Rapporteur has evaluated the need to amend board-level employee representation

A report on the possible need to make amendments to board-level employee representation was submitted by rapporteur Jukka Ahtela (Master of Laws, Trained on the Bench) to Minister of Employment Arto Satonen on 21 January 2025. The report will now be discussed by a tripartite working group. The Government will assess the need for amendments in its mid-term policy review session in spring 2025.

Board-level employee representation refers to the representation of personnel in the company’s administration, for example in the board of directors or senior management group. According to current legislation, the personnel has the right to participate in the discussion of important issues concerning the employer’s business and finances and the position of the personnel in companies that regularly employ at least 150 persons with employment contracts in Finland. 

“Board-level employee representation is like a sleeping giant. Despite its existence being well-known, it has not become a major phenomenon or a controversial issue in the labour market. Both employers and employees consider the benefits and potential offered by personnel representation positively – as long as it implemented in the right way,” Ahtela says.

In his report, Ahtela draws attention to the diversity of businesses and emphasises the benefits of the current flexible system. Flexibility encourages and makes it easy for employers to create a procedure that best meets the needs of the company and personnel. According to a comparison in the report, the models used in other Nordic countries appear more formal and rigid than the Finnish system.

“It is important to maintain flexibility because companies and their management systems are different. We will take a comprehensive look at the need to amend board-level employee representation in the Government’s mid-term policy review session,” Satonen says.

Proposal to extend scope of application to companies with 100 employees

The provisions of the Act on Co-operation within Undertakings (Co-operation Act) on personnel representation in administration currently apply to companies employing at least 150 employees in Finland. The rapporteur was tasked to assess the conditions on which the scope of application based on the number of employees could be expanded.

According to Ahtela, the scope of application could be extended to companies with at least 100 employees. However, he proposes that in companies with 100−150 employees, board-level employee representation could be implemented based on a lighter procedure. These companies could agree on the implementation of employee representation by adhering to the key principles of continuous dialogue. Provisions on the dialogue are laid down in the Co-operation Act.

If it is not possible to agree on board-level employee representation, Ahtela proposes a procedure in which the employer’s proposal for implementing such representation would be reconsidered again together with the employees. This would ensure that the statutory personnel representation can be implemented in the governance body that best promotes its objectives.

In addition to legislative amendments, the rapporteur proposes measures to raise awareness of board-level employee representation so that the opportunities offered by it could be utilised better than now. Companies and their personnel should be provided with practical information on the importance of board-level employee representation in the development of both company operations and the opportunities of the personnel to exert influence and access information.

Report is part of the Co-operation Act reform

Amending the Co-operation Act is part of the Government’s labour market reforms. Amendments in the first phase of the legislative project to extend the scope of the Act and to shorten the minimum duration of change negotiations are currently being discussed in Parliament.

The second phase of the project focuses on the possible need to amend the board-level employee representation. Ahtela was appointed by Minister of Employment Satonen to produce a report on the need to amend board-level employee representation on 11 September 2024. The report will now be discussed by a tripartite working group, whose term of office is from 1 January to 31 March 2025. The Government will assess the need to amend board-level employee representation in its mid-term policy review session in spring 2025.

Inquiries:
Jukka Ahtela, Master of Laws (Trained on the Bench), tel. 040 5507978
Jaakko Aromaa, Special Adviser to the Minister of Employment, tel. +358 295 047 110 (questions to the Minister of Employment)