What to do if your employment is terminated

Employers can terminate employment relationships in various ways. An employment contract can be cancelled or terminated by giving notice. An employment contract can be terminated on grounds related to the employee’s person or on financial or production-related grounds. 

Cancellation during a trial period is one way of terminating an employment relationship. In this case, the employment relationship ends immediately. Cancellation during the trial period must be explicitly agreed in the employment contract. 

This article focuses on the termination of an indefinitely valid employment relationship by the employer. A fixed-term employment relationship expires without either party giving notice when the agreed term ends. 

Termination may take place on grounds related to the employee’s person or on financial or production-related grounds. The procedure is different in each case. The employee may also terminate their employment contract, but they do not need to give a particular reason for the termination.

Termination on grounds related to the employee’s person

When an employment contract is terminated on grounds related to the employee’s person, the employer must provide a proper and weighty reason for the termination. A serious breach or neglect of the duties arising from the employment contract or the law and with an essential impact on the employment relationship can be considered a proper and weighty reason.

Another reason can be a significant change in the employee’s personal circumstances that makes them unable to perform their duties. The proper and weighty nature of the reason is assessed holistically. The law lists certain circumstances that, at least, cannot be used as grounds for termination (Employment Contracts Act, Chapter 7, section 2, subsection 2).

Typical reasons for termination on grounds related to the employee’s person include neglecting one’s duties, failure to comply with the employer’s instructions, unauthorised absences and manifest negligence at work. If an employee has neglected to perform their duties, they may not, as a rule, be given notice before being issued a warning asking them to amend their conduct. If the employee considers the warning to be unfounded, they should write a reply in which they express their views.

Financial and/or production-related grounds for termination

If an employer is considering termination on financial and production-related grounds, the company must first hold change negotiations, if it has at least 20 employees. According to law, the duration of the change negotiations is either 6 weeks or 14 days, depending on the intended measures and how many employees are affected. Collective agreements may provide for other applicable durations.

Once the change negotiations are complete, the company must examine the opportunities for reassignment and retraining. As a rule, an employee must be offered work that corresponds to their employment contract. If no such work is available, other work that corresponds to their education and training, expertise or experience must be offered. Only if no other work is available, grounds for termination exist.

Periods of notice are determined by the employee’s employment contract or the Employment Contracts Act. Collective agreements sometimes provide for periods of notice. It is worth noting that in many cases you can agree on a worse period of notice for yourself than what the Employment Contracts Act dictates. According to law, the employer’s period of notice becomes longer as the employment relationship continues, but your employment contract may exclude this provision.

Financial or production-related grounds for termination do not exist if the employer hires a new employee for similar duties either before or after the termination. It is worth keeping in mind that such transfers can sometimes be made within the company, but new personnel may not be hired from outside the company. In addition, grounds for termination do not exist if the restructuring of the work has not caused an actual reduction in the amount of work.

If you are offered a settlement agreement to terminate your employment, or a so-called exit package deal, you should contact your union to have this agreement reviewed. In addition, after an employer has terminated an employee, they must prioritise this employee in recruitment for a period of 4 months – or 6 months in long employment relationships – and offer the terminated employee the same or a similar position should they need someone for such a position.

Register with the TE Office and your unemployment fund

Register with the TE Office no later than at the end of your period of notice. At the same time, you should register with your unemployment fund, which, for many highly educated professionals, is the KOKO fund. If you have not been a member of an unemployment fund, you will need to apply for unemployment benefit from Kela. 

In order to be entitled to earnings-related allowance through the fund, you will need to meet the prior work requirement, which is currently 26 calendar weeks, or about six months. Following a legislative amendment that will enter into force on 2 September 2024, the length of this period will double, meaning that, in the future, you will need to work for at least 12 calendar months in order to meet the prior work requirement and be entitled to earnings-related allowance. Read more about the legislative amendment on the website of the KOKO fund (in Finnish).

What if everything was not done according to law?

Sometimes you are left wondering if everything was done according to law and whether your employment was terminated legally. The law provides some examples of circumstances where the grounds related to an employee’s person are not proper and weighty grounds for termination. Such grounds include an illness or a disability, except where the employee’s work ability is substantially and permanently reduced. In addition, participation in industrial action or political views do not constitute grounds for termination. The law does not provide a definitive list of criteria for the grounds, so they must be evaluated on a case-by-case basis.

If you suspect a violation of the law, you can contact TEK’s lawyers and we will take a closer look at your case. The legal expenses insurance requires that you have been a member for a certain period of time in order to have your expenses covered by the insurance company. If you join when a dispute is already at hand, you will not be covered by legal expenses insurance.

The author works at TEK as an employment lawyer.