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Last updated: 16.08.2023

Cooperation and statutory change negotiations

Cooperation refers to procedures between the employer and the employees in the workplace that are regulated by the Co-operation Act.

The Co-operation Act applies to companies whose number of employees in an employment relationship is regularly at least 20. In smaller companies, cooperation can be based on the collective agreement or methods agreed on in the workplace. 

The purpose of the Co-operation Act is to promote an operating culture in which the employer and the personnel respect each other’s rights, obligations and interests in the workplace. In addition, the purpose is to continuously develop the company’s operations and the workplace community, as well as to improve the results of operations and well-being at work. Workplaces decide independently how dialogue is implemented in practice.  

The Co-operation Act consists of three elements: 

  1. Continuous dialogue between the employer and the personnel  
  2. Negotiations in the event of change (change negotiations) 
  3. An employees’ representative in the company’s administration (the provisions concerning an employees’ representative in administration are applied to companies with at least 150 employees in Finland) 

Continuous dialogue 

Dialogue must take place at least quarterly. In smaller companies with 20–29 employees, dialogue must take place twice a year. A plan for the development of cooperation must be prepared as part of the dialogue. For continuous dialogue to be successful, the personnel must be provided with sufficient and timely information about the company’s state and plans.  

In the workplace, discussions must be carried out regularly on, for example, the following topics:  

  • The development prospects and financial situation of the company or entity  
  • Rules, practices and policies applicable in the workplace  
  • Use of labour and the personnel structure  
  • Employees’ competence needs and competence development  
  • Maintenance and promotion of well-being at work 

Change negotiations 

The Co-operation Act requires change negotiations to be conducted 

The employer has an obligation to conduct change negotiations (previously cooperation negotiations) when it considers making one or more employees redundant, implementing layoffs, converting full-time employment contracts into fixed-term contracts or unilaterally changing key terms of employment for financial reasons or reasons related to production.  

In addition, change negotiations must be conducted when the employer considers making essential changes to employees’ tasks or ways of working or the organisation of work, facilities or regular working time that arise from:

  1. The discontinuation or transfer to another location of the company or entity or any part of them, or the extension or reduction of their operations 
  2. he acquisition of machinery or equipment or the introduction of new technology 
  3. Changes to the organisation of work or work arrangements 
  4. Changes to the service provision or the product selection 
  5. The use of external labour or changes to the use of external labour 
  6. Other changes comparable to those referred to in items 1–5 

The employees are represented by their union representative in change negotiations. 

If the obligation to negotiate has been neglected and the change results in the termination of the employment contract, a layoff, the conversion of the employment contract into part-time employment or a unilateral change to an essential term of employment, the employer may be required to pay compensation to the employee who has been made redundant. The incorrect procedure will ultimately be resolved by a court of law. Fines may also be imposed on an employer or employer’s representative who has failed to comply with the cooperation obligations. 

The obligation to rehire is an employer’s obligation arising from the Employment Contracts Act. It applies in situations in which an employee has previously been made redundant for financial reasons or reasons related to production.  

If the employer needs new workers for the same tasks or tasks similar to those of the redundant employee, such work must first be offered to the redundant employee. However, the employee has no obligation to accept the work offered. She or he can also refuse the work. 

The obligation to rehire is valid for four months from the end of the employee’s notice period. If the redundant employee’s employment relationship had continued uninterrupted for at least 12 years, the rehire obligation period is six months.  

The rehire obligation period is always calculated from the end of the notice period, and not from the date of termination. This also applies to situations in which the employee has been released from the obligation to work. 

In sectors in which the agreement on protection against arbitrary dismissal (TT-SAK 2001) is part of the collective agreement (e.g. guards), the rehire obligation period continues to be nine months 

A job advertisement in a newspaper or magazine is not sufficient in terms of meeting the obligation to rehire. The redundant employee has no obligation to apply for the job based on an advertisement. The job must be specifically offered to her or him. 

An employer who has failed to comply with the obligation to rehire must compensate for the damage incurred by the employee. 

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