The family leave reform
 
 
 

The family leave reform and its impact on annual leave

 

In Finland the family leave reform brought with it a number of changes related to the names and durations of family leaves and the accumulation of annual leave, among other things. The names of maternity, paternity and parental leave were changed to be gender-neutral, so from now on, we will talk about pregnancy and parental leave and the related pregnancy and parental allowances.

The reform takes diverse families and entrepreneurs especially into account, because leave can also be taken partially and in periods and shared among other guardians, even several adults.

This amendment took force on 1 August 2022.

1. How the new provisions are applied
2. The start, duration and distribution of family leave between different carers
3. Payment of wages during family leave 
4. Accrual of annual leave during family leave
5. Taking annual leave and holiday pay
6. KELA’s reimbursements to employers
7. Child care leave
8. Carer’s leave 

1. How the new provisions are applied 

The new provisions apply if the due date of the baby was on 4 September 2022 or later, and if the first pregnancy allowance was paid on 1 August 2022 or later. These provisions also apply to adoptive parents if the adopted child was adopted on 31 July 2022 or later. 

If an employee’s family leave has started before the amendment entered into force (i.e. the child was born on 29 July 2022 or earlier), the old provisions related to calculating days or hours equivalent to days at work apply to maternity, paternity and parental leave. This means that there can be two different types of family leave in effect during the transitional period (a parent can take paternal leave until the child turns two years old). 

2. The start, duration and distribution of family leave between different carers has changed

The names of the leaves were not the only thing that changed, as the start, duration and distribution of family leave between different carers changed as well. Let’s take a closer look at what has changed. 

Pregnancy leave

The length of the pregnancy leave is 40 consecutive working days. Kela ( social insurance institution of Finland) will pay pregnancy allowance to the birthing parent for this period. Working days are days from Monday to Saturday, excluding midweek holidays. To be eligible for pregnancy allowance, the employee must be absent from work. 

Start of the pregnancy leave

The leave usually starts 30 working days before the due date of the baby, and it can be postponed by agreement to start at least 14 days before the due date. If the pregnancy leave has not started before the birth of the child, it will start at the birth at the latest. For example, if the child is born 30 working days before the due date, the parental allowance period is extended by 30 working days. The pregnancy allowance must be taken uninterruptedly, and the parent cannot carry any of the days over and hold them at a later date. 

Notifying the employer

The employee must notify the employer of their pregnancy leave at least two months before the intended start date of the leave. The employee should also find out whether the employer will pay wages during the pregnancy leave, as the employee will need this information for their pregnancy allowance application. 

Parental leave 

Kela will pay parental allowance to the parent or carer of the child for the duration of the parental leave, up until the child turns two years old. The birthing parent can start their parental leave after their pregnancy allowance has ended. The other parent or carer can start their parental leave after the child is born. 

Parental allowance duration and distribution

Parental allowance is paid for a period during which the parent or carer cares for the child. The number of parental leave days for one child is 320 working days, distributed equally between both parents or carers. Each parent therefore receives 160 parental allowance days, which are working days. 

Both parents can take parental leave at the same time for a maximum of 18 working days. In practice, this means that they are both on parental leave and are caring for the child together. It can also mean that one parent is still on pregnancy leave and the other is on parental leave, or one parent is on parental leave and the other is on partial parental leave. 

Single parents and parental leave 

Single parents can use the entire 320 working days of leave themselves. 

Turning parental allowance days over to someone else 

Unlike in the past, a parent can now give up and turn over a maximum of 63 of their own parental allowance days to another person. A parent can give up and turn over their parental allowance days to:

  • the child’s other parent
  • the parent’s spouse who is not the parent of the child
  • the other parent’s spouse who is not the parent of the child
  • another person who, in addition to the parent, is the child’s carer.

The parent can give up and turn over their parental allowance days to several persons if they so wish.

