Co-operation negotiations are used to discuss reasons possibly leading to notice of termination, lay-offs or the reduction of contracts to part-time contracts, their impacts and alternatives.
Co-operation negotiations are used to discuss reasons possibly leading to notice of termination, lay-offs or the reduction of contracts to part-time contracts, their impacts and alternatives. Negotiations must be held at an early-enough stage so that employees can participate in negotiations and impact any termination notices. Lay-off instructions and information on redundancy protection are important if they are required at the end of the negotiations.
Instructions for co-operation negotiations
When are co-operation negotiations held?
The Act on Co-operation within Undertakings is applied in companies which employ at least 20 people. Before the use of personnel can be reduced, the employer must engage in co-operation negotiations.
Reducing the use of personnel means notices of termination, lay-offs and reducing contracts to part-time contracts.
While the Act on Co-operation within Undertakings imposes the obligation to undergo negotiations on multiple issues, these instructions will focus solely on situations involvning reduction of personnel.
Who are the negotiating parties?
The parties in negotiations concerning reducing the use of personnel are the representatives of the employer and personnel (usually shop stewards). Negotiations can also be held as joint meetings.
The dismissal or laying off of a single employee or the reduction of their contract to part-time can be handled between the employee and employer. In this case, each employee is entitled to demand that the matter pertaining to him or her also be discussed by his or her representative and the employer.
The co-operation negotiations begin with a proposal for negotiations made by the employer.
The employer must provide a written proposal for negotiations no later than five calendar days before the start of the negotiations.
During this time the negotiating parties will have the opportunity to prepare for the negotiations. This time is not included in the actual negotiation period unless otherwise agreed on in the collective agreement.
The Act describes the form and specific minimum content of the proposal for negotiation.
Content of the negotiations
Matters concerning personnel reductions must be handled in the spirit of co-operation in order to achieve consensus. The personnel must have a genuine opportunity to impact the resolution of issues which have been provided for in the Act on Co-operation. This entails that the personnel is provided sufficient information and the opportunity to present their opinions, knowledge and experiences.
In order to achieve genuine interaction, the negotiations must also naturally be held in a timely manner so that the personnel’s representatives can impact the decision.
The issues that can be negotiated include the grounds, impacts, plan or principles for action and alternatives for reducing the personnel and the mitigation of the impacts resulting from a reduction in the personnel.
After the grounds and impacts have been handled, the following must be clear:
- what work will be reduced and why
- an estimate of how much the work will be reduced
- what the timetable is for the reduction
- how production will be affected
- what overlapping in duties there might be
- where work will be transferred, if any
- are operations making a profit/loss, what figures and calculations the need for savings is based on
- sufficiently clear and precise data on financial grounds and the situation
- grounds for the restructuring of work
- grounds for cost savings
- to what extent is it justifiable or necessary to reduce the number of employees
When the grounds and impacts of the reduction have been established
- alternatives for reducing the use of personnel must be discussed. Co-operation negotiations must also strive to minimise the harmful impacts on the personnel from the reduction of the use of personnel and look into ways to avoid dismissals.
In connection with co-operation negotiations concerning notices of termination,
- the necessary changes must also be made in the personnel and training plan outlined in the Act on Co-operation.
Specific issues to be discussed in the negotiations:
- training and re-employment possibilities
- work and working hours arrangements
Other issues for negotiation and handling can be, for example,
- the number of personnel wishing to transfer to part-time work, study leave and similar arrangements
The parties to the co-operation negotiations must handle possibilities for reducing the social and financial damage resulting from terminations, lay-offs and transfers to part-time contract if the reduction of the use of personnel cannot be avoided.
The Act on Co-operation requires the employer to negotiate with the employee but does not, unfortunately, require the parties to reach an understanding on the end result.
Minimum duration of the negotiations
Minimum durations for negotiations concerning the reduction of personnel have been provided for in collective agreements.
Negotiations over 14 days:
The employer is considered to have fulfilled his or her negotiation obligation if
- negotiations have been held over 14 calendar days from their start in the following case:
- the notices of termination, lay-offs or transfers to part-time contracts considered by the employer apply to less than ten employees or the lay-offs in question last no more than 90 days and apply to at least ten employees.
The time is calculated from the first day of negotiations, including the current day.
Negotiations over six weeks:
The employer is considered to have fulfilled his or her negotiation obligation if negotiations have been held for six weeks from their start in the following case:
- if the employer is considering serving notice of termination, reducing contracts to part-time contracts and lay-offs lasting more than 90 days which apply to at least ten employees.
Once the negotiation period ends, the employer must, within a reasonable time, provide a general report on the decisions being considered based on the negotiations. A reasonable time can be, in extensive personnel reductions, no more than a few weeks.
