Skip to content
Home » Guide to working life » Employment relationships » Termination of employment
Last updated: 16.08.2023

Termination ends an employment relationship

An employer may terminate a worker’s employment contract only for a justified and substantial reason.

The type of your employment relationship affects termination. The employer or the employee may terminate a permanent employment contract (which is valid until further notice).  

As a rule, a fixed-term employment contract cannot be terminated unless this has been expressly agreed on when entering into the employment contract. However, a fixed-term employment contract can be terminated if agreement can be reached on this between the employee and the employer. 

Both parties must comply with the notice period. Read more about notice periods in the service sector.  

When can the employee terminate the employment relationship?  

The employee can terminate a permanent employment relationship (which is valid until further notice) by notifying the employer of this. The employee does not need to give a reason for the termination. 

In practice, termination takes place when the employee submits written notice to the employer in person or by post or email. 

After notification of termination, work continues until the end of the notice period. 

Download a termination notice template (in Finnish).   

When can the employer terminate the employment relationship? 

An employer may terminate a worker’s employment contract only for a justified and substantial reason. The employer must always explain the grounds for termination to the employee. 

The grounds for termination may include financial reasons and reasons related to production, such as the following: 

  • The company’s products and services are not being purchased to a sufficient degree 
  • The company’s financial situation is bad  

The grounds for termination can also be related to the employee, including reasons such as the following:  

  • The employee is constantly late for work 
  • The employee’s work performance is poor

Before terminating employment, the employer must give the employee a warning and an opportunity to correct her or his conduct. 

The grounds for termination cannot include the worker’s 

  • Pregnancy or family leave 
  • Illness, injury or accident unless the employee’s working capacity has reduced significantly and for a long time 
  • Participation in industrial action 
  • Political, religious or other opinion or civil activity 
  • Recourse to legal remedies 

If the employer terminates the employment contract without a justified reason, the employer must pay compensation to the employee for illegal termination. The amount of compensation is equal to the employee’s wages for 3–24 months. 

Before termination, the employer is required to determine whether the worker can be employed in another position in the company or within the group of companies. If this is possible, the employer must offer the job vacancy to the employee to avoid termination.

Remember these in a termination situation 

You can ask the employer to provide you with the end date of the employment contract and the grounds for termination in writing. The employer must provide you with this information as soon as possible. 

If the employer has given you notice of termination, your work will not end immediately. It will continue until the end of the notice period.  

If you have been made redundant for financial reasons or reasons related to production (the company’s products and services are not being purchased to a sufficient degree or the company’s financial situation is bad), you are entitled to paid leave for applying for jobs or preparing an employment plan. The duration of the leave is 5–20 days, depending on the duration of the notice period. Notify your employer of the leave as soon as you can. 

If you have worked for the same employer for at least five years and the employer has at least 30 employees, you are entitled to employment training and occupational healthcare paid for by the employer for six months from the beginning of unemployment. 

Do not sign any papers regarding your termination that you do not understand. 

If you disagree with your employer on the termination, contact your union representative or PAM’s employment relationship hotline