In single-parent families, for example, the parent can give up and turn over a maximum of 126 days to a spouse who is not the child’s parent. The maximum number of leave days for the birthing parent therefore equals 263 days (40+160+63), leaving the other person with 97 days of leave.

Periodic or partial parental leave

Unlike before, parents can now split their parental leave days into several periods if they so wish, and partial parental leave is also possible. However, the parents must do this before the child turns two years old. 

In addition to full-time parental leave, a parent may also take the parental leave on a part-time basis (partial parental leave), provided that the parent first agrees with their employer to work part-time. The duration of the part-time employment contract is irrelevant for the purposes of partial parental leave; what matters is that the parent’s daily working time must be no more than five (5) hours per day. 

Partial parental allowance may be paid to both parents simultaneously for the same period of time or to one parent only. When a parent uses one partial parental allowance day, the number of their parental allowance days will decrease by half a day. Partial parental leave must not be confused with partial child care leave. 

3. Payment of wages during family leave 

The employer’s obligation to pay wages during family leave is determined by the applicable collective agreement.

4. Accrual of annual leave during family leave 

In the future, the total number of accrued working days or hours equivalent to days at work per birth or adoption will be either 160 working days or 182 calendar days, depending on the leave accrual scheme the person is covered by.

People covered by the 14-day rule (full-time workers) accrue annual leave as follows: 

160 working days during pregnancy leave and parental leave for the birthing parent, and 160 working days during parental leave for the other parent, the spouse of the other parent or another insured person who is the carer of the child.

People covered by the 35-hour rule (part-time workers) accrue annual leave as follows: 

182 calendar days during pregnancy leave and parental leave for the birthing parent, and 182 calendar days during parental leave for the other parent, the spouse of the other parent or another insured person who is the carer of the child. 

Holiday compensation for employees who come under the leave entitlement rule:

When calculating an employee’s holiday compensation, if the employee comes under the leave entitlement rule, i.e. they do not accrue annual leave but are entitled to take leave equivalent to annual leave, their holiday compensation shall include not only the wages paid but also the salary paid during special pregnancy leave, pregnancy leave or parental leave. The holiday compensation can be calculated from this total sum by using the relevant holiday compensation percentages (usually 9%/11.5%, but the percentages stated in the applicable collective agreement may be different from this). 

Example 

Pregnancy and parental leave: pregnancy leave starts on 15 October 2022 and continues until 14 June 2023.

The holiday credit year of 1 April 2022–31 March 2023 contains 142 working days equivalent to days at work (from 15 October 2022 to 31 March 2023), which means that annual leave during pregnancy and parental leave accrues from October to March. The next holiday credit year of 1 April 2023–31 March 2024 contains 18 working days equivalent to days at work (160 days minus 142 days). This means that the last day equivalent to days at work will be on Saturday, 21 April 2023. There are 14 working days equivalent to days at work in April, which means that annual leave still accrues for April.

5. Taking annual leave and holiday pay

Employers should keep in mind that annual leave must not be arranged to start during the first 105 days of parental and pregnancy leave. However, the annual leave can start when these 105 days have elapsed. 

The employee is not entitled to pregnancy or parental allowance during their annual leave. In other words, the employee does not have to apply for parental allowance during their annual leave and, if the employee so wishes, they may be granted annual leave during their parental or pregnancy leave.

Effect of changes in working hours and salary between periods of parental leave on the calculation of holiday pay

Now that parents can split their parental leave into several periods over two years, the annual leave accrual rule may change between the periods. A part-time employee may become a full-time employee between the different periods of leave, or a full-time employee may become a part-time employee between the different periods of leave. In these situations, i.e. when an employee’s working hours and salary change, the rule for calculating holiday pay also changes. 

The rule for calculating holiday pay changes when an employee’s working hours change, meaning that the holiday pay of an employee receiving a monthly salary shall be calculated on a percentage basis, and the rule used to calculate the holiday pay of an employee who is paid by the hour shall be determined according to the annual leave accrual rule that is in effect on the last day of March. 

