Increasing flexibility of fixed-term employment contracts and other changes to the Employment Contracts Act

The aim is to remove barriers to hiring and to improve the operating environment, especially for small and medium-sized companies.

Previously, a fixed-term employment contract could be concluded on the employer’s initiative for a justified reason. In addition, it was possible to conclude a fixed-term employment contract without a justified reason with a person who has been unemployed for a long time.

A fixed-term employment contract may be concluded without a justified reason in cases concerning the first employment contract between an employer and an employee. Moreover, such a contract may be concluded if, at the time of the conclusion of the contract, at least five years have elapsed since the previous employment relationship between them.

If the fixed-term employment relationship is concluded without a justified reason, its maximum duration is one year. 

A fixed-term employment contract may be concluded without a justified reason only once. It is not possible for the employer and employee to circumvent this restriction by agreeing to extend the fixed-term contract.

The employer may agree with the same employee on a new fixed-term contract concluded without a justified reason only if at least five years have elapsed since the end of their previous employment relationship at the time the contract was concluded. 

In addition, the employer must comply with the provision of the Employment Contracts Act that prohibits the use of consecutive fixed-term contracts if the contract is concluded for a justified reason. It is prohibited to use consecutive fixed-term contracts when the amount or total duration of fixed-term contracts or the totality of such contracts indicates a permanent need of labour. This evaluation also takes into account fixed-term employment contracts concluded without a justified reason.

At the end of the fixed-term employment contract, the employer will be required to give the employee a reasoned explanation of the possibility to hire the employee for an employment relationship of indefinite duration or for a fixed-term employment relationship concluded for a justified reason. 

The employer will also be required to offer the employee work in cases where a fixed-term employment contract concluded without a justified reason is about to end and the employer is considering hiring more employees for the task in question or a similar task. The obligation to offer work continues after the termination of the employment relationship. This obligation will remain valid for a period corresponding to one third of the duration of the employment relationship. Therefore, it cannot exceed four months.  

The obligations of the employer aim to prevent possible abuses of fixed-term contracts concluded without a justified reason.

In addition, there will be restrictions on the conclusion of such contracts consecutively and their maximum duration (see answers to previous questions). 

A fixed-term employment contract concluded in violation of the regulation will be considered to be valid until further notice.

Similarly to the previous rules, the new rules will not allow concluding or not concluding a fixed-term employment contract on discriminatory grounds. 

Moreover, the amendments are not in themselves estimated to weaken the protections against discrimination. However, a possible increase in the number of fixed-term employment contracts may also to some degree affect the number of suspected discrimination cases related to them. The prohibition of discrimination laid down in the Act on Equality between Women and Men also applies to fixed-term employment contracts without a justified reason concluded under the new regulation. Under the Act, the action of an employer is considered to constitute discrimination if the employer, when deciding on the duration or continuation of an employment relationship, acts in a way that results in the employee ending up in a less favourable position on the basis of pregnancy, childbirth or family leave.

The awareness of employers concerning the statutory prohibition of discrimination would be increased by a new provision under which concluding or not concluding a fixed-term employment contract on discriminatory grounds will not be allowed.

The changes are not estimated to have a particular effect on any sector dominated by men or women. 

Changes made during the parliamentary process that restrict the scope of application of fixed-term employment contracts concluded without a justified reason are expected to have a positive effect on the gender equality impacts of the proposal.

The employee and the employer will have the right to terminate a fixed-term employment contract concluded without a justified reason that has lasted for at least six months. This will increase flexibility for both employers and employees. For example, an employee may resign before the end of a fixed-term contract concluded without a justified reason if the employee is offered an employment contract for an indefinite term elsewhere.

That is the period of notice given to an employee before a lay-off. The purpose of the notice period is to give employees the opportunity to prepare for interruptions in work and pay.

Under the previous Act, the employer was required to give an employee a personal notice of lay-off no later than 14 days before the lay-off begins. In addition, collective agreements may specify a notice period of 14 days in accordance with the Act or longer.

