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Castren & Snellman Employment Law Newsletter 2/2016

Submitted By Firm: Castrén & Snellman

Contact(s): Tomi Kemppainen

Author(s):

Any Waaralinna and Suvi Kettunen

Date Published: 5/11/2016

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Annual Holidays Act Revised as of 1 April 2016: Holiday Accrual during Family Leave Limited and the Waiting Period Restored

The Finnish Annual Holidays Act (162/2005) has been amended effective from 1 April 2016. Prior to the amendments, annual holidays accrued during the employee’s maternity, paternity and parental leaves as if the employee had been working normally during the whole period of the aforementioned family leaves.
 
As of 1 April 2016, annual holidays will only accrue during a maximum of 156 days (approximately six months) of the aforementioned types of family leave.
 
Further, a waiting period related to postponing annual holiday due to incapacity to work has been restored into legislation. Previously, an employee was entitled to postpone his or her annual holiday if falling ill or becoming unable to work due to an accident prior to or while on holiday. Following the amendment, a waiting period of six days is applied before the annual holiday can be postponed due to incapacity to work. Consequently, the employee cannot postpone his or her annual holiday until he or she has been unable to work for a total of six days. The six-day waiting period can be accumulated from several separate sick leaves falling on the employee’s annual holiday. However, the waiting period applies only if the employee has accrued at least 24 days of annual holiday. Further, the waiting period is applied in full only to annual holidays of 30 days. If the employee’s holiday accrual exceeds 24 days but remains below 30 days, the duration of the waiting period equals the number of days exceeding the 24 days’ holiday accrual.
 
The amendments are likely to decrease the costs of both the Finnish State and employers and simplify employers’ substitute arrangements. However, since the waiting period of six days can be accumulated from separate days instead of six consecutive days of sick leave, employers should require the employees to inform their sick leaves immediately during annual holiday and carefully record the number of days of sick leaves falling on the employee’s annual holiday.

Employer’s Obligation to Observe Collective Bargaining Agreement Re-assessed by the Finnish Supreme Court (KKO:2016:18)

In its recent judgment, the Finnish Supreme Court has evaluated an employer’s obligation to observe a generally binding collective bargaining agreement.
 
In Finland, an employer’s primary field of business typically defines which collective bargaining agreement (CBA) should be observed, if any. CBAs applicable to a particular sector or industry bind all employers that are members of the employers' association that is a party to the CBA.  Some CBAs are declared generally binding on the basis of their widespread applicability and due to them being considered representative of particular business sector. According to the Employment Contracts Act (55/2001), an employer operating in the respective sector or industry must comply with such generally binding CBAs, regardless of whether or not the employer is a member of an employers' association. If the employer is not a member of any employers’ association and no generally binding CBA exists in the employer’s business sector or industry, the employer has usually not been obligated to observe any CBA.
 
In the case at hand, Employee A, who had worked as a journalist for a newspaper published by a student union, had claimed pay receivables from the student union. According to Employee A, he was entitled to salary accordant with a generally binding CBA for the press based on his duties and profession. The student union as an employer was not a member of any employer’s association, and no generally binding CBA existed in the employer’s business sector. The Labour Court had earlier rendered a decision that the CBA for press was not applicable to Employee A’s employment relationship.
 
The Supreme Court held that the fact that the student union’s field of business was defined by a special enactment was irrelevant. The Supreme Court further stated that the CBA for press is not an applicable CBA in the student union’s business sector. Regardless of this, the student union should have applied the generally binding CBA for press to Employee A’s employment, since the work it had authorised Employee A to do was work accordant with the CBA for press.
 
The outcome of the case is inconsistent with previous interpretation of law and the general perception of an employer’s obligation to observe collective bargaining agreements. Whether this precedent will change the established interpretation of law will be determined by the future case law. 

Finnish Supreme Court: Employer Could not Invoke Employee’s Previous Notification of His Willingness to Resign When Selecting Employees to be Dismissed (KKO:2016:15)

In March 2016, the Finnish Supreme Court issued a precedent in which a company was sentenced to pay 5 months’ salary to an employee as compensation for unjustified termination of the employment agreement.  The Supreme Court held that the company did not have a proper and weighty reason for the termination of the employment agreement even though it had financial and production-related grounds to terminate the employment agreement of one employee.

Under Finnish law, an employer may terminate an employment agreement if the work to be offered has diminished substantially and permanently for financial or production-related reasons or for reasons arising from the reorganisation of the employer's operations. In addition to financial and production-related grounds, the termination of an employment agreement also requires a proper and weighty reason, which must be taken into account when considering the grounds for termination in each individual case. When financial and production-related grounds exist, the employer is allowed to choose the employees to be dismissed quite freely as long as the selection is not made on discriminative or otherwise inappropriate grounds.

