Contracts in Finland

Overview by

The Active Population in Figures

Main Indicators 2004200520062007
Labor Force 2 594 0002 621 0002 648 0002 675 000
Labor Force (Annual Growth, %) -
Rate of Activity (%) 65.966.466.867.2
Unemployment Rate (%)

Source: Statistics Finland

Note: 2007 figures are estimations.

Employed Persons, by Occupation (% of Total Labor Force) 2005
Agriculture and forestry 4.8%
Manufacturing 19.2%
Construction 6.6%
Trade, hotels and restaurants 15.7%
Transport and communications 7.2%
Activities auxiliary to financial intermediation, insurance and business services 13.4%
Public and other services 32.9%
Industry unknown 0.2%
Total 100.0%

Source: Statistics Finland

For Further Statistics
Statistics Finland
For Further Information About the Labor Market
Information on Finnish working culture

Management of Human Resources



Method of Recruitment
The recruitment process takes place more and more via internet. Selection is made on the basis of a job interview.
Recruitment Agencies
Public Employment Offices are traditional recruitment agencies. Employment offices offer services to unemployed, those who are currently working or entering the working life as well as employers. The employment offices have over 200 outlets all over Finland. However, private recruitment agencies have became more and more popular in Finland.
Recruitment Websites
The Employment Office

The Contract

Type of Contract
Contracts can be either permanent contracts that remain valid for the time being or for a fixed term (specified in the contract). Permanent contracts (including permanent part-time contracts) represented 86,4% of the jobs in February 2007; the representation of fixed term contracts (including part-time fixed term contracts) was 13,6%. The number of people working under fixed term contracts is growing rapidly.
Breach of Contracts
  • Retirement

There are two complementary pension systems in Finland: earnings-related pensions linked to past employment and national pensions linked to residence in Finland. Both systems include a wide range of retirement benefits for specific contingencies:
- old-age / early old-age pension;
- disability pension / rehabilitation subsidy;
- individual early retirement pension (for persons born before 1944);
- unemployment pension (for persons born before 1950).

  • Dismissals
Employment contracts made for an indefinite time are usually terminated by one of the parties giving notice. The notice will be followed by a period of notice agreed upon by the parties, or defined by the collective agreement or by law. During a trial period, either party may cancel the employment contract, in which case there will be no period of notice. Fixed-term employment contracts expire, without giving notice and without any period of notice, at the end of the fixed term, or when the agreed work is completed.

The employer must not terminate an indefinitely valid employment contract without proper and weighty reason. Such reasons can be:
- serious breach or neglect of obligations of the employee, or such essential changes in the conditions necessary for working related to the employee’s person;
- or the work has diminished substantially and permanently for financial or production-related reasons, or for reasons arising from reorganization of the employer’s operations.

  • Other Possible Methods
Resignation, canceling the employment contract (very exceptional)
Labor Laws
A portal for Finnish public sector online services

Dispute Settlement


Conciliation Process

  • Legal Framework

If the matter cannot be solved between the employees and employer, negotiations will then continue between the employer and the shop steward representing the trade union. If the negotiations still do not produce a solution, the matter will be forwarded to be negotiated between the employer and the wage and salary earners’ unions. If no solution can be found at this level, either one of the unions may take the matter to the labor Court.

  • Procedure
The central provisions governing employment relationships are contained in the Employment Contracts Act, the Working Hours Act and the Annual Holidays Act. The most important contracts are the employment contract and the collective agreement. Generally binding collective agreements have the most far-reaching effects. They determine the minimum terms of employment in employment relationships in the given sector.

Judicial Structures

  • Legal Framework
The labor Court has jurisdiction in disputes on collective agreements and collective civil service agreements. Disputes on individual employment relationships are heard by the general courts and disputes on individual civil service relationships by the administrative courts.
  • Competent Legal Body
District courts (general courts) and regional administrative courts (administrative courts)

Social Partners

Social Dialogue and Involvement of Social Partners
Approximately 80% of Finns are members of a trade union. The International labor Organisation (ILO) recently ranked Finnish unions as amongst the most effective in the world. Finnish unions are occupation-based. There are about 70 trade unions in Finland and they organize employees in all types of work. These unions are affiliated to one of Finland?s three labor confederations, SAK, STTK and AKAVA.
Unionization Rate
The level of Finnish employees’unionisation is among the highest in the industrialized world; 75% of employees belong to a trade union.
The Central Organization of Finnish Trade Unions (SAK)
Confederation of Unions for Professional and Managerial Staff in Finland (AKAVA)
The Finnish Confederation of Salaried Employees (STTK)
Regulation Bodies
Ministry of Employment and the Economy
The Confederation of Finnish Industries
The Central Organisation of Finnish Trade Unions (SAK)
International labor Organization

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