Concluding an employment contract in Finland

18.02.2013

In practice, the Finnish Employment Contracts Act (Finnish:Työsopimuslaki) applies to all job relationships in Finland. The Employment Contracts Act, which is often referred to as the main law in the field of labor law, includes several binding provisions and a term of an employment agreement that is in conflict with a provision of the Employment Contracts Act is void. In addition, there are collective agreements (Finnish:Työehtosopimus), which include provisions on industry specific employment terms, for example, salaries, working hours, holiday and other benefits. A collective agreement can be generally applicable, which means that an unorganized employer, i.e. one who does not belong to an employer union, must also follow the terms agreed upon in a national collective agreement representative for the industry section in question; any term of an employment contract that is in conflict with an equivalent term in the generally applicable collective agreement is void, and the equivalent provision in the generally applicable collective agreement shall be observed instead.

A frequently asked question is whether the employment contract has to be made in writing for it to be valid. In Finland a work contract does not require a certain form and it can thus be made in writing, orally or electronically and it may also come into existence simply based on the employer’s tacit approval. It is, however, always strongly recommendable to conclude a written contract in order to avoid any unnecessary misunderstandings and conflicts regarding the terms of the employment.

Moreover, it is necessary to keep in mind that the employer is, according to the Employment Contracts Act, obliged to provide an employee whose employment relationship is valid indefinitely or for a term exceeding one month with written information on the principal terms of the employment by the end of the first pay period at the latest, unless the terms are laid down in a written employment contract. An employer who neglects this obligation may be fined for a violation of the Employment Contracts Act. Thus, if the employment agreement is made orally, the employer must in any case provide the employee with the principal terms of the employment in writing, and therefore it is recommendable to conclude the agreement in writing from the very beginning.

At least the following information should be included in the employment contract:

  • the domicile or business location of the employer and the employee;
  • the date of commencement of the work;
  • the duration of a fixed-term employment contract and the justification for specifying a fixed term;
  • the trial period;
  • the place where the work is to be performed or, if the employee has no primary fixed workplace, an explanation of the principles according to which the employee will work in various work locations;
  • the employee's main duties;
  • occupational safety and instructions regarding work methods and the use of work equipment;
  • the collective agreement applicable to the work;
  • the grounds for the determination of pay and other remuneration, and the pay period;
  • fringe benefits and compensation for travel costs;
  • the regular working hours;
  • the manner of determining annual holiday;
  • the period of notice or the grounds for determining it.

Additionally, the employment contract may include provisions on, for example, the employee’s confidentiality obligation and non-competition commitment after termination of the employment relationship.

Please do not hesitate to contact us if you have any questions about this topic. Our firm has a lot of experience in drafting different employment contracts and we are happy to advise you with any questions related to employment relationships and/or Finnish labor legislation.