In the case at hand, the company had terminated Employee A’s employment agreement for financial and production-related grounds on the same day as Employee A had returned to work after a long sick leave. The company argued that Employee A was selected to be dismissed due to Employee A’s own request, since he had expressed 7 months earlier his willingness to resign. However, according to Employee A he did not want the employment agreement to be terminated, but had rather expressed his opinion in a difficult working environment.

The Supreme Court held that the company had financial and production-related grounds for the termination of one out of three employment agreements with the same job description. According to the Supreme Court, the requirement of a proper reason for the grounds for termination of an employment agreement means, among other things, that the grounds should be actual and not in contradiction with the employer’s contractual loyalty obligation. The fact that the company had terminated Employee A’s employment agreement because of a general request that Employee A had expressed 7 months earlier without checking Employee A’s current view was unjustified and violated the employer’s loyalty obligation.

The outcome of the case emphasises the importance of the general provision on having a proper and weighty reason when terminating an employment agreement, even when financial and production-related grounds are at hand. Further, the case highlights the fact that even though the employer may choose the employees to be dismissed rather freely, careful attention must be paid to the selection, and even an employee’s own previous expression on their willingness to resign may be considered irrelevant from a legal perspective.

Finnish Company Sentenced to Pay Damages to an Employee Due to Temporary Suspension of Work (KKO:2016:13)

In March 2016, the Finnish Supreme Court sentenced a company to pay an employee EUR 3,914 as damages for the loss of income caused by a temporary suspension of work due to a lack of preconditions for working related to the employee’s person. The Supreme Court held that the company had breached its obligations arising from the employment relationship when it had not found out whether it would have been possible to avoid the suspension of work by placing the employee in other duties or offered the employee other work.
 
Under Finnish law, the employer is liable for the loss caused to the employee if it intentionally or through negligence commits a breach against its obligations arising from the employment relationship or the law. However, there are no provisions in law regarding a temporary suspension of work in such circumstances. On the other hand, employers have a contractual loyalty obligation towards their employees, which obligates the employer to take into account the employee’s interests.
 
In the case at hand, the airport operator had requested that Employee K, who worked as a security screener at the airport’s security check, to return his identification card temporarily for the duration of a pre-trial investigation where Employee K was being questioned as a suspect. Because the validity of the identification card was a prerequisite for the security screener’s work, the company decided to temporarily suspend Employee K from work and interrupt the payment of salary. Later on, the investigation concluded that Employee K had not committed a crime and Employee K returned to work.
 
According to the Supreme Court, even though there are no provisions regarding a temporary suspension of work in the circumstances at hand in the case, given corresponding provisions regulating termination of employment agreement and temporary lay-offs and the contractual loyalty obligation, employers have an obligation to find out whether the temporary suspension of work could be avoided by placing the employee in other duties.
 
The Supreme Court held that, although the removal of the identification card had prevented Employee K from working as a security screener, it had not affected Employee K’s ability to carry out other duties. Uncertainty of the duration of the suspension did not remove the requirement to find out if Employee K could be reassigned to other duties. 
 
The outcome of the case emphasises the employer’s obligation to find out whether the employee could be placed in other duties instead of suspending the employee’s work and salary payment even in situations where the employee is temporarily unable to take care of his or her duties. In situations where the employer has the obligation to offer other work, the employer must prove whether and under what conditions such work was offered.

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Client Successes

Altra Industrial Motion Inc.

Altra Industrial Motion Inc. has multiple locations in the U.S., as well as Central America, Europe, and Asia. The Employment Law Alliance has proved to be a great asset in assisting us in dealing with employment issues and matters in such diverse venues as Mexico, Australia, and Spain. We have obtained excellent results using the ELA network for matters ranging from a multi-state review of employment policies to assisting with individual employment issues in a variety of foreign jurisdictions.

In one instance, we were faced with an employment dispute with a former associate in Mexico that had the potential for substantial economic exposure. The matter had been pending for over a year, and we were not confident in the employment advice we had been receiving. I obtained a referral to the ELA counsel in Mexico, who was able to obtain a favorable resolution of the dispute in only a few days. Based on our experiences with the ELA, we would not hesitate to use its many resources for future employment law needs.

American University in Bulgaria

In my career I have been a practicing attorney, counsel to the Governor of Maine, and CEO of a major public utility. I have worked with many lawyers in many settings. When the American University in Bulgaria needed help with employment litigation in federal court in Syracuse, New York, we turned to Pierce Atwood, the ELA member we knew and trusted in Maine, for a referral. We were extremely pleased with the responsiveness and high quality of service we received from Bond Schoeneck & King, the ELA's firm in upstate New York. I would not hesitate to recommend the ELA to any employer.

David T. Flanagan
Member of Board of Trustees 

Arcata Associates

I really enjoyed the Conducting an Effective Internal Investigation in the United States webinar.  We are in the midst of a rather delicate employee relations issue in California right now and the discussion helped me tremendously.  It also reinforced things that you tend to forget if you don't do these investigations frequently.  So, many, many thanks to the Employment Law Alliance for putting that webinar together.  It was extremely beneficial.

