Appendix 7 - Agreement on protection against dismissal in the IT Service Sector

1 § Scope of application

This agreement applies to termination of contracts of employment valid until further notice, laying off of employees, and cancellations or annulments of employment contracts. The agreement also governs resignation and the procedure that must be followed when a contract of employment is terminated and an employee is laid off.

Instructions for application:

     The agreement does not apply to the termination of an employment contract or laying off of an employee if the grounds applicable are:

-    Termination of a contract of employment that is undertaken during the trial period (Employment Contracts Act, Chapter 1, Section 4)

-    Reorganisation of a company (Employment Contracts Act, Chapter 7, Section 7)

-    Bankruptcy or death of the employer (Employment Contracts Act, Chapter 7, Section 8).

In termination of a contract of employment on the basis of the above-mentioned grounds, the procedural regulations in sections 5 and 6 of this agreement will nevertheless be complied with. In the case of termination during a trial period, the procedure mentioned in Section 11 of this agreement will also apply. In addition, the agreement does not apply to apprenticeship contracts as specified in the legislation governing vocational training.

I    GENERAL RULES CONCERNING THE TERMINATION OF A CONTRACT OF EMPLOYMENT

2 § Termination periods

When terminating an employee’s contract of employment, the employer must abide by the following termination periods, unless longer termination periods have been agreed upon or other arrangements are agreed upon at the time of the termination.

Employment has continued                            Notice period uninterrupted for

Maximum of one year                                                   2 weeks
More than a year but a maximum of four years                1 month
More than four years but a maximum of eight years       2 months
More than eight years but a maximum of 12 years         4 months
Over 12years                                                              6 months

When terminating a contract of employment, the employee must abide by the following termination periods, unless longer termination periods have been agreed upon, or other arrangements are agreed at the time of the termination.

Employment has continued                          Notice period uninterrupted for 

Maximum of five years                                                 2 weeks
Over five years                                                            1 month

This rule concerning notice periods applies to new employment contracts that begin after 1 January 2008.

3 § The employee’s right to employment leave

Unless otherwise agreed by the employer and employee at the time of the former terminating the latter’s contract of employment on the basis of Chapter 7, Section 3 of the Employment Contracts Act, the employee is entitled to leave with full pay in order to, during his or her period of notice, participate in the drawing up of an employment programme as referred to in the Act on the Public Employment Service (1295/2002), in labour market training; in practical training and on-the-job learning pursuant to it; or, at his or her own initiative or at the initiative of the authorities, in job‑seeking and in a job interview, or in reassignment coaching.

The length of the employment leave is defined according to the length of the notice period as follows:

1)      A maximum of five working days in all, provided that the notice period is one month at most;

2)      A maximum of 10 working days, provided that the notice period is longer than one month but a maximum of four months;

3)      A maximum of 20 working days in all, provided that the notice period is over four months.

Prior to taking the employment leave or some of it, the employee must notify the employer of it and the grounds for the leave, as early as possible, and, if requested to do so, present reliable proof of the grounds for each taking of leave.

The employee’s employment leave may not cause any significant inconvenience to the employer.

4 § Non-compliance with the statutory notice period

An employer who fails to comply with the statutory notice period is obliged to pay the employee his or her full salary and annual leave entitlement for the notice period as compensation.

An employee who resigns without complying with the statutory notice period is obliged to pay his/her employer a lump sum equal to the value of the employee’s salary during the notice period. The employer is entitled to withhold this sum from the final salary paid to the employee at the end of his or her employment.

The employer must, however, abide by the provisions laid down in Chapter 2, Section 17 of the Employment Contracts Act governing the limitation of the setting off period.

If either party fails to satisfy part of the notice period, the requirement to compensate for the related damages will be based on the corresponding portion of the notice period.

5 § Notice of the termination of an employment contract

Notice of the termination of an employment contract must be delivered to the employer or its representative or to the employee in person. If this is not possible, the notice may be delivered by letter or electronic means. The recipient is considered to have been informed of such notice no later than on the seventh day after sending.

When delivering the termination notice by letter or electronic means, it can be considered to have been received within the agreed or stipulated time as specified in Chapter 1, Section 4 and Chapter 8, Section 1 of the Employment Contracts Act, if the notice was handed to the post office or sent electronically within that time period.

If the employee is on his or her annual leave, as specified by the appropriate legislation or the employee’s employment contract, notice can be considered to have been delivered, at the earliest, on the day following the employee’s return to work.

6 § Notifying the other party of the grounds on which the contract of employment is terminated

The employer must, by request of the employee, notify the employee without delay and in writing of the termination date of the employment contract, and of the reasons that have led to the contract of employment being terminated or dissolved.

