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.

During industrial peace, industrial action directed at one’s own collective agreement is prohibited in the current legislation (so-called illegal strike). In addition, case-law has intervened in industrial action deemed to be contrary to good practice and 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 have been prepared in a tripartite working group. The working group was tasked to prepare a report in the form of a government proposal that includes proposals for legislative amendments.

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

1. Enhancing the sanctions system: The report proposes to enhance the sanctions system for unlawful industrial action. The amount of compensatory fines would be increased.
2. Limiting disproportionate solidarity action: If the industrial peace obligation was in force, a solidarity action could not be carried out if the way it was implemented or its harmful consequences for those not party to the main dispute would be disproportionate to the objective pursued. If the industrial peace obligation were not in force, the above mentioned restriction would only apply to situations where the aim of the industrial action was not to conclude a collective agreement. Most solidarity action that has occurred in recent times would be permitted in future too. There would be no right to solidarity action or the action would have to be organised in a more moderate manner, if it caused significant harm to a third party employer that is the target of the solidarity action.
3. Limiting the length of political industrial action: According to the report, the maximum duration of political work stoppages would be 24 hours and that of other industrial action would be two weeks.

The amendments do not change 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 working group’s report proposes prohibiting disproportionate solidarity action and political industrial action lasting more than 24 hours. In future, the industrial peace obligation would 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 now prepared do not affect labour disputes that aim 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 illegal and a compensatory fine may be imposed as a result.

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 agreement or in a situation where the actual industrial action supported by the sympathy strike is illegal. 

According to the working group’s report, solidarity action will become subject to the duty to notify in accordance with the proportionality assessment and the Act on Mediation in Labour Disputes. If the industrial peace obligation was in force, a solidarity action could not be carried out if the way it was implemented or its harmful consequences for those not party to the main dispute would be disproportionate to the objective pursued. If the industrial peace obligation was not in force, the above mentioned restriction would only apply to situations where the aim of the industrial action was not to conclude a collective agreement.

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, which is directed at a political decision-maker or decision-making, such as the Government’s plans to amend legislation. At the moment, there is no 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.

According to the report, the maximum duration of political work stoppages would be 24 hours and that of other industrial action would be two weeks.

A compensatory fine may be imposed as a sanction for violation of the industrial peace obligation, unless otherwise provided in the collective agreement. The maximum amount of compensatory fine is currently EUR 37,400. 

The Government Programme outlines that the level of a compensatory fine for unlawful industrial action will be increased, with the maximum amount set at EUR 150,000 and the minimum amount set at EUR 10,000. However, the working group’s report proposes that, for a special reason, the level of compensatory fine could 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 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.

At present, compensatory fines can 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. The working group proposes to change this. An employee, who continues an industrial action found unlawful by a court and who is aware of the court’s decision, would be subject to pay their employer a penalty payment of EUR 200.

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 proposed changes will have a positive impact on employment, but it is difficult to estimate the exact amount. A more specific estimate will become available during the preparation.

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.

According to the Government Programme, the legislation will be prepared on a tripartite basis, drawing on the expertise of business and industry and employees. 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.

Parliament is currently debating the government proposal. After the debate, the parliamentary reply will be presented at the government session. Subsequently, the President of the Republic will approve the Act.