07.05.2025 | Articles, SAVALnews
Currently, termination on grounds related to the employee’s person requires a proper and weighty reason. The draft government proposal suggests that, in the future, a proper reason would be enough, with no requirement for it to be weighty.
Presently, the Employment Contracts Act states that a serious breach or neglect of obligations arising from the employment contract or the law and having essential impact on the employment relationship can be considered a proper and weighty reason for termination arising from the employee or related to the employee's person. In addition, essential changes in the conditions necessary for working related to the employee's person that render the employee incapable of coping with their work duties can also be considered grounds for termination. Termination also requires a comprehensive assessment that takes into account the number of employees in the employer’s service as well as the overall circumstances of the employer and employee.
Employees who have neglected their duties or committed a breach thereof cannot be terminated, however, before they have been warned and given a chance to amend their conduct. The current legislation does not stipulate the warning in more detail, but the practice has largely been established in case law.
The current legislation also obliges the employer to find out whether it is possible to avoid giving notice by placing the employee in other work.
However, if the employee has committed a grave breach related to the employment relationship, the employer is not required to issue a warning or find out options for placing the employee in other work.
Based on the government proposal draft, the employer could terminate an employment contract with a proper reason related to the employee’s person that renders it unreasonable for the employer to continue the employment relationship longer than the notice period. The reason would therefore no longer need to be weighty, merely proper. In addition, the mention of “serious” breach or neglect of obligations having “essential” impact has been removed and replaced by the above-mentioned assessment from the employer’s perspective. The justifications for the draft act clearly state that the aim is to lower the threshold for termination.
Unlike in the current act, the draft act separately lists the permissible grounds for termination. The first of these is the breach or neglect of obligations by the employee, such as not observing the instructions issued by the employer as per its right to direct, neglect of work, unjustified absence, inappropriate behaviour and negligence in the work. These breaches or acts of neglect would no longer be required to be essential or serious. The second listed ground for termination is a continuous deficiency in work performance arising from the employee. The justifications specify that this means underachievement: the employee fails to perform their work duties in a manner that is considered reasonable or similarly as other employees in a similar position. The third listed ground is a change in the employee’s capacity to work that makes them unable to cope with their work duties. The existence of the grounds for termination would still be evaluated through a comprehensive assessment.
The employer would no longer have the obligation to explore the possibility of placing the employee in other work except in situations where the employee’s capacity to work changes, in principle for a reason other than their own reprehensible conduct. Such reasons may include, for example, a long-term illness or injury. If the grounds for termination are otherwise met, the employer must determine whether it is possible to avoid giving notice by placing the employee in other work. This obligation would, thus, no longer hold for other grounds for termination, that is, those related to the employee’s own reprehensible conduct.
The employee should still be given a warning in most situations, and the draft act stipulates this procedure in more detail than before. The warning should be issued in such a manner that the essential content of the warning and the fact that the employer can terminate the employment contract if the same or other similar action is repeated is made clear to the employee. However, the warning would still not be required to be in writing. In addition, the warning requirement has been loosened so that a warning is not required if one has already earlier been issued to the employee and the new violation indicates similar reprehensibility or indifference in complying with obligations related to the employment relationship.
The justifications state that minor or arbitrary reasons would, however, not be sufficient grounds for termination. The grounds could still not be discriminatory or contrary to good practice prevalent in society. As concerns underachievement, the justifications state that a failure to achieve set goals would not constitute grounds for termination if the set goals have not been realistic or viable. The employer would still have the responsibility of providing orientation as well as clarifying the goals and expectations to the employee.
Since the clearly stated aim of the amendment is the lowering of the threshold for termination, a weakening of employment security will most likely be an inevitable consequence of the amendment. Case law will, in time, show the more precise level of the threshold for termination, but it will take years to accrue the relevant case law.
The consultation round on the draft act has ended and the final government proposal should be ready after the summer. The government proposal and final act may undergo changes, even major ones, to that which is stated above as a result of the comments received and continued preparation. The amendment is set to enter into force in early 2026.
The amendment does not change employment contract cancellations, trial period cancellations and terminations on financial or production-related grounds.
Text by Sirpa Leppäluoto, Labour Market Director at ASIA
The article has been published on ASIA membership magazine 2/2025
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