Is it fair to have different rules for workers depending on the size of the work place?

The Executive Committee by the Service Union United PAM decided on 5 November to call off all industrial actions in connextion to the draft law weakening protections against dismissal.

The decision became clear when Prime Minister Sipilä's government had drawn up a new proposal on dismissal praxis in order to secure public peace within the wage-earner's alliances. The new proposal included many of the points, that the unions themselves have pursued, such as removal of the amount of employees in the company as a ground for dismissal, the shortening of the qualifying period in the unemployment security and preparation based on a tripartite agreement. According to PAM's Executive Committee the processing has been fulfilled in a benefical manner, and therefore all industrial actions announced earlier will be cancelled.

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What is the proposal of the Sipilä government?

Why PAM wants to stop the draft amendment?

What is the proposal of the Sipilä government?

In the spring, the Sipilä government announced that it will start preparations for amending the Employment Contracts Act, aimed at easing the dismissal criteria in small companies. In the original draft amendment, new rules were being planned for individual dismissals in businesses employing 20 people or less.

At the moment, an employee may be legally dismissed if he or she violates or neglects the essential duties of the employment relationship, or if there is a significant change in the employee’s ability to work so that the employee no longer copes with his or her duties.

On 2 October, Minister of Employment Jari Lindström announced that the government will change the draft amendment so that the grounds for dismissal would be amended only for enterprises employing fewer than 10 persons.

Now the government envisages that ”less than substantive negligence and inappropriate behaviour would be enough if such behaviour destabilises the trust relationship between the employer and the employee or complicates the activities of the employer or the working community”. Another condition would be that continuing the employment relationship would not be seen as reasonable, from the point of view of the employer.

At the beginning of October, the issue concerning trust relationship had been deleted from the draft amendment. According to minister Lindström, grounds for dismissal could yet be an employee's inappropriate behaviour affecting a small company's working functions.  

On 17 October the government sent the Council of Regulatory Impact Analysis a draft of the government proposal relaxing the reasons for dismissal in companies with less than 10 employees. In this, the reason for dismissal could be "a breach or neglect of obligations or a change in the employee’s working circumstances that is more minor than at present but significant enough that the employer, taking into account the company’s size, cannot reasonably be expected to continue the employment relationship."

The government’s draft amendment submitted to the consultation round can be consulted here (in Finnish). 

The news release and other materials from the press conference 2 October.

You can find the news release of 17 October and the link to the draft law here (in Finnish).

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Why PAM wants to stop the draft amendment?

The government’s reasoning does not hold

The government justified its proposal by stating that dismissing an employee is difficult, and therefore especially small companies do not dare to employ staff. if it were easier to remove employees, companies would find it easier to hire staff and employment would improve.

You can get rid of an employee
A trial period may be used in the beginning of the employment relationship. During this period both the employer and the employee may cancel the employment relationship with immediate effect if it turns out that either the employee or the workplace is not suitable.
According to current legislation, an employee may be dismissed for neglect of duty or disobedience. It is not a problem. Small companies may just have lack of knowledge.

PAM questions how easy dismissals in small businesses should be, in the opinion of the Sipilä government?

Employment will not improve

Economists have estimated that the draft amendment has barely any, or at best very modest, effect on employment.

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 Insecurity and anxiety in workplaces would rise

Employees would feel more insecure

It is crystal clear that if employees can be dismissed easier than before, it results in uncertainty, raises fear in working life and weakens people’s well-being.
The government’s intentions on dismissal grounds are unclear. How to define less than substantive negligence or when does inappropriate behaviour affect a small company's working functions? According to government’s reasoning, if the employee’s inappropriate behaviour leads to poisoning of the working community’s working athmosphere, it can justify the termination of the employment contract as well.

Who defines poisoning or trust and its destabilisation? – The employer.

In practice, the proposal enables dismissals on ambiguous grounds. The physical appearance of the employee easily steps in.

It is very likely that the employee accepts almost anything and will not, for the fear of sacking, take up any workplace issues, for example. In service sectors, many employees work part-time and the wish for additional working hours is likely to keep the employees quiet, too. The employee’s trial period would never end.

Insecurity in companies would increase

Small companies already have relatively more disputes than bigger companies. One reason may be the lack of knowledge in small companies.

The limits of application of law are always determined by case law. It would take years before any case law on this exists, and the boundaries of legislation could be defined. This would increase the number of legal disputes. A small company would remain on an insecure ground in dismissal issues and would have to wait for years for the possible court decision.

Making dismissal easier in small companies would be a risk: Already many disputes

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 Inequality would increase

Employees would be put in an unequal situation

It is not right that the employee’s level of employment relationship protection depends on the size of the company he or she works at.

An employee dismissed on personal grounds is often hit by a long suspension period before the unemployment benefits kick in. As a consequence, employees of small companies would have a weaker employment relationship protection and a weaker unemployment protection as well.

Companies would be put in an unequal position

It is not right that companies should adhere to different legislation in dismissal situations, depending on their size.

The amendment would create new recruitment problems in small companies. If the employee can choose between companies employing less or more than 20 people, the employee probably chooses the employer with better employment relationship protection, as provided by law.

The amendment could also hamper companies’ growth – it’s less attractive to let companies grow above the 20 employees threshold.

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Employees have already shown flexibility

The government has already, for example, lengthened the trial period, shortened the reinstatement requirement of the dismissed and allowed ungrounded fixed-term employment relationships for the long-term unemployed. It has also weakened the job alternation leave arrangement. As a result of the Competitiveness Pact, the employees’ working hours were extended. The list goes on.

Read more on why the proposition should not be approved.
* www.sak.fi/viimeinenniitti
* The government’s planned severance act will silence women – PAM’s Ann Selin and JHL’s Päivi Niemi-Laine call for an impact of the gender impacts
* PAM decides to impose comprehensive overtime ban and other industrial action
* Making dismissal easier in small companies would be a risk: Already many disputes
* Government’s proposal would introduce different rules for similar stores