Termination ends an employment relationship

The employer or the employee may terminate a permanent employment contract that is an employment relationship 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 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? 

The employer must always explain the grounds for termination to the employee. 

The grounds for dismissal may include financial reasons and reasons related to production, such as: 

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

The employees work must have then been significantly and permanently reduced.

The employment cannot be terminated if the employer can offer equivalent work or work that corresponds to the employees education, skills or experience.

The employer does not have economic or production-related grounds if

• before or after termination has employed a new worker for similar tasks
• the re-organisation of work has not resulted in an actual decrease of work.

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

• not following management’s orders
• neglecting work
• absense without cause 
• inappropriate behaviour
• negligence.

Not all reproachable behaviour or shortcomings in work performance justify dismissal. For a termination to be lawful, the grounds must be sufficiently serious in relation to the continuation of the employment relationship. The key question is whether, in the circumstances, it is reasonable to expect the employment to continue and whether dismissal is a proportionate response to the employee’s conduct.

The law requires that the grounds for dismissal are assessed through an overall, case-by-case evaluation. This assessment must take into account the circumstances of both the employer and the employee.

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 

• 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 
• Pregnancy, family leave, gender, age, origin, religion, union activities, sexual orientation or any other discriminatory reason.

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. If the reason was discriminatory, the employer may be obliged to pay damages based on the Gender Equality Act or Non-Discrimination Act.

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 transition security. 

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.