According to the Employment Contracts Act (55/2001, as amended, the “ECA”), an employer is obligated to offer other work or training to an employee before terminating an indefinitely valid employment contract. By its decision on 11 August 2017, the Finnish Supreme Court extended this obligation to also apply in case of consecutive fixed-term employment contracts. However, based on the ruling, the obligation is not extended to apply to all cases of consecutive fixed-term employments but only to situations where particular circumstances are at hand.
According to the ECA, an employment contract is valid indefinitely unless there is a justified reason for it being in force for a fixed term only. In one recent case, the claimant had worked as a social worker in the service of a joint municipal authority under 16 consecutive fixed-term employment contracts between March 2003 and December 2011. The qualifications required for a social worker are stated in the Act on Social Welfare Professionals (the “ASWP”). Pursuant to the ASWP, if a qualified person cannot be acquired for a position, a person with adequate competence may be given the position for a fixed term. The claimant did not fulfil the required qualifications for a social worker and could therefore not be offered an indefinitely valid employment contract. The Supreme Court considered the failure to fulfil the qualification requirements a justified reason to conclude consecutive fixed-term employment contracts with the claimant. The court based its decision on the fact that the qualifications are required by law in order to provide every citizen with adequate social welfare and that the joint municipal authority in question had proven that they were struggling to find qualified social workers.
The joint municipal authority’s need for a social worker was permanent. The ECA states that consecutive fixed-term employment contracts are prohibited if the employer has a permanent need of labour. However, as previously mentioned, the ASWP prohibits the employer from concluding an indefinitely valid employment contract with an unqualified person. The Supreme Court stated that even though the employer had a permanent need for a social worker, the need for an unqualified person for the position was temporary and would only last until a qualified person could be acquired. Taking into account the previous statement combined with the reason behind the restrictions in the ASWP, the Supreme Court held that the joint municipal authority did not violate the ECA regulation regarding consecutive fixed-term contracts and, therefore, the claimant’s employment contract should not be treated as indefinitely valid.
The position was openly advertised when the claimant’s fixed-term employment was about to expire at the end of 2011, and the claimant was not chosen for the position. At the expiry of the employment, the joint municipal authority did not by their own initiative offer the claimant any other work. The claimant did, however, continue to work for the joint municipal authority in a different position, but this was because the claimant independently applied for an open vacancy.
Pursuant to the ECA, less favourable employment terms may not be applied to fixed-term employees merely on the grounds of the duration of the employment contract. The ECA also requires, as previously mentioned, employers to offer work and provide training to an employee before terminating an indefinitely valid employment contract. The Supreme Court viewed that the claimant’s employment contract would have been considered valid indefinitely had it not been for the qualification requirements. Therefore, the Supreme Court held that the claimant could be compared to an employee with an indefinitely valid employment contract regarding the obligation to offer work and provide training. The loyalty obligation in itself would have been enough reason for the joint municipal authority to investigate by their own initiative if they had any other work to offer to the claimant.
The joint municipal authority was thereby ordered to pay compensation equivalent to five months’ salary to the claimant for failing to offer work and provide training before termination in accordance with the ECA and, thus, for the unlawful termination of employment. As the Supreme Court could have ordered a maximum of 24 months in compensation, the ruling shows that the court was quite lenient towards the joint municipal authority. As the Supreme Court stated that the claimant’s employment contract should not be treated as having been indefinitely valid, there were no grounds to receive compensation for the notice period or holidays. As a consequence of the claims being only partially accepted, the joint municipal authority was ordered to reimburse only a fragment of the claimant’s legal expenses.
Although this Supreme Court ruling is a considerable change in legal praxis, based on this case, the obligation to offer other work and provide training before termination is not applied to all consecutive fixed-term employment contracts. Therefore, it is important to recognise the key decisive elements of this decision. Firstly, the claimant was offered fixed-term employment because a special enactment prohibited offering an indefinitely valid employment contract. Secondly, the joint municipal authority had a permanent need for a social worker, which would have led to the employment contract being valid indefinitely if it were not for the special enactment. Consequently, employers should take this case into consideration when they have a permanent need for a worker but they conclude consecutive fixed-term contracts based on lawful grounds due to e.g. a special enactment, or at the employee’s request.
Senior Counsel at Hannes Snellman