The notice period will be shortened to seven days. The possibility of local collective bargaining was also added to the Act. The employer and the representative of the employees may agree to observe the seven-day notice period instead of the longer notice period included in the collective agreement. The agreement must be in writing.

Statutory local collective bargaining concerning the notice period for lay-offs is not possible if the collective agreement binding on the employer contains a locally agreed provision on the notice period for lay-offs be concluded locally. In that case, local collective bargaining must comply with the legislation concerning local collective bargaining which entered into force on 1 January 2025 as well as the provisions of the collective agreement.

The re-employment obligation refers to a situation where an employer needs employees for the same or similar tasks for which the employer has dismissed an employee four months earlier for financial or production-related reasons. If the dismissed employee is a jobseeker, the employer is required to offer the employee the work in question. However, the obligation to re-employ would be six months for employment relationships that have lasted at least 12 years.

Re-employment obligation will only apply to employers with at least 50 employees.

It will be possible to agree on different rules on the re-employment obligation in the collective agreement, as is currently the case.

Fixed-term employment contracts are regulated by e.g. the EU Fixed-term Work Directive (the so-called Framework Agreement on fixed-term work). The Framework Agreement requires Member States to prevent the abuse of fixed-term employment contracts. Member States may choose different ways to do this. The agreement does not require Member States to regulate the first fixed-term employment contract with an employee. 

There are no binding international agreements or EU regulations on the re-employment obligation and the period of notice for lay-offs.

To the extent that legislation aims to authorise derogations from collective agreements offering better protections with the means of local collective bargaining, the regulation must consider international agreements on the freedom of organisation and the right to collective bargaining (e.g. ILO) and the provisions of the Constitution safeguarding these rights.

The reform is expected to lower the threshold for employers to hire employees, to increase legal certainty and to reduce the administrative burden to some extent.

The change is expected to increase the use of fixed-term employment relationships. 

Relevant research data does not indicate that the reform would have a clear impact on employment or unemployment.
 

Parliament requires that the Government closely monitor and evaluate the gender impacts of the provisions on fixed-term employment contracts concluded without a justified reason and, if necessary, take corrective measures if the negative effects on women’s labour market position mentioned in the impact assessments of the proposal are realised. A report on the results of the monitoring and evaluation must be submitted to the Employment and Equality Committee by the end of 2029.

In addition, the Ministry of Economic Affairs and Employment will monitor the effects of the changes on working life and the number of fixed-term employment relationships. 

On 6 September 2024, the Ministry of Economic Affairs and Employment appointed a tripartite working group to prepare the legislative amendments in accordance with the Government Programme. The tripartite working group that prepared the legislative amendments was not unanimous. Dissenting opinions were submitted by the Confederation of Finnish Industries EK and the Local Government and County Employers KT, the Federation of Finnish Enterprises as well as the employee confederations the Central Organisation of Finnish Trade Unions SAK, the Confederation of Unions for Professional and Managerial Staff in Finland Akava and the Finnish Confederation of Professionals STTK.

The Ministry of Economic Affairs and Employment organised a consultation round on the working group’s report between 2 June–28 July 2025.

During the parliamentary debate, the proposal on renewing a fixed-term employment contract was removed. According to the Government proposal, a fixed-term employment contract could have been concluded up to three times without a justified reason, provided that the total duration of the contracts did not exceed one year. However, as a result of the adopted legislative amendments, only one fixed-term employment contract may be concluded without a justified reason. The maximum duration of an employment relationship is one year.  

In addition, Parliament raised the time limit from two to five years for fixed-term employment contracts that can be concluded without a justified reason between an employer and the same employee. In other words, a fixed-term employment contract concluded without a justified reason can only be concluded if there has been no employment relationship between the parties in the previous five years. 

Certain technical and terminological changes were also made to the regulation.

The legislative amendments entered into force on 1 June 2026.