Concluding a contract of employment in Finland
 
 
 

Concluding a contract of employment in Finland

 

A contract of employment should be drawn up carefully, as that will eliminate the possibility of misunderstandings because both parties have identical information regarding the terms of the contract. In the event of a dispute, this also allows you to review the contract as regards the issue at hand if the contract has been concluded in writing.

It is also useful to understand the difference between a contract of employment, a job description, and the framework-agreement model where the employee is called to work as needed.

Written or verbal agreement

A contract of employment may take the form of a written or verbal agreement. In principle, it is always advisable to conclude a written contract, even if the employment is of a very short-term nature, if the number of weekly working hours is very low, or even in the case of a so-called zero-hour contract where there are no guarantees as regards the number of weekly working hours.

The new legislation on employment obligates the employer to present employees with written information on the principal terms of work (chapter 2, section 4 of the Finnish Employment Contracts Act). However, it not necessary to provide this information separately if the terms are laid down in a written contract of employment. In this regard too, it is well worth it to invest some time in drawing up a contract.

The following things should be mentioned in a contract of employment:

 The domicile or business location of the employer

  1. The starting date of the employment
  2. The exact or an estimated date of termination of a fixed-term employment contract and the basis for fixed-term employment
  3. Trial period
  4. Place of work or an explanation of the principles under which the employee works at different work sites if they do not have a fixed primary place of work
  5. The primary duties of the employee
  6. The collective agreement applicable to the employment
  7. The basis on which the salary or another form of compensation is determined and the pay period
  8. The regular working hours
  9. The basis on which annual leave is determined
  10. Period of notice or the basis on which the period of notice is determined
  11. The pay-off upon termination of employment. It is generally stated that the final salary will be paid on the next normal payday following the termination of employment.

Amending the contents of a contract of employment

A contract of employment is binding on both contracting parties, and its amendment requires legal grounds for notice or the consent of both parties.

A contract of employment may be drawn up in different languages

The language used to draw up a contract of employment can be chosen freely provided that the employee understands the language used. Thus, a contract of employment drawn up solely in English is in principle a valid agreement in Finland.

Differences between a contract of employment and a written job description

A written job description is not part of an employment contract, and it can usually be modified by the employer as necessary without grounds for notice or separate agreement. A job description describes what is expected of the employee in their work at each time. Where necessary, the description can be quite specific, but often a general description of the work to be carried out will suffice.

Job description should be updated regularly

It is advisable to ensure that the job description is kept up to date. Thus, we recommend updating the job description during the annual goal and development dialogue at the latest.

Differences between a contract of employment and the framework-agreement model

If a person is called to work as necessary, the parties conclude a framework agreement. In this framework agreement, the parties agree that the company may offer the person periodic short-term employment. Such framework agreements are not currently governed by the Employment Contracts Act.

The Employment Contracts Act becomes effective once the employee accepts the job

The person is entitled to refuse the offered job, but if the offer is accepted, a fixed-term employment contract is established, and the Employment Contract Act becomes effective. This fixed-term employment may last for just one work shift, for example. But it may also last longer if, for example, the person is called to replace an employee on extended sick leave.

The payment schedule for final salary should be specified in the framework agreement

As the payment of final salary including holiday compensation after each period of short-term employment is not practical in administrative terms, it is advisable to specify in the framework agreement that the final salary and holiday compensation will be paid in accordance with the regular salary payment schedule of the company.

It is advisable to conclude a framework agreement with multiple people

As the person is entitled to refuse an offered shift, it is often more efficient to conclude a framework agreement with several people. This will provide the company access to a pool of potential employees the job can be offered to.

Azets can help you with employment contract related matters

If you need help with drawing up a contract of employment or have questions regarding employment law, we are happy to help.

Contact us

Please contact us to discuss how we can help you getting smooth and reliable accounting, payroll, legal, advisory and HR services for your business in Finland.

Sales +358 10 756 4500

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