Article 20 January 2022

Employment law update: The year 2021 in the rear-view mirror and 2022 appearing on the horizon

In the beginning of the new year 2022, it is a good time to take look back to the previous year 2021 and to have a look at reforms and amendments coming up during 2022 within the field of employment law.

In addition to legislative changes, collective bargaining negotiations have lately been a hot topic as many collective bargaining agreements are up for renewal and some generally applicable collective bargaining agreements will not be renewed. This all started by the Finnish forest industries federation's announcement in 2020 that it will no longer negotiate nation-wide generally applicable collective bargaining agreements but aim for company-specific agreements. Last year the technology industries federation took a similar, but less radical, approach by establishing a separate federation for companies wanting to have nation-wide collective bargaining agreements. Due to this, some collective bargaining agreements no longer retain their status as being generally applicable, which leads to the question of what happens to terms and conditions of the previously generally applicable collective bargaining agreement that exceed the statutory minimum level. We have also seen pressure from employee unions to negotiate company-specific agreements and related industrial actions.

Legislative reforms and amendments in force from the beginning of 2022

The new Act on Co-operation within Undertakings entered into force on 1 January 2022. The purpose of the new Act is to increase discussion and consultation between the employer and the employees. The Act contains an obligation for on-going dialogue between the employer and the employee representative. The procedures on co-operation consultations remain mainly similar as in the previous Act, but the new Act includes explicit rights for employee representatives to make proposals and propose alternative solutions.

Further, amendments with respect to non-competition clauses and agreements entered into force on 1 January 2022. Under the new provisions, compensation for post-employment non-competition obligations is mandatory regardless of the length of the obligation and position of the employee. The amount of the compensation is 40% of the employee's salary for non-competition obligations of up to six months and 60% for non-competition obligations of more than six months. The maximum duration of the non-competition obligation remains the same and is 12 months, except for employees who are deemed to manage an independent part of the company or to be in a similar independent position. The employer is entitled to terminate the non-competition obligation by observing a notice period, the length of which is at least one third of the length of the post-employment non-competition obligation and in any event at least two months, and by terminating the non-competition obligation the employer can avoid the payment obligation. However, after the employee has resigned, the employer can no longer unilaterally terminate the non-competition obligation.

For non-competition clauses agreed before 1 January 2022, there is a one-year transition period and the obligation to pay compensation will apply only after the expiry of the transition period. Further, the employer is entitled to unilaterally terminate such non-competition obligations during the transition period without any notice period. Therefore, it is recommended for all employers to review non-competition clauses during 2022 and to terminate the clauses that are not deemed necessary to avoid payment obligation for unnecessary non-competition obligations.

What to expect in 2022

In addition to a busy start with the changes entered into force in the beginning of the year, there is more to be expected during 2022. Amendments related to family leaves will enter into force on 1 August 2022 mainly consisting of prolonging the duration of parental leaves. In the future, each parent will have a quota of 160 parental allowance days (including Saturdays but excluding Sundays and bank holidays, 320 days totally) from which 63 days can be transferred to the other parent. In addition, there will be a pregnancy leave allowance of 40 days and the employee can start the leave 30 days before the child is due, which is 20 days later than currently.

In addition, the EU Whistleblowing Directive 2019/1937 should have been implemented by 17 December 2021, but the implementation has been delayed and the government proposal is expected to be issued by the end of February. Whistleblowing channels will need to be implemented at least in companies with 250 employees or more when the local act enters into force. The Ministry of Justice has recommended companies to wait until the local act enters into force before organising and implementing reporting channels due to lack of protection for whistle blowers.

Also, a government proposal on amendments to the Act on the Protection of Privacy in Working Life regarding the collection of personal data of employees from other sources than the employee was expected to be given by the end of 2021, but also this proposal has been delayed and is expected to be issued in connection with the proposal of the act implementing the Whistleblowing Directive.

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