Co-operation Act reform 2025 – how will change negotiations be conducted in future?

In May 2025, the Parliament passed amendments to the Act on Co-operation within Undertakings (Co-operation Act) that entered into force on 1 July 2025. The key objective of the reform is to reduce the administrative burden on small and medium-sized enterprises, in particular. This article summarises the primary amendments made to the Act regarding change negotiations.

Application threshold raised – who will be left outside the scope of the Act?

The most significant change included in the reform is that the general application threshold is raised from the previous minimum of 20 employees to companies, corporations and branches that employ at least 50 employees. Companies with less than 20 employees are not obligated to apply the Co-operation Act.

In future, the obligation to conduct change negotiations in companies employing 20-49 employees will require that three criteria are met simultaneously: 

1. The employer is considering dismissals, reductions to part-time employment or unilateral modifications of an essential term in the employment contract for financial or production-related grounds or lay-offs that last over 90 days (reduction measures).
    
2. The considered reduction measures concern at least 20 employees (this could be a combination of reduction measures, for example, 10 dismissals and 10 lay-offs of over 90 days).
    
3. The threshold limit of 20 employees is met during a period of 90 days.

One should note that if the number of employees working under an employment contract for a particular employer is regularly 20–49, the employer has no obligation to conduct change negotiations when considering temporary lay-offs of less than 90 days. Furthermore, lay-offs of less than 90 days are not taken into account when calculating the 20-employee threshold limit. 

On the other hand, if a situation arises later on during the 90-day period, in which an employer that employs 20–49 employees needs to reconsider the reduction of the workforce, the employer shall, from the point of view of the threshold limit of 20 employees, take into account the reductions that have already been made, such as dismissals and lay-offs lasting more than 90 days.

Duration of negotiations cut by half, content requirement kept unchanged

The reform cut the duration of negotiations by half. In future, change negotiations will last seven days or three weeks. This change concerns both companies that have over 50 employees and those with 20–49 employees. 

The longer negotiation period (three weeks) remains the principal rule of application of the Co-operation Act. The shorter, seven-day negotiation period is an exception that is applied if

• the reduction measures concern fewer than 10 employees or 
• the lay-offs last less than 90 days or
• the number of employees in the company is under 50 or
• the company is the subject of restructuring proceedings.

In practice, this amendment means that the seven-day period of negotiations could be applied in companies employing 20–49 employees, for example, in the following situations: 

1. The employer has initially considered the dismissal of 15 employees during a period of 90 days. In such a case, the employer would not yet be obligated to conduct change negotiations as the threshold limit of 20 employees is not yet met.
    
2. If, later on during the 90-day period, the employer needs to reconsider dismissing an additional seven employees, the employer is required to conduct change negotiations for these additional reduction measures. 
    
3. In this situation, the duration of the negotiation requirement is seven days as the change negotiations concern the dismissal of less than ten employees.

The parties of the change negotiations can still agree on a shorter negotiation period once the negotiations have been initiated. The number of meetings during the negotiations is still not determined by law. In order for the obligation to conduct change negotiations to be considered fulfilled, the requirements concerning both the temporal duration and the content of the negotiations shall be met. The reform brings no change to the Act in this respect. 

It should, therefore, be noted that the shorter duration of negotiations puts a new kind of pressure on the planning of negotiations, particularly in the case of the seven-day period, as the content-related requirement shall now be met in a relatively short time: although the minimum negotiation period (seven days) has passed, the change negotiation obligation is not met until the requirements concerning the content of the negotiations have been met. One of the content-related requirements is that the alternatives proposed by employees to the reduction measures planned by the employer have been processed appropriately.

Dismissal at the earliest after 30 days and determination of the availability of employment services

A new provision concerning a 30-day “prohibition of dismissal” was added to the Co-operation Act; it concerns situations in which an employer with more than 20 employees has presented a negotiation proposal on their plan to dismiss at least ten employees for financial and production-related grounds. In such a case, the employment contract of a dismissed employee must not end before 30 days have passed from the submission of the negotiation proposal to the employment authority. The purpose of this provision is to make sure that the employment authority has sufficient time to, together with the employer, determine the availability of public employment services to support employment before the termination of the employment contract. 

The employee's term of notice and the above-mentioned 30-day period are overlapping, so this provision in significant particularly in situations in which the change negotiations have ended very quickly, based on the seven-day minimum duration or an agreement between the negotiating parties, and the employee to be dismissed has a short term of notice. If the employer submits the negotiation proposal to the employment authority on 1 October, for example, the earliest termination date of the employment contract can be 31 October.

Help for change negotiations from Employment law

As this article shows, the amendments made to the Co-operation Act do not necessarily simplify the application of the Act. As a member of ASIA, however, you always have access to the help provided by Employment law if you are unsure about anything concerning change negotiations. Familiarise yourself also with ASIA’s information bank on working life: www.asia.fi/tyosuhdeopas (in Finnish)

Text by Mikko Leirimaa, labour lawyer at ASIA 

This article has been published also on ASIA membership magazine 3/2025 (published on week 38).
 

Read also

Employment law