Finland reforms the Employment Contracts Act

At a glance

• As of 1 June 2026, employers with fewer than 50 employees are no longer required to offer redundant employees the same or similar work for up to six months after termination, although collective agreements may still impose (or allow parties to vary) this duty.
• The statutory layoff notice period under the Employment Contracts Act moved from 14 to seven days from 1 June 2026, subject to any longer period set by an applicable collective agreement.
• Employers now have a new right to sign fixed-term agreements of up to 12 months without needing a justified reason, provided they meet five specific conditions designed to protect the employee’s position.

A package of amendments to Finland’s Employment Contracts Act entered into force on 1 June 2026. The reforms touch three distinct areas: the post-employment re-employment obligation owed by smaller employers, the notice period that applies on temporary layoff, and the grounds on which fixed-term employment agreements may be concluded. Employers with Finnish operations, and their HR and legal teams, should take stock of what has changed.

Changes to the post-employment re-employment obligation

A significant change to the Employment Contracts Act entered into force on 1 June 2026. Employers employing less than 50 employees no longer have an obligation to offer the same or similar work to a redundant employee for up to six months after the employment has ended. However, applicable collective labour agreements may still require the employer to offer work as before. The collective agreement may also allow the employer to deviate from this obligation by agreeing with an employee representative or directly with the employees.

Layoff notice period changed

The Employment Contracts Act also changed the minimum notice period that applies where an employer temporarily lays off employees. With effect from 1 June 2026, the statutory layoff notice period was reduced from 14 to seven days. Applicable collective labour agreements may still stipulate for a longer notice period, though, which must be then followed.

Alleviated grounds for fixed-term agreements

The most awaited change to the Employment Contracts Act has been the employer’s right to sign fixed-term agreements for up to 12 months without justified reasons which is now in force. However, the right comes with limitations:

• The agreement must be the first employment relationship between the employer and the employee during the previous five years calculated as of signing the fixed-term agreement.
• If the length of the agreement is less than 12 months, it cannot be extended or renewed.
• Either party may terminate the agreement by giving notice once the employment has continued for at least six months.
• Before the employment ends, the employer must inform the employee whether it would be possible to continue the employment either as permanent or as a new fixed-term employment contract, if there is a justified reason for the new fixed-term agreement. This information must be given in writing within one month upon the employee’s request.
• If the employer is considering hiring an employee for the same or a similar position before or once the fixed-term contract has ended, the employer must first offer the role to the former fixed-term employee. After employment the obligation applies for a period equal to one-third of the duration of the expired fixed-term employment relationship. The offer must be sent without delay to the address provided by the employee. If the employee does not respond within two weeks of the offer being sent, the employer may offer the role to someone else.

The above obligations and restrictions do not apply if the fixed-term agreement has been signed with justified reasons.