Government's proposal to lower threshold for terminations on individual grounds

At a glance

• The Finnish government has proposed amending the Employment Contracts Act to lower the threshold for dismissals on individual grounds.
• The change would require only 'proper reasons' for termination, replacing the current 'proper and weighty reasons' standard.
• Employers would only need to offer alternative work if the employee’s work capacity has changed during employment.
• Arbitrary or minor grounds for dismissal remain prohibited, and warnings must still be issued before termination.
• The amendment is proposed to take effect on 1 January 2026.

On 23 October 2025, the Finnish government submitted a proposal to Parliament to amend the Employment Contracts Act, aiming to lower the threshold for terminating employment on individual grounds. Under the proposed change, employers would only need 'proper reasons' rather than the current 'proper and weighty reasons' to justify dismissal. This amendment does not apply to redundancies.

The proposal seeks to clarify the grounds for individual termination, though the sufficiency of those grounds will still be assessed holistically, considering both the employer’s and employee’s circumstances. Termination on arbitrary or minor grounds will remain prohibited, and employees must generally be given an opportunity to correct their conduct through a warning. However, the practical impact of the amendment will only become apparent through case law, and it may be minimal.

Additionally, the employer’s obligation to offer alternative work would be limited to cases where the employee’s capacity to work has changed during the employment relationship.

If enacted, the amendment would come into force on 1 January 2026.