Improving industrial peace in the labour market

When a collective agreement is in force, the agreement cannot be a target of industrial action. This is what industrial peace means.

The report proposes that, in future, disproportionate solidarity action or political industrial action lasting more than 24 hours would not be allowed during industrial peace.

The Constitution and several international agreements safeguard the right to industrial action. The Constitution guarantees the freedom to form trade unions, including the right to industrial action. However, provisions on the content of the right to industrial action can be laid down in law.

Industrial action targeted at a collective agreement cannot be organised when the collective agreement is in force. This requirement is called industrial peace. Provisions on industrial peace and sanctions for breaching it are laid down in the Collective Agreements Act.

Current legislation does not contain special requirements related to industrial action. However, case-law has confirmed that industrial action must not be contrary to good practice or unlawful.

The right to organise is safeguarded in the Constitution and international agreements to which Finland is committed. As a rule, the right to organise has been considered to include the right to industrial action. The most important agreements have been concluded within the framework of the International Labour Organization ILO. Other agreements safeguarding the right to organise include: 

• International Covenant on Civil and Political Rights
• European Convention on Human Rights
• Revised European Social Charter
• International Covenant on Economic, Social and Cultural Rights
• EU Charter of Fundamental Rights

International commitments safeguard the existence of the right to industrial action, but the exercise of the right to industrial action is not without limitations. States may set conditions for the exercise of the right to industrial action.

The exercise of the right to industrial action may be regulated by law, even though the right to industrial action itself is protected by the Constitution and international agreements. However, national legislation must meet the framework conditions of international agreements.

Legislation has also previously prohibited such industrial action that is directed at one’s own collective agreement during industrial peace (so-called unlawful strike). In addition, case law has intervened in industrial action deemed to be contrary to good practice or unlawful. It has also been possible to restrict the right to strike in order to ensure sufficient essential work in the healthcare sector during industrial action, so that the lives and health of patients are not endangered, for example.

The Government Programme includes proposals related to industrial peace, which were prepared in a tripartite working group.

The amendments relate to three areas presented in more detail below:

1. Enhancing the sanctions system: The sanctions system related to unlawful industrial action will be enhanced. The amount of compensatory fines will be increased.
2. Limiting disproportionate solidarity action: When the obligation to maintain industrial peace is in force, only such solidarity action that does not have disproportionately harmful consequences for third parties will be allowed. Most solidarity action that has occurred in recent times will be permitted in the future too. There will be no right to solidarity action or the action will have to be organised in a more moderate manner, if it causes significant harm to a third party employer that is the target of the solidarity action.
3. Limiting the length of political industrial action: The maximum duration of political work stoppages will be 24 hours and that of other industrial action will be two weeks.

The amendments will not affect the right to lawful strikes to improve one’s own working conditions.

In general, strikes directed at one’s own collective agreement are prohibited when the collective agreement is in force, i.e. during industrial peace. The employer can be considered to have earned industrial peace by committing to the terms of employment agreed in the collective agreement.

The reform will prohibit disproportionate solidarity action and political industrial action lasting more than 24 hours. In future, the industrial peace obligation will also include the requirement to refrain from disproportionate solidarity action or long-term political industrial action.

Industrial action is allowed when there is no industrial peace, i.e. the collective agreement is not in force. After the collective agreement expires, industrial peace is no longer in force. Then the right to industrial action is a natural part of the negotiation system for terms of employment. The parties to a labour dispute may initiate industrial action against each other to speed up the negotiations and to reach an agreement. The legislative amendments will not affect the right to industrial action aimed at improving working conditions in one’s own sector.

From time to time, labour market disruptions occur during industrial peace. The permissibility of such industrial action depends on whether the target of the action is one’s own collective agreement while the agreement is in force, or not. According to the Collective Agreements Act, the parties must avoid any industrial action directed at the entire collective agreement or a certain provision of it. If the action is directed at one’s own agreement, the strike is unlawful and a compensatory fine may be imposed as a result.

Political industrial action lasting less than 24 hours and solidarity action implemented within the limits of legislation will continue to be permitted. 

Solidarity action supports the industrial action of another employee group, and such action is generally permitted. Solidarity action is prohibited if the industrial action is considered to be directed at one’s own collective agreement or in a situation where the actual industrial dispute supported by the sympathy strike is unlawful. 

With the reform, solidarity action will become subject to the duty to notify in accordance with the proportionality assessment and the Act on Mediation in Labour Disputes. When the obligation to maintain industrial peace is in force, only such solidarity action that does not have disproportionately harmful consequences for third parties will be allowed. If the industrial peace obligation is not in force, the above-mentioned restriction will only apply to situations where the aim of the industrial action is not to conclude a collective agreement.

In future, a notification of solidarity action organised in the form of a work stoppage must be submitted to the employer subject to the industrial action, the party to the collective agreement and the National Conciliator’s Office no later than seven days before its start.

Spontaneous walkouts are one form of industrial action. Case law has consistently held that walkouts during the period when the collective agreement is in force are in violation of the industrial peace obligation.

Political industrial action refers to industrial action implemented by an employee organisation and directed at a political decision-maker or decision-making, such as the Government’s plans to amend legislation. Previously, there has not been any legislation on political industrial action in Finland.

The permissibility of political industrial action is primarily a question of whether the industrial action can be carried out during working hours and whether it affects the organisation of work (e.g. ban on changing shifts). It does not concern the activities of employees or organisations outside working hours.

As a result of the reform, the maximum duration of political work stoppages will be 24 hours and that of other industrial action will be two weeks. Any political industrial action organised previously cannot be repeated within one year of the start of the original industrial action to achieve the same objective. 