Registering the outcome of the negotiations
The law does not state that the employer has an automatic duty to keep minutes of the negotiations.
The employer must, however, ensure that minutes are drawn up of the negotiations if a party to the negotiations has requested it.
As minutes kept of the negotiations have central bearing when assessing negotiation content and the fulfilment of the negotiation obligation later on, the personnel’s representative/party to the negotiations must request that minutes be kept.
The most appropriate time to present the request is at the start of negotiations.
The inspection of the minutes and submitting them to the parties should be agreed on ahead of time. In practice, it is best to agree that the previous negotiation session’s minutes be delivered to the parties at least one day before the new negotiation session.
The minutes must show at least:
- when the co-operation negotiations have been held
- who participated in them
- the outcome of the negotiations
- the opinions of the disagreeing parties
The parties can have their statements entered in the minutes or prepared requests for clarification attached to them. Similarly, the minutes can also state that a request for clarification or comments will be delivered at a later date for attachment to the minutes.
This course of action ensures that nobody can later claim that a matter was not brought up in the negotiations.
Discussions that are not written up have little value as proof when the contents of the negotiations are studied later on.
Also attachments to the minutes must be signed. The signature confirms that the negotiation process, handling of matters and opinions of the parties are entered in the minutes as written down.
Instructions for lay-offs
A lay-off means the employer-initiated interruption of work and payment of wages and salaries while the other terms and conditions of the employment contract remain in force. Lay-offs can be in force for a fixed term or until further notice.
Lay-offs can be implemented either by interrupting work entirely or by reducing the working hours of the employee (part-time lay-off).
If the lay-off’s reason is a temporary reduction in the volume of work, the lay-off period can, for the most part, be no more than 90 days. If the grounds for the lay-off are permanent, the part-time lay-off will be implemented for the time being.
Fixed term lay-offs
Fixed-term lay-offs may come into question when the reduction in work is temporary in nature and it can be estimated to last no more than 90 days. Also in this case the condition is that the employee cannot be placed in or trained for a new position.
Laid off until further notice
The employer is allowed to lay an employee off until further notice on financial or production reasons. The employee can be laid off until further notice if the work to be offered has diminished substantially and permanently for financial or production-related reasons or for reasons arising from reorganization of the employer’s operations and the employee cannot be placed in or reasonably trained for other duties..
Never agree on lay-offs!
Lay-offs must not be agreed on because there is the risk that the unemployment fund (due to a statement by the TE Office) rejects the right to unemployment allowance because the person has agreed on their unemployment.
This does not mean that the shop steward cannot negotiate with the employer during the co-operation negotiations on the dates for the lay-offs etc. Negotiations must be held but the decision and responsibility for the lay-offs lies with the employer.
Laying off employees in fixed term employment
The main rule is that an employee in a fixed-term employment relationship (incl. apprenticeship contracts) cannot be laid off.
Chapter 5, section 2 of the Employment Contracts Act includes an exception to the main rule and, according to the section in question, the employer is entitled to lay off an employee in a fixed-term employment relationship only if the employee is working as a substitute for a permanent employee and if the employer would be entitled to lay off the permanent employee.
Redundancy security supports job seekers in case of dismissal
The Finnish redundancy security model provides additional opportunities of taking part in measures that support finding a new job and improves and maintains the professional skills of job seekers.
According to the redundancy security model, the employer has a reinforced obligation to negotiate in personnel reduction situations. The employer must present to the personnel group representatives a plan for improving re-employment opportunities at the start of the co-operation proceedings.
In cases where fewer than ten people are handed their notice, the employer must present in the co-operation negotiations the principles according to which he or she will support employees to independently seek work or apply for training over the period of notice and their re-employment through a public workforce agency.
The duty of the employer is to explain to the employee receiving their notice of termination what TE office services are available. The employer must inform the TE office of the lay-off if the lay-off concerns at least ten people or there are at least ten people receiving a notice of termination.
An employment plan is drawn up together with a TE office expert. It includes an assessment of the employee’s situation and a plan in which the employee and the TE office agree on independent job seeking, support from the TE office and other TE services in order to boost the employee’s speedy and permanent employment in a new workplace.
The employer is additionally obligated to arrange for occupational health care for the employee for six months from the conclusion of the obligation to work.
Right to re-employment leave during period of notice
Every employee that is given notice of termination for productional or financial reasons is entitled to paid time off during the period of notice. The length of the re-employment leave is 5–20 working days and it is determined by the duration of the employment relationship and the period of notice.
The employee can also use their leave to create an employment plan or for measures agreed on in the employment plan, for instance, participating in training.
The dismissed employee is also entitled to paid leave when they are seeking work independently or with the help of the TE office, go to an interview or participate in re-employment coaching.
Paid leave does not concern laid off employees in a fixed-term employment relationship because their employment contract will end without a term of notice.