Amendments to the Act on Co-operation within Undertakings

Amending the Act on Co-operation within Undertakings (hereinafter, the Co-operation Act) 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. The Government aims to reduce the administrative burden caused by the application of the Co-operation Act, especially in companies with fewer than 50 employees. In addition, the reform will speed up the ability of all companies to react to changes in the operating environment.

The Government Programme’s entries on amendments to the Co-operation Act can be divided into three themes:

1. Scope of application based on the number of employees
2. Duration of change negotiations
3. Board-level representation of employees

The first phase of the reform will implement the Government Programme’s entries on raising the threshold for applying the Co-operation Act and reducing the minimum duration of change negotiations by half. In the second phase of the reform, the Government will evaluate whether board-level representation of employees should be amended.

Until now, the Co-operation Act has applied to companies, corporations and branches that regularly employ at least 20 people. From 1 July 2025, the Co-operation Act will primarily apply to companies, corporations and branches that regularly employ at least 50 employees. However, the Act will lay down certain obligations for employers that regularly employ 20−49 people (see questions on continuous dialogue and the obligation to hold change negotiations).

Moreover, the rules on the transfer, merger and division of business will continue to apply to all companies, corporations and branches that regularly employ at least 20 people.

The purpose of continuous dialogue is to promote the handling of matters between the employer and employees.

Beginning on 1 July 2025, continuous dialogue between the employer and employees will be lightened in companies and corporations that regularly employ 20−49 people. The employer must create workplace-specific practices for regular continuous dialogue. Existing practices may also enable continuous dialogue to take place. The employer will engage in a dialogue with the representative of the employees unless the employer and the representative agree that the dialogue will be conducted with the employees as a whole. If the employees do not have a representative, the employer will engage in a dialogue with the employees.

Introducing this lighter procedure is based on the amount of administrative burden that continuous dialogue can cause, especially in small and medium-sized companies.

From 1 July 2025, a company or corporation regularly employing fewer than 50 employees no longer has an obligation under the Co-operation Act to conduct change negotiations in accordance with the Act concerning significant changes to the position of one or more employees, which are being considered by the employer and fall within the scope of the employer’s power of management (so-called light change negotiations, where the aim is not to reduce the use of labour).

Employers that regularly employ 20–49 persons in employment relationship must initiate change negotiations in situations where the employer is considering measures to reduce the use of labour affecting at least 20 employees over a 90−day period, i.e. termination, lay-off, reduction to part-time employment or unilateral modification of an essential term in the employment contract for financial or production-related grounds. However, any lay-offs considered by the employer that are based on a temporary reduction of work or the employer’s ability to offer work (lay-offs lasting a maximum of 90 days) will not require change negotiations.

The Co-operation Act lays down provisions on the duration of change negotiations concerning the reduction of workforce. Under the current Act, change negotiations last at least six weeks or 14 days, depending on their subject.

From 1 July 2025, the duration of change negotiations will be cut by half. The amendment will apply to all companies, corporations and branches within the scope of application of the Act. The minimum duration of the change negotiations will be either three weeks or seven days, depending on the matters to be negotiated and the number of employees at the company or corporation.

As of 1 July 2025, a provision will be added to the Act concerning the time reserved for determining the availability of employment services. The provision will be applied if the employer submits a proposal for negotiations concerning its plan to terminate at least ten employees on production-related and financial reasons. The employment contract of a terminated employee may not end before 30 days have elapsed from the date a proposal for negotiations was submitted to the employment authority. The proposal for negotiations will be submitted to the authority at the beginning of the negotiations.

The purpose of this provision is to reserve sufficient time for the employment authority to determine, together with the employer, the employment services available for the affected employees to support their employment.

Board-level employee representation refers to the representation of personnel in the company’s administration, for example in the board of directors or senior management group. The Government Programme states that the possible needs to amend the Co-operation Act, which was revised in 2022, concerning e.g. the board-level representation of employees will be assessed in the mid-term policy review session.

A report on the possible need to make amendments to board-level employee representation was submitted by rapporteur Jukka Ahtela (Master of Laws, Trained on the Bench) to Minister of Employment on 21 January 2025. The report was subsequently discussed by a tripartite working group, whose term of office ran from 1 January to 31 March 2025. In its mid-term policy review sessionLink to an external website in spring 2025, the Government decided to lower the scope of application of board-level representation of employees from 150 to 100 employees. It also stated that board-level employee representation must take place in the board of directors or senior management group. A tripartite working group has been appointed to prepare the change.

The amendments to the Co-operation Act have been prepared by a tripartite working group with representatives from the Central Organisation of Finnish Trade Unions SAK, the Confederation of Unions for Professional and Managerial Staff in Finland Akava, the Finnish Confederation of Professionals STTK, the Confederation of Finnish Industries EK and the Federation of Finnish Enterprises, in addition to the Ministry of Economic Affairs and Employment.

A tripartite working group discussed the matters related to the scope of application and the duration of the change negotiations during its first term of office on 11 December 2023–20 June 2024. The working group’s task was to prepare a report in the form of a government proposal. The working group was not unanimous in its work. The employee organisations together, the Confederation of Finnish Industries EK, and the Federation of Finnish Enterprises gave a dissenting opinion. The working group’s report was circulated for comments from 28 June to 23 August 2024.

The second term of the working group was from 1 January 2025 to 31 March 2025. During that term, the working group discussed a report on the need to amend board representation.

The amendments on raising the application threshold and shortening the duration of change negotiations will enter into force on 1 July 2025.