In future, when industrial peace is in force, the party to the collective agreement and the National Conciliator must be notified of any political industrial action no later than seven days before its start.

A compensatory fine may be imposed as a sanction for violation of the industrial peace obligation, unless otherwise provided in the collective agreement. 

The reform will raise the level of a compensatory fine for unlawful industrial action. The maximum amount of the compensatory fine was EUR 37,400 before the reform. Now the maximum amount is set at EUR 150,000 and the minimum amount at EUR 10,000. However, for a special reason, the level of the compensatory fine can be reduced below the minimum amount or waived altogether.

The compensatory fine is paid in lieu of compensation for damage, which means that the fine does not necessarily compensate for the damage actually suffered. The amount of the compensatory fine is determined by the court on the basis of overall consideration, that takes into account, for example, the extent of the damage, the degree of guilt, any cause given by the other party to the violation and the size of the association or company. For a special reason, it is possible to refrain from imposing a compensatory fine.

In case of property damage, the compensatory fine imposed is paid to the injured party, unless otherwise provided in the collective agreement. Otherwise, the compensatory fine is paid to the party on whose claim the judgment has been given. 

If there are several parties entitled to the amount of compensation, the judgment determines how the compensation imposed is divided among the parties. In this case, the extent of the loss suffered by each of the parties or their members and those represented will be considered. Consequently, the maximum amount of the compensatory fine cannot be paid to more than one party. Instead, it is divided between the parties.

Prior to the reform, compensatory fines could only be imposed on an association or employer that is party to or otherwise bound by a collective agreement and that is bound by the industrial peace obligation. In future, an employee who continues an industrial action found unlawful by a court and who is aware of the court’s decision must pay their employer a compensation of EUR 200. The employer must inform the employee in writing that the court has found the work stoppage to be unlawful. The employer will be allowed to deduct the compensation from the employee’s salary only with the employee’s express consent. Otherwise, deduction will require that the employee, by final judgment, has already been ordered to pay the compensation. 

In Germany, political industrial action is prohibited. In the Nordic countries, political industrial action is not restricted by law, but case-law has assessed its length. In Sweden, case-law has ruled that short-term political industrial action is permitted and similarly in Denmark where short-term political industrial action lasting a few hours is allowed.

According to Statistics Finland, there have been an average of 100 industrial disputes per year in Finland between 2018 and 2022, with an average of 350,000 lost working days each year. Solidarity action accounts for about 10 per cent of all disputes and political industrial action for slightly under 10 per cent. The number of industrial disputes varies greatly from year to year.

The Ministry of Economic Affairs and Employment estimates that there have been an average of 40 illegal industrial actions in 2018–2022, with 25,000–40,000 lost person-days. This accounts for 7–12 per cent of all working days lost to strikes.

The number of strikes varies from year to year. For example, there were 46 strikes in Finland in 2022, and three in Sweden, one of which was a lockout. There were a total of five strikes and lockouts in Norway and 93 in Denmark. (Source: Medlingsinstitutet)

The Ministry of Economic Affairs and Employment estimates that the legislative amendments will reduce the number of working days lost to strikes by 5–10 per cent. The number of strikes may decrease relatively more because the majority of illegal industrial actions are small-scale.

The changes will have a positive impact on employment, but it is difficult to estimate the exact amount.

Improving industrial peace is part of a broad package of labour market reforms. On the whole, the package will have a significant positive impact on employment and the ability of companies to hire workforce.

The Ministry of Economic Affairs and Employment appointed a tripartite working group to consider issues related to industrial peace between 3 July 2023 and 15 October 2023. Its task was to draw up a report in the form of a government proposal.

The working group included representatives from:

• Local Government and County Employers KT
• Confederation of Finnish Industries EK
• Federation of Finnish Enterprises SY
• Office for the Government as Employer
• Central Organisation of Finnish Trade Unions SAK
• Confederation of Unions for Professional and Managerial Staff in Finland Akava
• Finnish Confederation of Professionals STTK
• Employee confederations (joint representative).

The group was not unanimous in its work. SAK, STTK and Akava presented a joint dissenting opinion. So did EK, SY and KT.

The Ministry of Economic Affairs and Employment circulated the working group’s report for comments from 23 October to 4 December 2023. The comments received were discussed during further preparations before the government proposal was submitted to Parliament.

The Government submitted the proposal on industrial peace to Parliament on 1 February 2024. Parliament clarified and specified the provisions on the basis of the statement of the Constitutional Law Committee. 

The wording of the provisions on solidarity action and political industrial action was specified.  

In addition, a one-year time limit was added to the provisions on the maximum duration of political industrial actions. This means that any political industrial action organised previously cannot be continued during that time.  

In future, the National Conciliator’s Office must also be notified of political industrial actions or solidarity actions. 

The Constitutional Law Committee required that the provisions on the compensation of EUR 200, which is imposed due to continuing a work stoppage found unlawful, be specified. Because of this, the provisions were specified by Parliament to obligate the employer to inform the employee in writing that the work stoppage has found to be unlawful by a court. The employer will be allowed to deduct the compensation from the employee’s salary only with the employee’s express consent. Otherwise, deduction will require that the employee, by final judgment, has already been ordered to pay the compensation. 

Transitional provisions were also included in the legislation for possible situations where political industrial action or solidarity action has started before the act’s entry into force and it still continues when the act enters into force.

Parliament passed the bills with changes on 8 May 2024.

The parliamentary reply was discussed at the government session on 16 May 2024. 

The amendments entered into force on 18 May 2024.