Government to reduce administrative burden on small companies – changes to Co-operation Act to take effect on 1 July 2025

The amendments to the Act on Co-operation within Undertakings (Co-operation Act) will raise the application threshold of the Act and shorten the duration of change negotiations. The Government proposes that the President of the Republic approve the legislative amendments at the presidential session on 23 May 2025. The amendments would enter into force on 1 July 2025.

Reforming the Co-operation Act is one of the Government’s labour market reforms. The aim of the first phase of the reform is to reduce the administrative burden caused by current legislation, especially in companies with fewer than 50 employees. Another objective is to speed up the ability of all companies to react to changes in the operating environment.

Threshold for applying the Act will be raised to companies with at least 50 employees

The Co-operation Act currently applies to companies, corporations and branches that regularly employ at least 20 people. Under the reform, the threshold for applying the Act will be raised so that it will apply to entities employing at least 50 persons. 

However, employers who regularly employ 20 to 49 employees must still comply with certain obligations arising from the Act: 

• The practice of continuous dialogue will be maintained, but the procedures pertaining to the dialogue will be lightened significantly.
• Employers will be required to hold change negotiations only in situations where the employer is considering measures to reduce the number of at least 20 employees over a 90−day period. No change negotiations will be required of employers who are considering lay-offs that are based on a temporary reduction of work or the employer’s ability to offer work and last a maximum of 90 days. 
• The provisions on the transfer, merger and division of business would continue as before.

Minimum duration of change negotiations will be cut by half

At present, change negotiations concerning the reduction of workforce must last at least six weeks or 14 days. After the amendments have entered into force, 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 organisation.

In future, time will have to be reserved for examining the availability of employment services if the employer submits a proposal for negotiations on its plan to terminate at least ten employees on production-related and financial grounds. 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.

Second phase of the project will evaluate the need to change board-level employee representation

The provisions of the Co-operation Act on personnel representation in administration currently apply to companies employing at least 150 employees in Finland. In its mid-term policy review in spring 2025, the Government decided to lower the threshold to companies with 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.

Inquiries:
Jaakko Aromaa, Special Adviser to the Minister of Employment, tel. +358 295 047 110
Elli Nieminen, Chief Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 056