Government proposal to enhance the use of local bargaining among non-organised employers (update)

At a glance

• The Finnish government are introducing a series of reforms aimed at enhancing flexibility in the Finnish labour market, one of which is increasing the reach for local bargaining.
• Currently, local bargaining is only available for employers who are a member of the employer association.
• The working group proposes that the provisions which permit local bargaining should be extended to cover non-organised employers.
• The government is expected to present its proposal to enhance local bargaining in August 2024, with the expectation that the new rules enter into force in January 2025.

Update: 24 January 2025

The new regulations on local bargaining for collective agreements took effect on 1 January 2025. This reform allows local collective bargaining regardless of a company's membership in an employers' association or the type of employee representation it has. It also applies to company-specific collective agreements.

Previously, the law prevented employers bound by a generally applicable collective bargaining agreement from entering into local agreements that deviated from certain labour legislation provisions, even if the collective bargaining agreement permitted it. The reform has removed these prohibitions, explicitly allowing local agreements in companies that are not members of any employers' association but are still required to apply a collective bargaining agreement due to its generally binding nature.

According to the transitional provisions, unorganised employers can only make local agreements based on collective agreements negotiated from 1 January 2025 onwards. The Occupational Safety and Health Authority will oversee local agreements at unorganised workplaces.

Update: 13 December 2024

The government has now submitted its proposal. The planned implementation date is 1 January 2025. 

The Finnish government are introducing a series of reforms aimed at enhancing flexibility in the Finnish labour market, one of which is increasing the reach for local bargaining. Currently, local bargaining is only available for employers who are a member of the employer association. The government proposes to enhance the use of local bargaining among companies who are not members in employer associations.

Background

A non-organised employer (an employer which is not a member of an employer association) must, at the least, observe the provisions of a general collective agreement, if a collective agreement exists for that sector. These collective agreements often include provisions which permit local bargaining. However, under Finnish law (Employment Contracts Act, Working Hours Act, Annual Holidays Act, Co-operation Act) non-organised employers may not apply such provisions from collective agreements that deviate from the law and necessitate local bargaining. Consequently, non-organised employers find themselves at a disadvantage compared to organised employers.

Proposal

The working group proposes that the provisions which permit local bargaining should be extended to cover non-organised employers. In other words, non-organised employers who observe generally applicable collective agreements would also be able to conclude local agreements. Shop steward would still be the primary contracting party. In the absence of a shop steward, the contracting party would be as stipulated in the applicable collective agreement, or representative elected based on the Employment Contracts Act, or the majority of the employees.

The government is expected to present its proposal to enhance local bargaining in August 2024 (during the 35th week of the year), instead of the previously scheduled presentation in June. The new rules are expected to enter into force in January 2025.

This move is part of a broader set of labor market reforms initiated by the Orpo government, which aims to make the labor market more adaptable and responsive to current economic conditions.