The employer may terminate the employment contract if the work to be offered has diminished substantially and permanently for financial or production-related reasons, or for reasons arising from reorganisation of the employer’s operations.

An obligation to offer work is materially related to financial and production-related grounds for termination. The employment contract shall not be terminated if the employee can be placed in or trained for other duties. Employees shall primarily be offered work that is equivalent to that defined in their employment contract. If no such work is available, they shall be offered other work equivalent to their training, professional skill or experience. The employer shall provide employees with training required by new work duties that can be deemed feasible and reasonable from the point of view of both contracting parties.

At least the following shall not constitute grounds for termination: either before termination or thereafter the employer has employed a new employee for similar duties even though the employer’s operating conditions have not changed during the equivalent period; or no actual reduction of work has taken place as a result of work reorganisation.

The employer shall be entitled to terminate the employment contract of an employee on maternity, special maternity, paternity, parental or child-care leave on financial and production-related grounds only if its operations cease completely.

The employer shall be entitled to terminate the employment contract of a shop steward or an elected representative on financial and production-related grounds only if the work of the shop steward or the elected representative ceases completely and the employer is unable to arrange work that corresponds to the person’s professional skill or is otherwise suitable, or to train the person for some other work.

Change security

After the employer has terminated the employment contract on financial and production-related grounds, the employee is entitled to a fully paid employment leave during the period of notice. This leave can be used for the preparation of an employment plan, labour market training or related practical training or on-the-job learning, jobseeking, attending job interviews or for attending re-assignment coaching. The duration of the leave is 5–20 working days, depending on the length of the employee’s notice period.

If the employer regularly employs a minimum of 30 employees and the employee has been employed by the employer for an uninterrupted period of at least five years before the termination of the employment relationship, the employer is obligated to

  • offer the employee an opportunity to take part in employer-funded coaching or training to further the prospects of finding employment. The value of the coaching or training must at least correspond to the employee’s imputed pay for one month or the average monthly earnings of personnel at the same place of work as the employee given notice, whichever is greater.
  • arrange occupational health care for the employee for six months starting on the expiry of the employee’s obligation to work.

Re-employment of an employee

If the employment contract is terminated for financial and production-related grounds, the employer has the obligation to re-employ; i.e. the employer shall offer work to the former employee if the employee continues to seek work via an Employment and Economic Development Office and the employer needs employees for the same or similar work that the employee given notice had been doing.

The re-employment period is four months. However, if the employment relationship had lasted without interruption for at least 12 years prior to its termination, the re-employment period shall be six months.

Legislative amendment 1.4.2020–31.12.2020

Due to covid-19 pandemic, the Employment Contracts Act has been temporarily amended by extending the employer’s obligation to re-employ employees to nine months, on the condition that the employment contract was terminated during the validity of the legislative amendment, i.e. 1.4.2020–31.12.2020.

The legislative amendment applies to the private sector. If the employer is the state, municipality, local authority, the social insurance institution Kela, Åland provincial government, evangelical-lutheran or orthodox church, the re-employment period shall be four months, or, if the employment relationship had lasted without interruption for at least 12 years prior to its termination, six months.