Finland Employment Guide

Navigating Employment Termination in Finland: A Guide for International Employers

Terminating an employment relationship in Finland requires strict adherence to a complex legal framework. The process must be managed collaboratively between the employer and the employee, often involving specific procedures and potential costs depending on the circumstances. Both employers and employees hold the right to terminate the contract. When an employer initiates termination, Finnish law mandates prior consultation, providing the employee an opportunity to respond to the grounds for dismissal.

Legally Compliant Grounds for Termination

Finnish employment law recognizes several valid pathways to end an employment agreement. Understanding these categories is crucial for ensuring compliance and mitigating legal risks.

• Contract Expiration: Fixed-term contracts conclude automatically upon their end date.
• Dismissal: Termination initiated by the employer, which must be based on proper and weighty grounds related to the employee's person or conduct, or financial and production-related reasons of the employer.
• Resignation: Voluntary termination initiated by the employee.

Understanding the Notice Period Requirements

The notice period is a critical component of the termination process, with its duration determined by the employee's length of service and which party ends the contract. The minimum statutory period is 14 days.

Notice Period for Employer-Initiated Termination

• Employment under 1 year: 14 days
• Employment of 4 years: 1 month
• Employment of 8 years: 2 months
• Employment of 12 years: 4 months
• Employment over 12 years: 6 months

Notice Period for Employee-Initiated Resignation

• Employment under 5 years: 14 days
• Employment over 5 years: 1 month

Severance Pay: Legal Stipulations and Best Practices

Unlike many other European countries, Finnish law does not universally mandate severance pay upon termination. Payment is generally at the employer's discretion. However, employees may be entitled to compensation in specific situations, such as dismissals deemed unlawful or if stipulated in a collective bargaining agreement. For instance, a company like SailGlobal might choose to offer a severance package as part of its global HR policy to ensure fairness and maintain its employer brand, even when not legally required in Finland.

To illustrate, consider a case where a long-serving employee is dismissed due to company restructuring. While severance may not be obligatory, providing a transitional package can help manage the process smoothly and protect the company's reputation.