Government proposes more flexibility for fixed-term employment contracts

Under the proposal, a fixed-term employment contract could be concluded without a justified reason for a maximum of one year if certain conditions are met. The Government also proposes to shorten the notice period for lay-offs and to limit the employer’s obligation to re-employ dismissed employees. The proposal for the amendments was submitted to Parliament on 15 January 2026.

“The Government continues with determination its efforts to reform the labour market so that it will be easier especially for small and medium-sized companies to hire new workers. These proposals facilitate hiring and their aim is to ensure that more Finnish people find work,” says Minister of Employment Matias Marttinen.
 
The proposal is one of the Government’s labour market reforms that will remove barriers to employment and strengthen the operating conditions of small and medium-sized companies, in particular.

Fixed-term contracts could be concluded without a justified reason for up to one year – Use of consecutive fixed-term contracts would be restricted

In future, a fixed-term employment contract could be concluded without a justified reason in cases concerning the first employment contract between an employer and an employee. Moreover, such a contract could be concluded if the employee had worked for the same employer previously but the employment relationship had ended more than two years ago. A fixed-term employment contract concluded without a justified reason could not last longer than one year.

The use of consecutive fixed-term contracts would be restricted. In total, a maximum of three fixed-term contracts could be concluded without a justified reason. The contract could be renewed up to two times during the year following the conclusion of the first fixed-term employment contract. The combined total duration of the contracts could not, however, exceed one year.

Concluding or not concluding a fixed-term employment contract on discriminatory grounds would not be allowed. A fixed-term employment contract concluded in violation of the rules on the employer’s initiative would be considered to be valid until further notice.

Obligations of employer would safeguard employee’s position

The employee and the employer would have the right to terminate a fixed-term employment contract concluded without a justified reason that has lasted for at least six months. The employer would be required to explain the reasons behind the termination, as is the case with employment contracts valid until further notice.

At the end of the fixed-term employment contract, the employer would be required to give the employee a reasoned explanation of the possibility to hire the employee for an employment relationship of indefinite duration or for a fixed-term employment relationship concluded for a justified reason.

The employer would also be required to offer the employee work in cases where a fixed-term employment contract concluded without a justified reason was about to end and the employer was considering hiring more employees for the task in question or a similar task. After termination of the employment contract, the obligation to offer work would last for a period corresponding to one third of the total duration of the employment contracts concluded with the employee. The period could not exceed four months.

These rules aim to ensure the continuity of employment relationships and to prevent employers from circumventing employment protections.

Notice period for lay-offs would be seven days

The Government proposes that the notice period for lay-offs be shortened from 14 to seven days. This is the period of notice given to an employee before a lay-off.

It would be possible for the employer and employees to agree on the use of the statutory notice period for lay-offs in workplaces.

Re-employment obligation would apply to employers with at least 50 employees

Under the government proposal, the re-employment obligation would only apply to employers with at least 50 employees.

The re-employment obligation refers to a situation where an employer needs employees for the same or similar tasks for which the employer has dismissed an employee four months earlier for financial or production-related reasons. If the dismissed employee is a jobseeker, the employer is required to offer the employee the work in question. However, the obligation to re-employ would be six months for employment relationships that have lasted at least 12 years.

Legislative changes would enter into force on 1 April 2026

The legislative amendments based on the Programme of Prime Minister Petteri Orpo’s Government were prepared in a tripartite working group that was not unanimous. The Ministry of Economic Affairs and Employment organised a consultation round on the legislative amendments between 2 June and 28 July 2025. The Government submitted its proposal to Parliament on 15 January 2026. The Government proposes that the amended legislation enter into force on 1 April 2026.

Inquiries:
Jaakko Aromaa, Special Adviser to the Minister of Employment, tel. +358 295 047 110 (questions to the Minister of Employment) 
Nico Steiner, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 295 049 001
Katariina Jämsén, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 143