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Home » Guide to working life » Employment relationships » Basics of employment relationships
Last updated: 23.11.2023

An employment relationship is based on an agreement between the employee and the employer

This section provides help with matters related to employment relationships. Here you will find information about various types of employment relationships, the start of employment, trial periods and the end of employment relationships.

What is an employment relationship?  

An employment relationship is established when the employee and the employer agree that the employee will work for the employer and will be paid wages for the work. 

There are different types of employment relationships: permanent, full time, fixed term and part time, for example. The type of your employment relationship affects your working time and holidays, among other aspects. It also affects what happens if you become ill. 

Read more about various forms of employment

How are the terms of employment determined?  

The minimum terms of employment are determined based on a number of agreements and laws. Terms of employment include wages, working time and holidays, for example. 

Employment contracts 

An employment contract is an agreement on work between you and your employer. In addition to wages, the employment contract specifies your working time and tasks, among other aspects. Employment contracts should always be made in writing. 

Read more about employment contracts and their entry into force

Collective agreement

A collective agreement is an agreement on the terms of employment in a specific sector. PAM negotiates collective agreements for the service industries with associations representing employers. Different sectors (such as the commercial sector, the property services sector and the hotel and restaurant sector) have their own collective agreements. The agreements determine the general terms of employment – that is, the rules for doing work and having work done. They also provide for minimum wages for different types of work. 

Read more about the collective agreements negotiated by PAM

Labour legislation

Labour legislation includes a wide range of laws that determine the rights and obligations of workers and employers. These include the Employment Contracts Act, the Working Hours Act, the Annual Holidays Act, the Non-Discrimination Act, Occupational Safety and Health Act, the Act on the Protection of Privacy in Working Life and the Collective Agreements Act, for example. 

Workplace practices and rules 

A workplace may have established practices or procedures that have been followed for a long time. If a certain way of working has been applied to an employment relationship for a sufficient period of time, such a practice may become a binding term of employment.

Employer’s orders

The employer’s right to manage and monitor workplace matters is called the right to supervise work. Based on this right, the employer may determine what tasks must be performed, where and when.  

What rights and obligations does an employment relationship involve? 

An employment relationship involves a wide range of rights and obligations. The key rights and obligations include the following: 

Worker • Wages in accordance with the collective agreement 
• Right of association
• Protection provided by laws and agreements
• A safe working environment 
• Careful performance of work in line with the supervisors’ instructions 
• Refusal to engage in activities that compete with those of the employer 
• Business and professional secrecy 
• Taking account of the employer’s interests  
Employer • Managing work 
• Hiring employees
• Cancelling and terminating employment contracts  
• Complying with laws and agreements and treating workers equally
• Ensuring safety at work
• Providing the employee with a written record of the terms of employment
• Promoting a good working atmosphere, good work performance and professional development 

When can the terms of employment be changed?   

The employer has the right to make some changes to the work to be done. Within the limits agreed in the employment contract, the employer may, for example, make changes to how work is carried out and with which tools.  

However, essential terms of employment, such the wages paid for the work, cannot be changed unilaterally. Amending such terms always requires either mutual agreement or the existence of grounds for termination. When applying grounds for termination, the change may not come into force until after the notice period.   

On the other hand, it is not always clear what is an essential term of employment, and this may lead to differences of opinion between the employer and the employee. The definition of an essential term of employment may also be affected by case-specific circumstances.  

Converting an employment relationship into part-time employment  

The employer may convert an employment relationship into part-time employment when the work available has decreased for financial reasons, reasons related to production or reasons related to the reorganisation of the employer’s operations. The conversion of an employment relationship into part-time employment requires the existence of grounds for termination, and the employer must comply with the notice period.   

How to deal with unclear situations 

In unclear situations, you should contact the union representative or PAM if a union representative is not available. If the employer attempts to change an essential term without justification, the employee should inform the employer in writing that she or he considers the change to be unjustified and reserves an opportunity to have the justification of the change investigated. You should not refuse to work if you want your employment relationship to continue. 

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