The Finnish Act on Co-operation within Undertakings is applied to undertakings employing at least 20 persons. Before an employer considers a reduction in the number of employees or a unilateral amendment of an essential term of an employment contract on production and economic grounds, the employer shall conduct negotiations concerning the change. The reduction in the number of employees means terminations of employment, lay-offs and reduction to part-time employments.
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Parties to the negotiations
In negotiations concerning the reduction of the number of employees and the unilateral amendment of an essential condition of the employment contract, the parties are primarily the employer and the representatives of the personnel group or groups of personnel. If the employees do not have a representative, the change negotiations are conducted together with the employees whom the negotiations concern.
A measure concerning an individual employee or individual employees, considered by the employer, may be processed between the employee or employees and the employer. In such a case, however, every employee shall have the right to request that a matter concerning them be discussed in the presence of a personnel representative or between the employer and the personnel representative.
Course of negotiations
In practice, the change negotiations start with the negotiation proposal made by the employer. The employer must give a written negotiation proposal for the commencement of negotiations no later than five days before the commencement of the negotiations. During this period, personnel representatives/negotiating parties will have the opportunity to prepare for the negotiations. This time is not counted in the actual negotiation period.
The form and exact minimum contents of the negotiation proposal are governed by the Act on Co-operation within Undertakings.
Contents of the negotiations
Issues pertaining to the reduction of the number of employees and the unilateral amendment of a condition of an employment contract must be discussed in the spirit of cooperation in order to achieve consensus.
The dialogue must be genuine. The personnel must have an actual possibility to affect decisions in matters governed by the Act on Co-operation within Undertakings. This requires that the personnel is given sufficient information and possibility to present their opinions, knowledge and experience. The realisation of the dialogue naturally requires that negotiations are held in a timely manner so that the representatives of the personnel can still affect the decision. All too often these preconditions remain empty words and employees gain an image of the negotiations that all decisions had already been made and nothing could be concretely impacted on.
The matters to be negotiated shall include at least the grounds for and effects of the measures targeting the personnel, the action plan or policy and the options for limiting the circle of persons affected by the measure and for mitigating the negative consequences of the measure for the employees.
According to the Act on Co-operation, the personnel representative or employee participating in the negotiations has the right to submit proposals and alternative solutions in writing for discussion in the change negotiations. If the employer does not consider the proposal or alternative solution to be appropriate or feasible, it shall, during the negotiations, explain in writing its views on the reasons for its attitude.
After consideration of the reasons and impacts, at least the following information should be clear:
- what work is reduced and why
- how much the work is assessed to reduce
- within which period of time the reduction takes place
- how the production is possibly altered
- what possible overlapping is in the work assignments
- which works are transferred if transferred
- is the operation profitable/making loss
- sufficiently clear and exact information on the financial grounds
- grounds for the reorganisation of the works
- grounds for the cost savings
- on which figures and calculations the saving need is based
- to which extent it is well-founded and necessary to reduce the number of employees
- When the grounds and impacts of the reduction have been clarified, options to limit the number of the employments to be reduced must be negotiated, and also the fact how the results caused to employees from the reduction can be mitigated.
In the co-operation negotiations, the aim is to minimise harmful effects caused to the personnel from the reduction in the number of employments and to find out how terminations could be avoided.
Matters to be discussed in the negotiations are especially training and relocation possibilities as well as work and working hours arrangements. Other matters to be negotiated and discussed can be, for example, the number of employees willing to work part-time, take study leave or similar arrangements. In addition, possibilities to reduce social and financial harm resulting from terminations, temporary lay-offs and part-time employments must be discussed if the reduction in the number of employments cannot be avoided.
Minimum durations of negotiations
The minimum durations of the negotiations of the reduction of employments are governed by law. The minimum negotiation period is either 14 days or six weeks. The applicable negotiation period depends on the size of the company, the number of employees affected by the measures and the duration of the temporary layoff. The aforementioned negotiation periods may have been agreed on differently in collective agreements.
Negotiations in 14 days
The employer is considered to have fulfilled its duty to negotiate once 14 days have elapsed since the commencement of the negotiations in the following situations:
If the notices of terminations, temporary lay-offs or reduction of an employment contract into a part-time contract or amendments to the essential conditions of the employment contract considered to be served by the employer concern fewer than ten employees or if the temporary lay-offs of at least ten employees in the company last a maximum of 90 days, or if the number of employees is normally at least 20 but fewer than 30.
The time reserved for the negotiations means calendar days. The time is calculated from the first negotiation day, that day included.
Negotiations in six weeks
The employer is considered to have fulfilled its duty to negotiate once six weeks have elapsed since the commencement of the negotiations in the following situation:
The employer is considering to serve notice of termination, lay-offs and reduction of an employment contract into a part-time contract for a period over 90 days, unilaterally amending an essential condition of the employment contract of at least ten employees and the company employees at least 30 employees.
After the end of the negotiation period, the employer must within a reasonable time give a general report on the decisions considered on the basis of the negotiations. The law or its grounds do not define the length of a reasonable time. In practice, a reasonable time can be a few weeks at most in situations of extensive reduction in workforce.
Registering the negotiations
The law does not lay down an automatic obligation to an employer to keep minutes of the negotiations. However, the employer must ensure that the minutes of the negotiations are prepared if someone attending the negotiations requires it. The law does not define the exact date for the request.
Since the minutes to be kept of the negotiations have a significant meaning in a later assessment of the contents of the negotiations and the fulfilment of the negotiation obligation, the representative of the personnel/a party to the negotiations must request the minutes to be kept. The most reasonable time for the request is at the beginning of the negotiations. The inspection of the minutes and the delivery to the parties can and should be agreed on in advance. In practice, it should be agreed so that the minutes of the previous negotiations are given to the parties at least a day before the next negotiation day.
The minutes should contain at least:
- the dates when the co-operation negotiations were held
- who participated in them
- the outcome of the negotiations
- the dissenting opinions of the parties
One’s own statements can be noted down word-for-word in the minutes or clarification requests on different matters written in advance can be enclosed to it. It is also possible to leave a reservation that clarification requests or comments will be submitted to it later on. This way it cannot be later argued that the matter would not have been discussed at the negotiations. Discussions left unrecorded or, for example, held outside the negotiations do not have much value as proof when reviewing the content of the negotiations later on. The appendices to the minutes must also have been checked out. The signature confirms that the course of the negotiations, the handling of the matters and the parties’ views have been written down in the minutes as agreed.
If no consensus is found during the negotiations or an agreement on the matter discussed, the expressions such as “it was stated”, “it was agreed” should be formulated as “the employer’s representative stated” etc. If the contents of the minutes cannot be reformulated to correspond to the actual course of events or they are otherwise unclear, it is possible to refuse to sign.
If disagreements arise from whether the negotiations conform to law or from the termination of employment relationships, temporary lay-offs, creation of part-time employments or amending an essential condition of the employment contract, YTN will take the matter into consideration. In this case, we will investigate the possibility of bringing the matter to court.
Remember to notify YTN of the change negotiations in your company – you can submit the notification via our online service!