If we think about this in terms of days equivalent to days at work, 160 working days can suddenly turn into 182 calendar days. Therefore, employees need to pay close attention to this. You may find yourself in a situation where you have to convert working days into calendar days or vice versa. 

Example 

If a part-time employee becomes a full-time employee between different periods of parental leave, both periods of time (160 working days and 182 calendar days) are used to calculate the accrual of annual leave. In this case, the number of working days can be converted into calendar days by multiplying the number of working days with 7 and dividing the result by 6. This also works the other way around: the number of calendar days can be converted into working days by multiplying the number of calendar days with 6 and dividing the result by 7. For example, 50 working days can be converted into calendar days as follows: 50*7/6=58.33, or 58 calendar days.

Partial parental leave does not cause the annual leave accrual rule to change

It is worth noting that partial parental leave does not cause the 14-day annual leave accrual rule to change into the 35-hour rule. Actual days worked count as working days for the purposes of accruing annual leave, and the quota of 160 working days equivalent to days at work is not used up if the employee’s daily working hours are reduced to 5 hours. If the parent works on alternate days or weeks, full days off are considered to be equivalent to days at work, and the quota of 160 working days equivalent to days at work is used up. 

Partial child care leave may cause the annual leave accrual rule to change

By way of comparison, partial child care leave may cause the annual leave accrual rule to change into the 35-hour rule, so that annual leave is accrued only for actual hours and days worked. If the working hours of an employee receiving a monthly salary change, their holiday pay shall be calculated on a percentage basis. The employee’s average daily pay and holiday pay are reduced if the duration of their work shift is made shorter. In addition, the percentage-based holiday pay does not include the calculated addition due to the reduced working hours.

6. KELA’s reimbursements to employers

If the employer pays wages to the employee during their parental allowance period, Kela can pay the parental allowance to the employer. In addition, the employer may receive compensation for annual leave expenses for the duration of the employee’s family leave, as well as compensation for family leave for the duration of the employee’s paid maternity leave.

7. Child care leave 

No changes were made to child care leave: a parent may still take child care leave after the end of their parental leave, either as full-time or partial child care leave (the parent can take partial leave by reducing their working hours). Child care leave is unpaid, and no new annual leave is accrued during child care leave. 

8. Carer’s leave

The new carer’s leave is also closely linked to the family leave. An employee is entitled to a maximum of five (5) working days off work per calendar year to provide personal assistance or support to a relative or a loved one living in the same household as the employee. This right also applies to participation in terminal care. 

As stated in the Employment Contracts Act, carer’s leave is unpaid leave, but the leave days are considered to be equivalent to days at work for the purposes of calculating the accrual of annual leave. 

Definition of a relative or a loved one

A relative or a loved one refers to the employee’s child, parent, spouse, domestic partner, registered partner or other close person living in the same household as the employee (e.g. spouse’s child). 

Assessment of the conditions for carer’s leave

The conditions for carer’s leave must be assessed on a case-by-case basis. The condition is that the employee’s relative or loved one requires substantial assistance or support, which requires the employee’s immediate presence. Another condition is that the need for assistance or support is due to a serious illness or injury that has significantly reduced the person’s ability to function. 

However, no specific diagnoses are needed to be granted carer’s leave. This means that a medical assessment of the person’s functional capacity (medical certificate) cannot be required either. However, the law states that at the employer’s request, the employee must provide a reliable explanation for their absence. 

The fact that there are other ways of providing assistance or support to the relative or loved one does not prevent the employee from being granted leave. The employee must inform the employer about their carer’s leave and its estimated duration as soon as possible. 

If you have questions regarding employment law or payroll services 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

Fill in the contact form

Yes, please handle my request. I agree that Azets receives and stores my contact information in accordance with the Privacy Statement.

Yes, I  would like Azets to send me relevant information on email based on my interests. I can unsubscribe at any time.