands that the employer will explain to the employees why this must be done. However, there are no strict rules how this explanation has to be made. After this, the employer must give new layoff notices to the employees. After 14 days the new layoffs may begin.

Companies with 20 employees or more in Finland have to follow the Co-operation legislation. (It has similarities to Swedish Medbästämmande lag). Before continuation of layoffs there must be a negotiation process between the employer and the employees.

If the company has 20 employees or more the company must have a co-operation negotiations before a new layoff notice can be given. An invitation to negotiations must be given at least 5 days before. The co-operation process takes either 14 days of 6 weeks depending on the planned length of the layoff and number of employees who are involved. If the company has under 30 employees, the negotiation process always takes 14 days.

Termination of employment based on economical reasons

A layoff is meant to be a temporary operation. So, there is still hope. A termination of employment based on economical reasons means that the employer does not see any brighter future – at least not in the short run.

The process with this kind of termination of employment is quite similar to the layoff process. The number of employees in the company and number of employees who are involved are the ruling factors to decide if the Co-operation legislation to be used or if it is enough to only follow Employment Contracts Act. And if co-operation legislation must be followed, is the process 14 days long or 6 weeks long.

When an employer is considering terminating employment contracts based on economical reasons there is one obligation which might easily be forgotten. There is an obligation to provide education or training to employees. This obligation concerns companies with at least 30 employees,  and the employees who are entitled to this must have at least 5 years of employment at this company. There is a price for this – the education or training must be equal to one month's gross salary of the employee.

When the employer has terminated employment contracts based on economical reasons there is also an obligation to hire back. In practice, this obligation means that during a certain period after the end of the employment the employer may not hire new employees without certain actions. The employer has to find out if this new position is the same or similar to any position that some ex-employee has done. This obligation is valid during a period of 9 months after the end of employment. In a normal situation, this period is 4 or 6 months but COVID-19 changed rules until the end of the year 2020.

Positive alternatives

Let's take a positive perspective for a change and imagine the sunshine after the rain again. COVID-19 will fade out and societies will try to find goodness and meaning to all this. What will the new normal be?

Layoffs will terminate and employees return to work, salaries are paid and everything is as normal as it can be. Payroll staff will calculate how the layoffs have affected new holidays. Recruitments that had been frozen will be defrosted again. Everyone is thinking how to find that drive again. Lots of questions.

A well known Finnish entertainment star once said in an interview that her most disliked subject at school was history. She did not see any point in learning the names of ancient kings. That is one point of view. However, I claim that she had not realized the meaning of history to mankind. The true value of knowing history is to learn from mistakes made in the past. If we want to, we are able to avoid making the same mistakes again and again. On the other hand, we will learn that human beings are survivors. That's why we have to climb up from the hole. Nothing ventured, nothing gained.

Read about our HR and employment law services in Finland.

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