Contents of an employment contract

Make sure that your contract of employment includes all the orally agreed conditions.

Job description

  • The contract should include some sort of a job description.
  • In dispute, it’s good to have written documentation of what has been agreed on job content.

Location of work

  • Daily allowances, for example, are calculated on the basis of agreed work location.
  • Location of work is the locality where work is predominantly performed.

Duration of employment

  • Your employment contract may be temporary or permanent. A permanent contract may be terminated by dismissing the employee.
  • The employer must have an acceptable reason for offering a temporary contract. It can be, for example, seasonal nature of work or substituting another employee during parental leave.
  • From the beginning of 2017, a long-term unemployed person may be employed on a temporary basis without reasonable grounds for a duration of maximum 12 months.
  • A temporary contract may include a termination clause to enable the parties to terminate the contract within the agreed term of notice. Such clause must be expressly included in the employment contract.
  • Even with termination clause, the employer may not dismiss the employee without legal grounds.

Collective agreement

  • If any collective agreement is applied, all the conditions thereof, such as holiday pay, will become part of the employment contract.
  • Check the contents of your employment contract to ensure that you’re aware of your rights.
  • All industries and branches do not have a collective agreement.

Probationary period

  • Applying probationary period requires agreeing on the basis of Employment Contracts Act.
  • The maximum duration of probationary period is 6 months.
  • The employer may extend the length of the probationary period if the employee is absent from work during that period for more than 30 calendar days due to incapacity for work due to sickness or injury, or due to parental leave.
  • In a temporary contract of less than 12 months, the probationary period may not be longer than half of the duration of employment.
  • Termination of contract during the probationary period
  • During the probationary period, the parties to the employment contract may terminate the contract without notice.
  • The employment relationship is terminated on the day of notification of termination, during the probationary period.
  • The employment relationship may not be terminated on the basis of probationary condition until work has commenced.


  • The amount of pay, period of pay and payment date should be agreed upon in writing.
  • In addition to monetary compensation, pay may include fringe benefits such as cell phone allowance.
  • If a performance-related pay in addition to monthly salary is agreed upon, the determination basis for it should be included in the employment contract or in its attachment.
  • It is particularly important to agree on the payment of performance-related pay or bonuses at the termination of the employment contract.

Working hours

  • The employee’s regular working hours and the application of Working Hours Act shall be agreed upon in the employment contract.
  • Working Hours Act stipulates that overtime shall be compensated by overtime pay as defined by law.
  • Agreed upon separately, overtime may be compensated by corresponding leave. Unless otherwise agreed, overtime must be compensated in monetary pay.
  • Compensatory overtime must be ordered by the employer and agreed by the employee.
  • Work of CEO or comparable work which can be regarded as independent work on the basis of its duties or the position of the employee in the organisation, and which explicitly corresponds the leading of the company, organisation, fund and or an independent part thereof, remains outside the scope of the Working Hours Act.
  • Should the Working Hours Act not be applied, compensation of overtime can be taken into account in defining the person’s pay.
  • In that case, the employer and the employee should agree upon how compensation is and will be taken into account in salary development, also over time.

Annual leave and holiday pay

  • Annual leave is accrued according to Annual Holidays Act.
  • In general, an employee is entitled to 2–2,5 days annual leave for each full month at work.
  • If the employee has outstanding annual leave at termination of the employment contract, the accrued leave will be paid as holiday compensation with the final pay.
  • Holiday pay is not a statutory benefit. It has to be agreed upon separately, either in collective agreement or in the employment contract. Payment of holiday pay may also be the employer’s policy. The basis for holiday pay is as agreed in the respective contracts.

Travel costs

  • If the job involves a lot of travelling, you should agree on compensation of travel costs and travel time in your employment contract.
  • Also agree on daily allowance while travelling.
  • The collective agreement, if applicable, usually includes clauses on travel-related costs.
  • The employer may also have a company travelling policy.
  • Check before travelling, at the latest, what has been agreed on travel costs.
  • Termination of employment relationship
  • Term of notice may be agreed on, irrespective of the duration of employment. A longer term may be applied to the employer than to the employee.
  • The maximum duration of the term is six months.
  • Unless otherwise agreed, the Employment Contracts Act stipulates  that the employer shall apply the following terms:

Duration of employment / Term of notice   


maximum 1 year 14 days
more than 1 and maximun 8 years 1 month
more than 4 and maximun 8 years  2 months
more than 8 and maximun 12 years  4 months
more than 12 years 6 months


Non-compete clause

  • A non-compete clause (NCC) in the employment contract or a separate non-compete agreement restricts the re-employment of the employee after the termination of his or her employment relationship.
  • A non-compete clause may be agreed on when strong arguments related to the activities of the employer and the nature of the employment relationship exist. In these cases, the type of employer activities, need for protection and the position and duties of the employee are taken into account.
  • To be applicable, a non-compete clause has to be expressly agreed upon before the employment commences or during the employment.
  • In general, a non-compete clause restricts, within agreed time limits, the leaving employee to be employed in competing companies or embarking on a competing business of his or her own.
  • The statutory maximum length of a non-compete clause is, as a rule, 6 months.
  • The employee is not bound by the non-compete clause if the employment is terminated for reasons originating from the employer.
  • Have your NCC checked by the lawyers of The Finnish Business School Graduates in our Employment Councelling to know what you are committing yourself to.
  • Non-disclosure
  • Employment Contracts Act stipulates that the employee may not disclose confidential or proprietary information or trade secrets of the employer during the employment.
  • Even after termination of employment, the employee may not, without permission, disclose any of the above-mentioned information.
  • According to Criminal Code (30 Chapter 5 §), disclosure of business-sensitive information is a punishable act during the employment and two years after the termination of it.
  • Employment contracts often include a separate clause on non-disclosure.
  • The idea of non-disclosure is to protect the trade secrets of not only the employer but also those of other companies of the same Group, its customers or business partners.
  • In a well-written non-disclosure clause or agreement the confidential or proprietary information is clearly defined and the extent of disclosure is not unnecessarily made larger.
  • The obligation of non-disclosure shall not apply to the professional skills or previous experience of the employee.
  • The law does not stipulate the contents of non-disclosure clause or agreement.
  • Non-disclosure may have an undetermined duration after the termination of employment. However, it is justified to limit the validity of such agreement to 1–2 years after the termination of employment as the interest to protect confidential or proprietary information or trade secrets decreases over time and may disappear altogether.