Krogerus' employment law summer newsletter 2025
As summer is well underway, it's a good time to review the reforms in the field of employment law that have already taken effect and the changes that are coming our way. This newsletter briefly summarises the recent and planned changes.
The Non-Discrimination Ombudsman's role and employers' duty to promote non-discrimination
Employers have a duty under the Non-Discrimination Act to promote equality in the workplace. The Act requires employers with at least 30 employees to have equality plans specifying measures to promote workplace equality. These measures and their effectiveness must be discussed with the employees or their representatives. It should be noted that discrimination does not require intent — ignorance can also constitute discrimination. Further, equal treatment does not necessarily mean equality and non-discrimination. Positive discrimination can be used to promote de facto equality without violating the prohibition of discrimination.
Employers should note that the two-year transitional period for the updated equality plan requirements ended on 1 June 2025. Employers now have a new obligation to include clear conclusions drawn from the workplace equality assessment, specifying both the conclusions themselves and how they were reached.
Legislative reforms already in force: Changes to local bargaining and consultation obligations
As of 1 January 2025, employers that are not members of any employers' federation can conclude local agreements based on collective bargaining agreement provisions. Local agreements can now be concluded between the employer and an elected representative if no shop steward has been elected and there are no provisions in the collective bargaining agreement on how to conclude local agreements without a shop steward. The discussion indicated that the reform of local agreements may have had a limited impact on the recent collective agreement negotiation round.
The changes to the Co-operation Act regarding its scope of application and reduction of the consultation periods were approved by the Finnish Parliament and entered into force on 1 July 2025. The Act requires that the employer must carry out change consultations prior to making any decisions on redundancies, furloughs (temporary layoffs), reduction to part-time employment or significant changes of contractual terms of employment. The Act previously applied to employers regularly employing at least 20 employees, but threshold for the scope of application was largely raised to companies and organisations with at least 50 employees. However, certain requirements concerning employers with 20-49 employees are included in the amended Act, including the obligation to conduct a lighter dialogue at the workplace, as well as change consultations in situations where the employer is considering redundancy measures effecting at least 20 employees within a 90-day period. The previous consultation periods, which were 14 days or six weeks, were shortened by half to seven days or three weeks, depending on the number of employees affected by the measures and the employer's total headcount.
Upcoming reforms already outlined by published draft government proposals
The Government has published draft government proposals regarding three key employment law reforms:
- Amendments to personal dismissal grounds.
- Changes covering the grounds for fixed term employment contracts, notification periods for temporary layoffs and re-employment obligation.
- The implementation of the EU Pay Transparency Directive.
The first legislative reform was also discussed in the afternoon's seminar panel discussion. The proposed amendments to personal dismissal grounds are intended to take effect on 1 January 2026. Currently, an employer may terminate an indefinite term employment contract for proper and weighty reasons. The proposed legislation aims to amend this to allow termination of employment for a proper reason, thereby lowering the threshold for terminations. The key factor to be assessed would be whether the employer can reasonably continue the employment relationship beyond the notice period. According to the proposed amendments, termination grounds would still require case-by-case assessment. Additionally, employers would no longer be required to explore alternative employment opportunities for the employee. An exception would apply if an employee's working capacity changes significantly due to long-term illness or similar reasons.
The provisions of the Employment Contracts Act regarding fixed-term employment contracts are proposed to be amended so that employment contracts may be concluded for a fixed term of one year without specific reasons, provided that it is the first employment contract between the parties or that at least five years have passed since the previous employment relationship. Furthermore, it has been proposed that the notification period for temporary layoffs (furloughs) be reduced to seven days. Moreover, it has also been proposed that the re-employment obligation be abolished for employers with fewer than 50 employees. These proposed changes are also intended to enter into force on 1 January 2026.
The EU Pay Transparency Directive entered into force in June 2023, requiring Member States to implement it by 7 June 2026. A working group has published a draft government proposal to implement the Directive, suggesting amendments to the Act on Equality between Women and Men and related legislation. The implementation introduces new obligations on employers. Employers will be required to have objective, gender-neutral pay structures ensuring equal pay for the same or equivalent work. Employers with over 100 employees are expected to have to report gender pay gaps by employee category. If unexplained gaps (over 5%) are not corrected within six months, a joint pay assessment must be made with employee representatives. In addition, the draft suggests further obligations to employers related to salary transparency for individual employees and jobseekers. The amendments are intended to come into effect on 18 May 2026.
Other notable employment-related strategic guidelines agreed in the Government's mid-term policy review session
In addition, the Government has agreed the following strategic guidelines in its mid-term policy review session:
- The plan to make the first day of sick leave an unpaid leave of absence was revoked.
- In the future, employers would be entitled to decide when employees may take their carried-over holiday entitlement, unless otherwise agreed.
- The Government plans to make legislation governing the protection of privacy in working clearer and will examine the need to amend the Act on the Protection of Privacy in Working Life and explore whether it is possible to remove the additional regulation in Finland that creates an administrative burden.
- The Government also decided to proceed with the plan to lower the threshold for employee representation in the employer's administrative body from 150 to 100 employees.
Further, there are also other legislative initiatives that have been launched. These include, for example, possible amendments to the limitation period for claims related to working hours and the implementation of the Corporate Sustainability Due Diligence Directive.
All these topics were also discussed in our annual afternoon seminar earlier this year with the Non-Discrimination Ombudsman Kristina Stenman, Atte Rytkönen-Sandberg from the Federation of Finnish Enterprises, Markus Äimälä from the Confederation of Finnish Industries and Samuli Hiilesniemi from the Central Organisation of Finnish Trade Unions, and Nico Steiner from the Ministry of Economic Affairs and Employment as guest speakers. Sign up to our mailing list if you would like to receive invitations for future employment law seminars and events.
