Employment law review: The year 2025 in the rear-view mirror and 2026 appearing on the horizon
Significant employment law reforms came into effect in 2025 as part of the Government's labour market objectives. While some of the legislative reforms have already entered into force, further legislative changes are scheduled for 2026 that will continue to shape employment law in Finland. In this newsletter, we discuss these changes and their impact from the employers' perspective.
Legislative reforms and amendments in 2025
1. Local bargaining
The revised provisions on local bargaining entered into force on 1 January 2025. The scope of local bargaining agreements was extended by removing the prohibition of local agreements for companies that are not members of the relevant employer's association and that apply a generally binding collective bargaining agreement (CBA).
Local agreements based on generally binding CBAs must be submitted to the occupational safety and health authority within one month of concluding the agreement. This obligation does not, however, apply to agreements made with individual employees.
Companies with a company-specific CBA can derogate from the same employment legislation provisions as those previously available only under nationwide CBAs, provided that the company-specific CBA is concluded either with a nationwide employees' association or its member association.
Provisions regarding employee representation were also amended. Where no shop steward has been elected and there are no provisions in the CBA on how to conclude local agreements without a shop steward, a local agreement could be concluded between the employer and the elected representative.
2. Amendments to the Cooperation Act
The scope of application of the Cooperation Act was raised to companies and organisations regularly employing at least 50 employees. However, certain requirements concerning employers employing 20-49 employees were retained, including the obligation to conduct a lighter dialogue at the workplace, as well as change consultation obligation in situations where the employer is considering reducing the number of employees by at least 20 within a 90-day period. The statutory minimum negotiation period in change consultations (unless otherwise agreed) was halved, now being seven days / three weeks. The amendments entered into force on 1 July 2025.
What to expect in 2026
1. Pay transparency
Member States are required to implement the Pay Transparency Directive into national legislation by 7 June 2026. The draft government proposal proposes amendments to the Act on Equality between Women and Men and related legislation and suggests that the Directive will be implemented in line with its minimum requirements. The implementation will impose new obligations on employers.
The proposed amendments introduce definitions for the gender pay gap, work of equal value and employee groups. The draft government proposal further includes a new provision pursuant to which employers would be required to have pay structures in place that ensure equal pay for the same work or work of equal value.
Proposed amendments set special obligations for employers with more than 100 employees. Such employers would be required to report on the gender pay gap to the Ombudsman for Equality via the Incomes Register, and failure to report could result in a negligence fee. The report must present the pay gap broken down by employee groups, which employers are responsible for defining. If the report reveals a gender pay gap exceeding 5%, and the employer has not justified the difference with objective and gender-neutral criteria, nor corrected the unjustified pay gap within six months, the employer would be required to carry out a joint pay assessment together with employee representatives.
The proposed amendments also introduce certain information obligations for employers. Employers must provide employees with information about the criteria used to determine their pay and pay levels. Upon the employee's request, employers must also provide information on the pay levels of other employees performing the same work or work of equivalent value. In addition, employers with more than 50 employees must provide information on the criteria used to determine pay progression.
Further, the draft proposal suggests additional obligations related to recruitment. Job advertisements and titles must be gender-neutral, and jobseekers must be informed of the initial pay or pay range, and where necessary relevant provisions of the applicable CBA. The formal government proposal is expected to be presented to Parliament in week 11/2026 and the amended acts are scheduled to enter into force on 18 May 2026.
2. Employee representation in the employer's administration
In the second phase of implementing amendments to the Cooperation Act, it is assessed whether the provisions on employee representation in the employer's administration should be amended (currently applicable to employers with at least 150 employees). The proposed new threshold would apply to companies employing more than 100 employees. The amendments for the second phase are expected to be presented to Parliament during the week 16/2026.
3. Amendments to legislation on grounds for termination related to employee
The government proposal concerning changes to the grounds for termination related to the employee was adopted by Parliament on 19 December 2025, and the changes entered into force on 1 January 2026. The amendments aim to lower the threshold for dismissal.
Under the old provisions, employers were required to have proper and weighty reason for terminating an employment contract on grounds relating to the employee. As of 1 January 2026, proper reason is sufficient.
Going forward, the existence of termination grounds would still be determined based on a case-by-case assessment. However, as worded in the government proposal, the primary test for dismissal would be whether termination is a reasonable consequence of the employee's conduct. This would involve breaches of or failures to fulfil employment-related obligations arising from either the employment contract or law, and the underlying reasons for dismissal must be of sufficient materiality in terms of the prerequisites for continuing the employment relationship.
In addition, the employer would no longer have the obligation to explore the possibility of offering alternative employment to the employee. Situations where the employee's working capacity changes in a way that they can no longer cope with their tasks due to long-term illness or a similar reason would form an exception to this.
4. Changes to grounds for fixed term employment contracts, notification period for temporary layoffs and re-employment obligation
The Government aims to amend the provisions of the Employment Contracts Act to allow fixed-term employment contracts of up to one year without a specific reason, shorten the notification period for temporary layoffs to seven days, and abolish the re-employment obligation for employers with fewer than 50 employees. The formal government proposal is expected to be presented to Parliament in week 3/2026 and the amendments can be expected to enter into force during early 2026.
Currently, a justified reason indicating a temporary need of workforce is required for concluding a fixed-term employment contract at the employer's initiative. Under the proposed amendments, no such justified reason would be required for entering into a fixed-term contract of up to one year, provided that it is the first employment contract between the parties or that at least two years have passed since the previous employment relationship ended. Such fixed-term contract could be entered into even if the need for workforce is permanent. The proposed amendments also include an obligation for the employer, at the end of the fixed-term, to provide a reasoned explanation to the employee of the possibility to hire the employee for a permanent employment relationship, or a fixed-term relationship concluded for a justified reason. The draft proposal also includes a proposal to reduce the notification period for temporary layoffs (furloughs) from 14 days to seven days. Pursuant to the proposed amendments, if a CBA includes a longer notification period, the employer and the employees' representative or if no representative has been elected, the employees collectively, could agree locally at the workplace to apply the statutory seven-day notification period.
Additionally, the re-employment obligation is proposed to be abolished for employers that regularly employ fewer than 50 employees. As is the case under the current law, derogations regarding the re-employment obligation could be agreed in a CBA between the employer or an employers' association and a nationwide employees' association or its member association.
Additional information
Please contact our Employment & Benefits practice if you have any questions or would like to further discuss the legislative changes presented in this article.
