Why are there no more employee representatives on company administration in Finland?

For more than 30 years, Finland has had a law in force that gives employees the right to appoint a representative to the board of a company or association if the organisation employs more than 150 people. The law articles that used to be in a separate law on employee representation became part of the reformed law on cooperation at the beginning of the year 2022. However, compliance with the law in Finland is still very low.

There is direct research evidence that compliance with the law articles on employee representation in company administration is beneficial not only for employees but also for employers. A good example is Germany, where employee representation in company administration in companies is strong and has not brought down their business, but rather the opposite.

Why, then, is the law not fully complied with in Finland, or if it is, why does it not always necessarily work?

Some employees or even employers still do not know that such a law exists. Here we trade union representatives can also look in the mirror. Our task is to inform workers of their rights and to ensure that they are respected.

In the spring, I read an article in Helsingin Sanomat about a company where an employee representative had been appointed to the board. The employer received a lot of praise in the article, which seemed funny, because they had simply followed the law instead of not following it.

We also need employees to be active. The employer cannot elect a employee representative for company administration, it is up to the employees themselves. Employee representation in company administration must be agreed in the first instance between the employer and the employee. If no agreement can be reached, it shall be carried out at the request of the employees in accordance with Article 31 of the Act.

In the past, the employee representative in company administration may have ended up in a ‘coffee club’ to hear about decisions already taken and found the whole thing completely pointless. Even if the employer decides where the employee representative is to be present, the new law stipulates that the place must be the “right place”, dealing with the right issues. The employer decides on the seat when the law is passed, but in principle it can only be either the board or the management team, or the group board or the management team if this is agreed separately. If an ostensible new body is set up for the employee representative in company administration that has no decision-making power, it is directly illegal.

How, then, would Finland achieve effective employee representation in corporate governance? Trade unions, employees and employers alike need to look in the mirror here.

• We trade unions need to talk more about the right to employee representation in company administration
• Employees must be mobilised to demand compliance with the law and appoint a representative in companies with more than 150 employees.
• Employers must see employee representatives in company decision-making as a valuable resource and not a necessary evil. The employee representative in company administration should be included in the real decision-making bodies of the company, such as the board of directors or the management team.

More information

• Employee representation in company administration