7 § The employer’s obligation to notify the employment office

Provisions regarding the employer’s responsibility to notify the labour administration of the termination of an employee’s employment contract on the basis of economic or production-related factors are laid down in Chapter 9, Section 3a of the Employment Contracts Act.

8 § The employer’s requirement to notify the employee about the employment programme and the employment subsidies

Provisions regarding the employer’s responsibility to notify an employee being dismissed on the basis of economic or production-related factors of the employment programme and employment subsidy are laid down in Chapter 9, Section 3b of the Employment Contracts Act.

II   TERMINATION OF A CONTRACT OF EMPLOYMENT AND THE EMPLOYEE’S DISMISSAL FOR A REASON CONNECTED WITH His or her ACTIONS OR PERSON

9 § Grounds for terminating an employment contract and laying off an employee

Grounds for dismissal

An employer may not terminate an employee’s employment contract for reasons connected with the employee or his or her person, unless the reasons are proper and weighty, as explained in Chapter 7, sections 1–2 of the Employment Contracts Act.

Instructions for application:

          Proper and weighty reasons include reasons dependent on the employee him- or herself, such as negligence of the obligation to work, violation of orders issued by the employer within his or her right to supervise work, unwarranted absences from work, and obvious negligence at work.

Grounds for cancelling an employment contract

The employer has the right to cancel an employment contract on the grounds referred to in Chapter 8, Section 1 of the Employment Contracts Act.

Grounds for treating an employment contract as cancelled

The employer has the right to process an employment contract as cancelled on the grounds explained in Chapter 8, Section 3 of the Employment Contracts Act.

Laying off an employee for a reason connected with the employee’s actions or his or her person

An employer can lay off an employee for a fixed period without honouring the period of notice concerning layoffs on the same grounds that apply to the termination or cancellation of an employment contract.

10 § Delivering notice of termination

The employer must deliver any notice of termination to the employee on the grounds referred to in Chapter 7, sections 1–2 of the Employment Contracts Act, within reasonable time from the reason for dismissal coming to the employer’s attention.

11 § Hearing the employee

Before the employer terminates the employee’s employment contract on the grounds referred to in Chapter 7, sections 1–2 of the Employment Contracts Act, or cancels it on the grounds referred to in Chapter 1, Section 4 or Chapter 8, Section 1 of the same act, the employer must allow the employee to be heard about the reasons for his or her dismissal. The employee has the right to assistance at the hearing from, for instance, a shop steward or a colleague.

III  CANCELLING A CONTRACT OF EMPLOYMENT AND LAYING OFF AN EMPLOYEE FOR ECONOMIC OR PRODUCTION-RELATED REASONS OR because of REORGANISATION OF THE EMPLOYER’S BUSINESS

12 § Negotiation procedure

If a need emerges at a workplace to dismiss or lay off employees or to reduce their working hours, the statutory co-operation procedure must take into consideration the following legal stipulations.

Instructions for application:

          The responsibility to negotiate concerns companies that fall within the scope of the Act on Co-operation within Undertakings (334/2007) as it entered into force on 1 July 2007. According to the transitional provisions in the act, companies that regularly employ at least 20 but no more than 30 employees became governed by the law and its transitional provisions as of 1 January 2008. The Act on Co-operation does not constitute a part of this contract.

          The Act on Co-operation does not constitute a part of this contract. The regulations of this clause complement that act and replace the corresponding clauses therein.

Unlike sections 45 and 51 of the Act on Co-operation, the co-operation obligation is considered to have been met when the case is handled in accordance with the co-operation procedure, following the negotiation proposal and on the basis of the pertinent facts, agreed on beforehand, as described below.

Entry on the record:

          Provisions on the information to be attached to the negotiation proposal are laid down in Section 47 of the Act on Co-operation.

1   Economic and production-related reasons and reasons resulting from the reorganisation of the employer’s business

a)  If the focus of the negotiations is a measure that will probably lead to fewer than 10 employees being shifted to part-time work, being laid off, or being dismissed, or to laying off of at least 10 people for a minimum of 90 days, the employer’s negotiating obligation is considered to have been met, unless otherwise agreed, when the case has been under negotiation for 14 days since the negotiation proposal was made.

b)  If the focus of the negotiations is a measure that will probably lead to a minimum of 10 employees being shifted to part-time work, being laid off, or being dismissed, or to laying off for over 90 days, the employer’s negotiation obligation is considered to have been met, unless otherwise agreed, when the case has been under negotiation for six weeks since the negotiation proposal was made.

