Notice period for temporary lay-offs and the duration of co-operation negotiations will be shortened due to COVID-19

On 20 March, the Government decided on first-hand measures to be taken to secure people’s livelihood and liquidity of companies in the difficult situation caused by the coronavirus. On 26 March, the Government submitted its proposal to Parliament on amendments to the Employment Contracts Act, the Seafarers’ Employment Contracts Act and the Act on Co-operation within Undertakings. The amendments are intended to be in force for three months, or until 30 June 2020.

Shorter notice period for temporary lay-offs, changes in termination during trial period

According to the Government proposal, the notice period preceding employee temporary lay-offs is shortened from 14 days to five days. In other words, the employer will be required to inform the employee of the temporary lay-off no later than five days before the lay-off begins. However, employers would still be allowed to deviate from the notice period requirement and comply with collective agreements between national employer and employee associations.

Similarly, the duration of co-operation negotiations regarding temporary lay-offs will be shortened from the current six weeks or 14 days to five days.

In the future, employers will have the right to temporary lay off an employee in a fixed-term employment relationship under the same conditions as an employee with an employment contract of unspecified duration.

The provision on trial period will be amended so that the employment contract can be terminated during the trial period for financial or production-related reasons.

The proposal extends the employee re-employment obligation to nine months if the employee was laid off during a time when the temporary provisions were in force.

The amendments proposed to the Seafarers’ Employment Contracts Act are similar to those proposed to the Employment Contracts Act.

The Acts are scheduled to enter into force as soon as possible and will remain in force until 30 June 2020.

Extended right to unemployment benefit during temporary lay-off

The Government proposes that those laid off temporarily would be entitled to unemployment benefit even if they were engaged in business activities or studies. This amendment would provide easier and quicker access to unemployment benefit to those who are studying or engaged in business activities as a part-time activity, as that would eliminate the need to investigate any labour policy requirements regarding studies or business activities.

Payment of unemployment benefit to a person who has been temporarily laid off would require, as is the case currently, that the person registers as a jobseeker with the Employment and Economic Development Office (TE Office) and that a labour policy statement is issued regarding the person’s entitlement to unemployment benefit. The obligation to accept work offered by the employer referred to in the Unemployment Security Act would continue during temporary lay-off.

The Act is scheduled to enter into force on 1 April 2020 and it would remain in force until 31 July 2020. The Act would apply to those laid off as of 16 March 2020 or later.

What is the reason for these amendments?

The COVID-19 coronavirus outbreak and the measures taken to stop the spread of the epidemic have led to a situation where the economic operating conditions of companies and, consequently, their ability to offer work have deteriorated dramatically in a short period of time. This has forced companies to start adapting their operations. The number of temporary lay-off notifications submitted to the TE Office has risen sharply since the first half of March, and some companies have been forced to resort to dismissals instead of temporary lay-offs. 

On 18 March 2020, the central labour market organisations EK, KT, SAK, STTK and Akava presented their proposal on measures to safeguard business, employment and livelihoods in the context of the economic crisis caused by coronavirus epidemic to the Government.  Based on this proposal, on 19 March 2020 the leaders of the government parties outlined measures that would be addressed in the Government proposal for amendments to the Employment Contracts Act, the Seafarers’ Employment Contracts Act and the Act on Co-operation within Undertakings.

The proposed amendments are, for the most part, in line with the measures proposed by the central labour market organisations on 17 March 2020.

Inquiries:

Tarja Kröger, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 504 8937 (employment legislation)
Nico Steiner, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 504 9001 (employment legislation)
Eeva Vartio, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 504 7082 (provisions on unemployment security during lay-off)

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