Individual employment relations in Finland

Requirements regarding an employment contract

The minimum working age in Finland is 15 years, although 14-year-olds can be employed with special provisions that take into account their education. The employment of minors also includes other restrictions on matters such as dangerous work. Non-EU citizens normally need a work-based residence permit to start working in Finland. Exceptions to this include people who are performing work of short duration within certain occupations or asylum seekers, for example.

An employment contract must be issued whenever a paid employment relationship begins. Such a contract can be either oral or written. A person under 15 years of age needs the signature or approval of their legal guardian to sign an employment contract (Occupational Safety and Health Administration in Finland, undated). The provisions regarding employment are laid down in the Employment Contracts Act.

Dismissal and termination procedures

Fixed-term contracts are ended without notice at the end of the pre-specified employment period. Indefinitely valid employment relationships end either by mutual agreement between the employer and the employee or by a unilateral act of termination (giving notice). If the employer terminates the contract, this must be based on weighty grounds, that is, serious transgressions on the employee’s side or a change in circumstances that makes the employee unable to cope with their duties. Financial or production-related reasons are also acceptable. The employee does not need a specific reason to terminate the contract. Both sides must respect the notice period at the termination of the contract, the length of which is related to the length of the employment period. Employees whose contract has been terminated due to financial reasons are also entitled to a period of paid re-employment leave. The views of both parties must be heard in the process of terminating the employment contract, and the employer must explain the possible financial reasons for the termination.

Parental, maternity and paternity leave

The parental, maternity and paternity leave policies in Finland are generous, although the duration of the leave is not among the longest in Europe. Although most fathers use at least some of the paternal leave days they are entitled to, women still avail of most of the non-earmarked parental leave. According to the latest figures, the uptake of parental leave among fathers has been increasing since 2000 but is still well below the uptake of mothers. In 2021, fathers’ took 11.1% of parental leave (Kela, 2022a).

In 2022, the government’s new family leave reform entered into force. This reform increased the length of earnings-based leave from 12.5 months to approximately 14 months. The reform consists of 40 working days of leave for the parent who is pregnant and then about 6.4 months leave for each parent. Two-parent families can choose to transfer 63 days from one parent to the other. In single-parent families, the parent gets all of the parental leave. With the new reform, parental leave is no longer linked to gender (Finnish Institute for Health and Welfare, 2022). The reform also introduced the right to take unpaid carers’ leave for up to five days per year (Ministry of Social Affairs and Health, 2022a).

Statutory leave arrangements

The Employment Contracts Act provides the legislation on sick leave. The sick leave allowance is paid by the Social Insurance Institution of Finland (Kela). The reimbursement rate depends on the worker’s income level, so that the minimum amount paid is €31.99 per working day and the maximum is 70% of the worker’s salary, as of 2023. The maximum duration of sick allowance is 300 working days, after which a disability pension is an option if necessary. It is also possible to receive a partial sickness allowance for a maximum of 150 working days (Kela, 2022b). Rehabilitation programmes are also offered in cases of long-term illness. The employer has the right to terminate the employment contract only if the condition of the worker makes them permanently unable to do their work and no other suitable work can be offered.

According to the National Pensions Act 347/1956 (Kansaneläkelaki), the general retirement age is 65 years, and early retirement can be granted from the age of 64 years. In the case of early retirement, the amount of the pension payments will be reduced. Recipients of extended unemployment allowance can apply for an old-age pension at the age of 63–64 years. These allowances will, however, be discontinued for all age groups in 2030 (Kela, 2022c). In accordance with the pension reform that was agreed upon by the central labour market organisations in 2014 and that entered into force in 2017, the earliest eligibility age for the old-age pension will be raised gradually to 65 years by 2025. After 2025, the retirement age will be tied to life expectancy.