     In a company whose employees regularly number at least 20 but fewer than 30, the employer’s negotiating obligation under this regulation is considered to have been met, unless otherwise agreed, when the case has been under negotiation for 14 days since the negotiation proposal was made (effective as of 1 January 2008).

     When the company is facing restructuring proceedings, as referred to in the Restructuring of Enterprises Act (471/1993), the employer’s negotiating obligation is considered to have been met, unless otherwise agreed, when the case has been in negotiation for 14 days since the negotiation proposal was made.

2 Plan of action and operating principles

If the employer has issued a negotiation proposal with the intention of laying off at least 10 people for economic or production-related reasons, it must submit a proposal to the employees’ representative at the start of the co-operation negotiations concerning a plan of action to promote the employment prospects of employees. Whilst preparing the plan of action, the employer and employment authorities must, without delay, jointly examine the availability of public employment services in support of employment.

In accordance with Section 49, Subsection 2 of the Act on Co-operation, the plan of action must include the planned schedule for the co-operation negotiations, the methods to be used in negotiations, and the planned operating principles to be followed during the termination period, during use of services as referred to in the Act on the Public Employment Service (1295/2002), and in order to promote job-seeking and training.

If the dismissals considered by the employer relate to fewer than 10 employees, the employer must, in the co-operation negotiations, present the operating principles by which, during the notice period, the employees’ search for jobs or training at their own initiative is supported, alongside their opportunities of finding employment through services as referred to in the Act on the Public Employment Service.

13 § Grounds for termination of employment

The grounds for termination of employment comply with those described in Chapter 7, sections 1 and 3 of the Employment Contracts Act (economic, production-related, or resulting from the reorganisation of the employer’s business).

Entry on the record:

          The unions consider the employer’s responsibility for offering work and training to apply first and foremost to work that is available in the employee’s own employment district, and in which he or she can expediently and appropriately be placed.

14 § Steps taken to reduce the number of workers

When terminating or laying off an employee, the employer must, insofar as is possible, abide by the rule according to which key personnel and employees in critical positions within the company are dismissed or laid off last. This rule also applies to employees who have lost part of their working ability whilst working for this particular employer. In addition to this rule, the duration of employment within the company should be considered, alongside the employee’s family responsibilities.

15 § Reinstating an employee

Exceptions to the procedure for reinstating an employee as referred to in Chapter 6, Section 6 of the Employment Contracts Act, can be made by mutual agreement between the employer and the employee. Such an agreement is made in writing at the time of terminating or ending the employee’s employment contract, taking account of the employer’s measures to promote the reassignment of the employee. The employee has the right to be heard before signing the agreement, and to use an assistant as provided in Section 11.

16 § Layoffs

1   Grounds for laying off an employee

The grounds for laying off an employee comply with the provisions laid down in Chapter 5, Section 2, subsections 1–3 of the Employment Contracts Act.

Entry on the record:

          The unions consider the employer’s responsibility for offering work and training to apply first and foremost to work that is available in the employee’s own employment district, and in which he or she can expediently and appropriately be placed.

a)  Temporary reduction of work

If the availability of work or the employer’s preconditions for offering work have been temporarily affected, the employee can be laid off for the duration of the temporary shortage of work, or until further notice.

Instructions for application:

          The shortage of work can be considered temporary if it is estimated to last no longer than 90 calendar days.

b) A more permanent reduction in work load

If the reduction in work load is estimated to last for more than 90 calendar days, the employee can be laid off temporarily or for the time being.

2   Reduced working hours

The procedures regarding layoffs shall also apply for adoption of a shorter working day or week.

3   Notice period for layoffs

A notice period of a minimum of 14 days applies to layoffs.

There is no requirement to provide a preliminary account in the case of layoffs.

4   Local agreements

Other arrangements can be made with respect to layoffs, their grounds, and applicable notice periods by local agreement in compliance with Section 29 of the collective agreement.

5   Postponement and discontinuation of a layoff

a)  Postponement of layoff

If the employer receives a temporary work assignment during the notice period for being laid off, the start of the layoff can be postponed. Without setting of a new notice period, the start of the layoff can be postponed only once, and only for the duration of the temporary work assignment.

b)  Discontinuation of layoff

The employer may receive a temporary work assignment after the start of the layoff. The employer and employee must jointly agree on the discontinuation of the layoff, if the intention is to continue the layoff without a new notice period after the work has been completed. The agreement should be made before the work begins. The estimated duration of the temporary work assignment should be established at the same time.

