What does it mean to be laid off?

If the employer’s ability to offer work is temporarily hindered due to the COVID-19 epidemic and the employer is unable to arrange other suitable work or relevant training for the employee, the employer may be justified to lay off the employee. Being laid off means that the work and the payment of salaries is temporarily suspended, even if the employment relationship remains in force.

A lay-off can be fixed-term or valid until further notice. A lay-off valid until further notice requires production-related and financial grounds for dismissal, in other words permanent and significant decrease of work. A lay-off can also be partial, whereupon the employee’s working hours are cut back according to need.

Due to a temporary amendment to the Employment Contracts Act, the employer now has an exceptional right to lay off a non-permanent employee under the same prerequisites as a permanent employee. However, the amendment will not apply to the public sector (state, municipality, church, KELA). The amendment will be valid from 1 April 2020 to 30 June 2020.

How quickly can an employee be laid off?

At the beginning of April, an amendment entered into force to shorten the lay-off notice period preceding the lay-off of an employee from 14 days to five (5) days. Therefore, the employer must inform the employee of the lay-off at least five days before the start of the lay-off. The amendment will be valid until 30 June 2020. However, the amendment will not apply to the public sector (state, municipality, church, KELA). Moreover, the amendment will not apply to the university sector as it does not affect the lay-off notice periods agreed in a collective agreement. The General Collective Agreement for universities stipulates a 14-day lay-off notice period. Therefore, university employers are not allowed to lay off employees with a five-day notice period.

When to organise cooperation negotiations before lay-off?

If the employer has at least 20 permanent employees, the employer must conduct cooperation negotiations before making the lay-off decision. When the employer is considering action that may lead to the dismissal of employees, a shift to part-time work or lay-offs under financial or production-related grounds, the cooperation negotiation proposal must, according to legislation, be delivered to the employees five (5) days before starting the cooperation negotiations, at the latest.

According to the temporary amendment valid since 1 April 2020 (valid until 30 June 2020), the duration of cooperation negotiations concerning lay-offs is five days (previously 14 days or six weeks). The amendment will not apply to the public sector (state, municipality, church, KELA). The five-day negotiation period is only applied if the employer is planning to lay off employees. If the employer is considering laying off fewer than 10 employees or shifting them to part-time work, the cooperation negotiations must be conducted for at least 14 days after starting the negotiations. If the employer is considering laying off at least 10 employees or shifting them to part-time work, the cooperation negotiations must be conducted for at least 6 weeks after starting the negotiations.

Entrepreneurial activities or studies do not annul a laid-off employee’s right to unemployment benefit

Due to the COVID-19 epidemic, the Unemployment Allowances Act has also been temporarily amended. The most significant change is that a laid-off employee registering as a jobseeker has the right to unemployment benefit regardless of entrepreneurial activities or studies, for example. The amendment expedites the application and granting process of unemployment benefit for laid-off employees studying alongside work or engaging in entrepreneurial activities. If the laid-off employee receives income from their entrepreneurial activities, the Social Insurance Institution of Finland (Kela) and the unemployment fund take the income into account when paying the adjusted unemployment benefit.

Paying the unemployment benefit to a laid-off employee will require the employee to register as a jobseeker with the TE Office. Laid-off employees will also be required to accept work offered by the employer. If you are dismissed or laid off, remember to immediately register as an unemployed jobseeker. The unemployment benefit can be granted as of the date of registration at the earliest.

The TE Office will not investigate the laid-off employee’s potential refusal from work offered by the TE Office or any neglect related to the employment plan or a substitutive plan and service.

Trial period and obligation to re-employ

The provision in the Employment Contracts Act concerning trial period was temporarily amended as of the beginning of April (until 30 June 2020) so that the employment contract can be annulled during the trial period under financial or production-related grounds.

In addition, the re-employment obligation under the Employment Contracts Act was extended to nine months if the employee has been dismissed during the validity of the temporary stipulations. However, the amendment does not apply to the public sector (state, municipality, church, KELA) where the duration of the re-employment obligation remains unchanged (4 months or, in long-term employment, 6 months).