Revised employee information act to extend coverage of enterprises

In June 2006, a tripartite working group submitted its proposals for a revised Act on Cooperation within Undertakings to the Ministry of Labour. The working group recommends extending the scope of the act to include all workplaces with at least 20 employees. The extension of the act would bring a further 2,600 enterprises and 70,000 employees approximately within its scope. The proposed reforms also place a greater emphasis on the importance of seeking full consensus in cooperation negotiations. The Finnish parliament is expected to consider the proposals in the autumn.

Legislative background

The current Act on Cooperation within Undertakings (192Kb PDF) (1978) and the Act on Personnel Representation in the Administration of Undertakings (15Kb PDF) (1991) are the main legislative provisions governing the information and consultation of employees, and employee representation and participation arrangements. The 1978 law was most recently amended in 1997 and reduced the negotiation time in the case of collective redundancies from three months to six weeks. A regulation by statute has strong weight in Finland, and relatively few collective agreements go beyond the statutory provisions.

Labour market organisations, particularly trade unions, have argued at length that the current Act on Cooperation within Undertakings has not adhered in practice to its original intention, and that negotiations have concentrated too much on only informing staff about workforce reductions (FI0309203T). As a result, the present government (FI0304202F) decided to reform the act; on 30 November 2003, the Ministry of Labour set up a tripartite working group whose remit is to formulate proposals to reform the current cooperation act. The Finnish parliament will begin considering the proposals in the autumn.

Main reform proposals

The current cooperation act applies to private companies that employ at least 30 employees; however, it also applies to smaller enterprises in cases where the employer is considering the termination of at least 10 employment contracts. The tripartite working group recommends extending the scope of the act to include all workplaces with at least 20 employees, and also to cover associations and foundations. This extension would bring a further 2,600 enterprises and 70,000 employees approximately within the scope of the act. The scale of application in relation to corporate groups will remain at a minimum of 500 employees. The proposed new act will not apply to the public sector, which has its own, similar rules on cooperation between public sector employers and employees.

The present act has been widely criticised for being too complicated and unclear from an administrative perspective. The proposed reforms would place a greater emphasis on the importance of seeking full consensus in cooperation negotiations. These negotiations would always be necessary whenever there are substantial changes in duties, working methods or work organisation. The new proposals also require more detailed human resource (HR) planning than is currently necessary. This would include planning of in-house staffing levels, type of employment and vocational skill requirements, together with associated training targets. Planning would also have to place a greater focus on work–life balance.

The revised act would improve the availability of information on the use of labour. One new feature of the act would concern the provisions on subcontracting, whereby the principles governing the use of subcontractors would have to be reviewed annually. This review would have to specify the type of work and the time when subcontractors are to be used.

Employers who violate the proposed new cooperation act would be liable to pay compensation of up to €30,000 to any employees who are affected. The new law would also provide for a conditional fine to be imposed on the employer for failure to provide proper information or to prepare a HR plan.

Response of social partners

Both the Confederation of Finnish Industries (Elinkeinoelämän keskusliitto, EK) and the three trade union confederations – the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK), the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) and the Confederation of Unions for Academic Professionals in Finland (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA) – have expressed their satisfaction regarding the progress of the three-year tripartite working group.

However, the Federation of Finnish Enterprises (Suomen Yrittäjät), which represents small and medium-sized enterprises (SMEs), was critical of the proposals and considers that extending the scope to enterprises with 20 employees will make their operation more difficult.

According to EK, the working group’s proposals represent a good starting point for the development of cooperation. EK was pleased that the proposed reforms did not restrict the supervisory powers of management in relation to work. It was also satisfied that small enterprises would have greater powers in negotiation procedures. Another favourable aspect of the reforms, EK believes, is that employer compensation to an employee whose rights have been infringed would be a fixed euro sum (maximum €30,000) and not bound to monthly salaries as at present (maximum 20 monthly salaries).

According to SAK, the proposals would clearly enhance the existing cooperation act, making it more straightforward and giving employees a greater say in the workplace. Both STTK and AKAVA also consider the proposed reforms to be a worthwhile package.

Minister of Labour, Tarja Filatov, emphasises that the most important impact of the revised act would be that it would increase true interaction and cooperation at workplace level.

Commentary

The existing provisions of the national incomes policy agreement (2005–2007) have already resulted in proposals on important issues like subcontracting work and parental allowance (FI0603039I, FI0603059I); aspects of these are also included within the present proposals, with the new feature on subcontracting and increased emphasis on planning towards a work–life balance.

The fact that several of the working group’s proposals address essential working life issues indicates the relevance of the present tripartite cooperation with regard to revising the act, which represents an integral part of the employer–employee relationship.

Pertti Jokivuori, Statistics Finland, University of Jyväskylä