6   Other work during layoff periods

The employee may take on other work during the period of layoff.

7   Termination of a laid-off employee’s employment contract and the employer’s liability for compensation in certain circumstances

The employee terminates his or her employment contract

The laid-off employee has the right to terminate his or her employment contract regardless of the notice period, but not during the last seven days of the layoff if the end date of the layoff is already known to the employee.

The employer terminates the contract of employment

Preconditions for compensation

Under Chapter 5, Section 7, Subsection 2 of the Employment Contracts Act, a laid-off employee has the right to receive compensation for the loss of salary during the notice period if the employer terminates his or her contract of employment during the period of layoff.

Limitations to liability for compensation

The employer’s liability to compensate the employee is limited by the amount of salary he or she earns elsewhere during the period of layoff.

The deduction of salary that the employee has not earned on purpose will only be possible in exceptional circumstances – for instance, if the employer would have organised work for the employee for the duration of the period of layoff, or part thereof.

No deduction is made for the salary paid during the notice period of the layoff.

Payment of compensation

The compensation is paid by pay period, unless the employee is employed elsewhere during the notice period.

If the employee works elsewhere during the notice period, the employer pays him or her the difference between the salary for the period of notice and the salary earned elsewhere, provided that, at the end of employment, the employee provides the employer with a clear explanation of the salary earned elsewhere.

Resignation of an employee

A laid-off employee who resigns on the grounds laid down in Chapter 5, Section 7, Subsection 3 of the Employment Contracts Act, when the layoff has continued uninterrupted for a minimum of 200 days, is entitled to receive his or her salary as compensation for the notice period defined for the employer to comply with. The compensation is paid on the next regular pay day following the end of the employment contract, unless otherwise agreed.

Entry on the record:

     Despite the end of employment, the parties may agree on a temporary employment contract for the duration of the notice period, or part thereof.

     In this case, the salary payable for the work will be deducted from the compensation payable for the notice period.

 IV  COMPENSATION

17 § Compensation

 

Violation of requirements concerning grounds for termination

The employer’s liability to compensate for terminating an employment contract or laying off an employee in a manner contrary to the grounds set forth in this agreement is defined as follows:

Termination of the employment contract (sections 9 and 13)

The compensation is defined by Chapter 12, Section 2 of the Employment Contracts Act.

Termination and annulment of the employment contract (Section 9)

Any damage suffered because of the loss of the notice period must be compensated for in accordance with Section 4, paragraph 1 of this agreement.

If there was no justification for termination of the employment contract even through dismissal, further compensation will be payable in accordance with Chapter 12, Section 2 of the Employment Contracts Act.

Laying off an employee (Section 9 and paragraph 1 of Section 15)

The compensation for damage is defined in accordance with Chapter 12, Section 1 of the Employment Contracts Act.

The principle of single compensation

The employer cannot be compelled to pay compensation under this clause in addition to compensation under the Employment Contracts Act, nor in place thereof.

Violation of procedural rules

A compensatory fine, as referred to in Section 7 of the Collective Agreements Act, cannot be imposed on the employer for failure to comply with the procedural rules specified in this agreement.

When determining the amount of compensation imposed for terminating an employment contract without proper justification, and layoff, failure to comply with procedural rules will be taken into account as an aggravating factor.

Compensation in relation to a compensatory fine

In addition to compensation imposed on the employer to be paid to the employee as referred to in this paragraph, a compensatory fine cannot be imposed on the employer as referred to in Section 7 of the Employment Contracts Act, insofar as the case involves the violation of responsibilities that are based on the collective agreement but are in fact responsibilities for which compensation in accordance with the agreement has already been imposed.

18 § Dealing with situations of conflict

If the employee considers his or her employment contract to have been terminated or he or she has been laid off without justification in compliance with the agreement, the dispute can be referred to be resolved in compliance with the negotiation procedure agreed on in Section 31 of the collective agreement.

19 § Period for appeal

Unless a dispute involving the dismissal or layoff of an employee, covered by this agreement, results in reconciliation, the case may be referred to an industrial tribunal in accordance with Section 11, Subsection 2 of the Industrial Tribunals Act.

When the employee’s employment with a company ends, his or her right to compensation under Section 16 of this agreement will expire, unless litigation begins within two years of the end of the employment contract.

20 § Entry into force

This agreement enters into force on 1 January 2010 as a part of the collective agreement.

Helsinki, 12 January 2010

 

THE FEDERATION OF FINNISH TECHNOLOGY INDUSTRIES                 

FEDERATION OF SPECIAL SERVICE AND CLERICAL EMPLOYEES ERTO