Consultation round on amending the Co-operation Act begins

The Ministry of Economic Affairs and Employment will organise a consultation round on the amendments to the Act on Co-operation within Undertakings (hereinafter, the Co-operation Act) on 28 June−23 August 2024. The amendments concern raising the threshold for applying the Act and shortening the duration of change negotiations. The amendments were prepared in a tripartite working group that was not unanimous in its work.

The Government aims to reform working life legislation to remove barriers to employment and, in particular, to strengthen the operating conditions of small and medium-sized companies. The amendments to the Co-operation Act are among the Government’s labour market reforms. The aim is to reduce the administrative burden caused by legislation, especially in companies with fewer than 50 employees.

The first phase of the legislative project would implement the Government Programme’s entries on raising the threshold for applying the Co-operation Act and reducing the minimum duration of change negotiations by half. It will be evaluated in the second phase of the project whether the board representation of employees should be amended.

The information below is based on the working group’s report, on which the consultation round will be organised.

Act to apply to companies with at least 50 employees

The Co-operation Act currently applies to companies, corporations and branches that regularly employ at least 20 people. The Government proposes that the threshold for applying the Act be raised so that in future it would apply to entities employing at least 50 employees. However, the Act would lay down certain obligations for employers that regularly employ 20−49 people.

The practice of continuous dialogue would be maintained in companies or corporations regularly employing 20−49 people. However, the procedures pertaining to the dialogue would be lightened significantly. The purpose of the continuous dialogue is to promote the handling of matters between the employer and employees.

The Act would also lay down provisions on the obligation to conduct change negotiations to reduce workforce, which would apply to employers that regularly employ 20–49 people.  However, the obligation to conduct change negotiations would apply to significantly fewer situations than now. 

The provisions on the transfer, merger and division of business would continue to apply to all companies, corporations and branches that regularly employ at least 20 people.

Minimum duration of change negotiations to be cut by half

The Co-operation Act lays down provisions on the duration of change negotiations concerning the reduction of workforce. At present, change negotiations must last at least six weeks or 14 days, depending on their subject.

The negotiation times would be reduced by half. The amendment would apply to all companies, corporations and branches within the scope of application of the Act. The minimum duration of the change negotiations would be either three weeks or seven days, depending on the matters to be negotiated and the number of employees.

A new time limit for the termination of the employment contract would be added to the Act. The time limit would be applied if the employer submitted a proposal for negotiations concerning its plan to terminate at least ten employees on production-related and financial reasons. The employment contract of a terminated employee could not end before 30 days have elapsed from the date a proposal for negotiations was submitted to the employment authority.

Government Programme entries to be implemented in two phases

The Government Programme’s entries on amendments to the Co-operation Act can be divided into three themes:

1. Scope of application based on the number of employees
2. Duration of change negotiations
3. Board representation of employees

A tripartite working group discussed the matters related to the scope of application and the duration of the change negotiations during its first term of office on 11 December 2023–20 June 2024. In addition to the Ministry of Economic Affairs and Employment, the working group includes representatives from the Confederation of Finnish Industries, Federation of Finnish Enterprises, Central Organisation of Finnish Trade Unions SAK, Confederation of Unions for Professional and Managerial Staff in Finland Akava, and Finnish Confederation of Professionals STTK. The employee organisations together, the Confederation of Finnish Industries and the Federation of Finnish Enterprises gave a dissenting opinion on the working group’s report.

The working group’s report is circulated for comments from 28 June to 23 August 2024. The Government plans to submit its proposal to Parliament in November. The amendments would enter into force on 1 July 2025.

In addition, a report on the possible need to amend board representation will be drawn up. The report should be completed in late autumn 2024. The working group will discuss the report during its second term of office from 1 January 2025 to 31 March 2025. Subsequently, the Government’s mid-term policy review session will assess the need for amendments in spring 2025. Board representation refers to the representation of employees in the company’s administration, for example in the board of directors or senior management group.

Inquiries:
Jukka Sarhimaa, Special Adviser to the Minister of Employment, tel. +358 295 047 330
Elli Nieminen, Chief Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 056 (available on 28 June and from 29 July)