23.10.2025 | Articles, SAVALnews
Currently, the dismissal of an individual requires a valid and serious reason for the termination of employment. The government’s draft proposal suggests that, in the future, a material reason would be sufficient, i.e. significant or weighty grounds would no longer be required.
Under the current law, a serious breach or failure to comply with obligations arising from the employment contract, or legislation, that has a material effect on the employment relationship may be considered to be a material and serious reason for dismissal, whether caused by the employee or related to the employee’s person. In addition, the dismissal may be based on a substantial change in the work requirements related to an individual that makes the employee no longer able to carry out his or her work tasks. Dismissal also requires an overall assessment that takes into account the number of employees employed by the employer and the overall circumstances of the employer and the employee.
Nevertheless, a worker who fails to carry out his or her work tasks or fails to comply with his or her obligations may not be dismissed before he or she has been given a warning to correct his or her conduct. The current law does not provide for a more specific warning, but the practice of warning is well established in case law.
In addition, under the current law, the employer has the obligation to examine whether the dismissal could be avoided by reassigning the employee to other work.
However, if the employee is guilty of a serious breach of the employment relationship, no warning or reassignment assessment is required.
According to the government's draft proposal, the employer would be allowed to dismiss an employee on personal grounds for a material reason that does not reasonably require the employer to continue the contractual relationship beyond the notice period. Thus, the reason no longer needs to be significant or weighty, just relevant. In addition, the reference to a “serious” breach or failure to comply with obligations has been deleted and replaced by the abovementioned consideration from employer's perspective. Indeed, the explanatory memorandum to the draft law clearly states that the intention is to lower the threshold for dismissal.
Unlike the current law, the draft legislation specifically lists the grounds for dismissal that are allowed. The first is the breach or neglect of the worker's obligations, such as failure to comply with the employer's instructions within the limits of his or her right to direct the work, neglect of work duties, unjustified absence, misconduct, and work negligence. There would no longer be a requirement of materiality or seriousness for these infringements or omissions.
A second reason for dismissal is listed as persistently poor work performance by the employee. The explanatory memorandum specifies that this means underperformance: a worker does not perform his or her duties to a reasonable standard or in the same way as other workers in a comparable position. A third reason for dismissal listed is a substantial change in the work requirements related to an individual that makes the employee no longer able to carry out his or her work tasks. The existence of a reason for dismissal would continue to be assessed by means of an overall appraisal.
The employer would no longer have to assess the possibility of reemployment except in cases where the worker's working conditions have changed, in principle as a result of conduct other than the worker's own blameworthy conduct. This may, for example, be due to a long-term illness or injury. If the conditions for dismissal are otherwise met, the employer must investigate whether the dismissal could be avoided by reassigning the employee to other work. This obligation would therefore no longer apply to the other grounds for dismissal, i.e. those relating to the employee's own blameworthy conduct.
A warning to the employee would still be required in most situations, and this is more specifically provided for in the draft law than previously. A warning should be given in such a way that the employee is aware of its essential content and that the employer may terminate the employment contract if the same or similar conduct is repeated. Nevertheless, a written warning would still not be required. In addition, the obligation to issue a warning has been relaxed so that no warning is required if the employee has been warned previously and the new infringement shows similar blameworthiness or negligence in the performance of the obligations of the employment relationship.
However, the explanatory memorandum states that a minor or arbitrary reason for dismissal would be insufficient. The grounds should still not be discriminatory or contrary to good social practices. With regard to underperformance, it has been argued that failure to achieve objectives could not be a reason for dismissal if the work goals or objectives have been unrealistic. The employer would still be responsible for the employee's induction and for clarifying objectives and expectations to him or her.
However, since the purpose of the legislative amendment is clearly stated to be a lowering of the threshold for dismissal, a reduction in employment protection will probably be an inevitable consequence of a change in the law. Case law will in due course show the exact positioning of the dismissal threshold, but it will take several years to obtain relevant case law.
The consultation round on the draft law has been completed, and the final government proposal is expected after the summer. Compared to the above, the government's proposal and the final law may undergo significant changes as a result of feedback and further preparation. The legislative amendment is due to enter into force at the beginning of 2026.
Termination of an employment relationship, or of a probationary period, and dismissals for production and economic reasons are not affected by the amendment.
Text by Sirpa Leppäluoto, labour market directro at ASIA
The text has been published on ASIA member magazine 3/2025.
Employment law