Making an employment contract
An employment contract is concluded when an employer and an employee agree on the performance of work and the wages and other benefits and terms and conditions associated with it. An employment contract can be made orally, in writing or in electronic format, but it is highly recommended to always make a written employment contract in order to reliably determine what has been agreed upon.
Collective labour agreements and their universal validity
In employment contracts and employment relationships, employers must comply with the minimum requirements stated in a nationwide collective labour agreement considered to be representative in the sector (universally valid collective agreement) regarding the terms and conditions of employment applicable to the work performed by the employee or equal work.
Any terms and conditions of agreement in conflict with the corresponding provisions of a universally valid collective labour agreement are invalid, and the provisions of a universally valid collective labour agreement shall be observed instead.
The Board for Confirming the Universal Validity of Collective Agreements issues decisions stating whether or not a nationwide collective labour agreement is universally valid.
The Regional State Administrative Agencies’ occupational safety officials (former occupational safety and health districts) provide advice to employers and employees on the application of collective agreements.
The decisions of the Board for Confirming the Universal Validity of Collective Agreements and the universally valid collective labour agreements are available in Finnish in the Electronic Statutes of Finland Finlex. The service also includes agreements between the central labour market organisations, the validity of which as a constituent part of the collective agreements is indicated in each collective agreement.
The employer must make the Employment Contracts Act and the nationwide collective labour agreement that is considered to be representative in the line of business (universally binding collective labour agreement) freely available to the employees at the workplace.
The Regional State Administrative Agencies’ occupational safety officials provide advice on issues related to employment contracts, wages, working hours, annual holidays and other terms and conditions of employment. Their tasks also include the supervision of compliance with universally valid collective agreements in non-union enterprises.
Comply with the collective labour agreement for your line of business
When concluding an employment contract, an employer is obligated to comply with labour legislation and collective labour agreements. A collective labour agreement is an agreement made between a trade union and an employers’ organisation that specifies the terms and conditions to be followed in employment contracts and employment. The agreement is binding on employers that are members of the employers’ organisation.
Also an employer that is not a member of an employers’ organisation is liable to comply with the collective labour agreement if there is a “universally binding collective labour agreement" for the line of business in question. The employment contract may not contain provisions that are, from the employee’s point of view, inferior to the terms and conditions of the collective labour agreement binding on the employer.
By using industry-specific agreement forms, you can ensure that all of the terms and conditions required by law and significant in the line of business in question are included in the employment contract.
Minimum requirements for employment contracts
The format of an employment contract is free, but it must indicate the following matters as a minimum:
- Employer’s and employee’s domicile
- Time when employment commences
- Duration of a fixed-term contract and the basis for it being a fixed-term contract
- Duration of the trial period if one is agreed upon
- Location of work; if there is no principal location, an account of the principles according to which the employee works at different sites
- Employee’s main duties
- Collective labour agreement applied to the work
- Wage determination principles and wage payment period
- Regular working hours
- Calculation of annual leave
- Period of notice or the principles for its calculation
- For work outside Finland that lasts for a minimum of one month, the duration of employment, the currency in which monetary wages are paid, monetary compensation paid abroad, fringe benefits and the conditions for repatriating the employee.
An oral employment contract also requires a written summary of the agreed terms and conditions of employment. For additional information on the minimum contents of the employment contract, see the Occupational Safety and Health Administration website.
Fixed-Term Employment Contract
The main type of employment contract is an employment contract that is valid until further notice. A contract can also be made for a fixed term, but there must be a justifiable reason for this. No reason is required for a contract that is made for a fixed term on the employee’s initiative.
Justified reasons for a fixed-term employment contract include, for example:
- Acting as a substitute
- Seasonal nature of the work
- A fixed-term project
- A one-time work performance
- Internship period with an educational institution
- Fixed-term apprenticeship
- Another aspect related, for example, to the company’s operations or the work in question that requires the contract to be made for a fixed term
If the employer cannot justify a fixed-term purpose for the employment contract, the employment contract is considered to be valid until further notice. If the employment contract has not been made in writing or the minimum requirements for an employment contract (see the previous paragraph) are not specified in the employment contract, the employer must, without separate request, provide the employee with a written account of the terms and conditions of employment to the employee by the end of the first wage payment period. An account need not be given for fixed-term employment lasting less than one month.
If an employee has repeated fixed-term employment relationships lasting less than one month with the same employer under the same terms and conditions, the account must be provided within one month of the beginning of the first employment relationship. The account need not be repeated unless the terms and conditions change. If the terms and conditions of employment change, the new terms and conditions must be reported in writing at the end of the next wage payment period following the change at the latest.