Lynn Clayton
Vice President, Human Resources

Barrett Business Services, Inc.

I recently participated in the ELA-sponsored webinar on the Employee Free Choice Act.  I was most impressed with that presentation.  It was extremely helpful and very worthwhile.  I have also been utilizing the ELA's online Global Employer Handbook.  This compliance tool is absolutely terrific. 

I am familiar with several other products that purport to provide up-to- date employment law information and I believe that this resource is superior to other similar compliance manuals.  I am delighted that the ELA provides this free to its members' clients.

Boyd Coffee Company

Employment Law Alliance (ELA) has provided Boyd Coffee Company with a highly valued connection to resources, important information and learning. With complex operations and employees working in approximately 20 states, we are continually striving to keep abreast of specific state laws, many of which vary from state to state. We have participated in the ELA web seminars and have found the content very useful. We appreciate the ease, cost effectiveness and quality of the content and presenters offered by these web seminars.  The Global Employer Handbook has provided our company with a very helpful overview of legal issues in the various states in which we operate, and the network of attorneys has helped us manage issues that have arisen in states other than where our Roastery and corporate headquarters are located in Portland, Oregon.

Capgemini Outsourcing Services GmbH

As an international operating outsourcing and consulting supplier Capgemini has used firms of the Employment Law Alliance in Central Europe. We were always highly satisfied with the quality of employment law advice and the responsiveness. I can really recommend the ELA lawyers.

Hirschfeld Kraemer

Stephen HirschfeldAs an employment lawyer based in San Francisco, I work closely with high tech clients with operations around the globe. Last year, one of my clients needed to implement a workforce reduction in a dozen countries simultaneously. And they gave me 48 hours to accomplish this. I don't know how I could have pulled this off without the resources of the ELA. I don't know of any single law firm that could have made this happen. My client received all of the help they needed in a timely fashion and on a cost effective basis.

Stephen J. Hirschfeld
Partner 

Hollywood Entertainment Corporation

As the Vice President for Litigation & Associate General Counsel for my company, I need to ensure that we have a team of top-notch employment lawyers in place in every jurisdiction where we do business. And I want to be confident that those lawyers know our business so they don't have to reinvent the wheel when a new legal matter arises. With more than 3400 stores and 35,000 employees operating in all 50 U.S. states and across Canada, we rely on the ELA to partner with us to help accomplish our objectives. I have been delighted with the consistent high quality of the work performed by ELA lawyers. I encourage other in-house counsel to use their services, as well.

Ingram Micro

Ingram Micro is the world's largest technology distributor, providing sales, marketing, and logistics services for the IT industry around the globe. With over 13,000 employees working throughout the U.S. and in 35 international countries, we need employment lawyers who we can count on to ensure global legal compliance. Our experience with many multi-state and multi-national law firms is that their employment law services are not always a high priority for them, and many do not have experts in many of their offices. The ELA has assembled an excellent team of highly skilled employment lawyers, wherever and whenever I need them, and they have proven to be an invaluable resource to our company.

Konami Gaming

Our company, Konami Gaming, Inc., is growing rapidly in a very diverse and highly regulated industry. We are aggressively entering new markets outside the domestic U.S., including Canada and South America. I have had the recent opportunity to utilize the services provided by the ELA. The legal advice was both responsive and professional. Most of all, the entire process was seamless since our Nevada attorney coordinated the services and legal advice requested. I look forward to working with the ELA in the future, as it serves as a great resource to the legal community.

Jennifer Martinez
Vice President, Human Resources

Nikkiso Cryo, Inc.

Until recently, I was unaware of the ELA's existence. We have subsidiaries and affiliates throughout the United States, as well as in Asia, the Middle East and Europe. When a recent legal issue arose in Texas, our long-time Nevada counsel, who is a member of the ELA, suggested that this matter be handled by his ELA colleague in Dallas. We are very pleased with the quality and timeliness of services provided by that firm, and we are excited to now have the ELA as an important asset to help us address employment law issues worldwide.

Palm, Inc.

The ELA network has been immensely important to our company in helping us address an array of human resources challenges around the world. I strongly encourage H.R. executives who have employees located in many different jurisdictions to utilize the ELA's unparalleled expertise and geographic coverage.

Stacy Murphy
Former Senior Director of Human Resources

Rich Products

As the General Counsel for a company with 6,500 employees operating across the U.S. and in eight countries, it is critical that I have top quality lawyers on the ground where we do business. The ELA is an indispensable resource. It has taken the guesswork out of finding the best employment counsel wherever we have a problem.

Jill K. Bond
Senior Vice President/General Counsel, Shared Services and Benefits

Ricoh Americas Corporation

We have direct sales and service offices all over the U.S., but have not necessarily had the need in the past for assistance with legal work in every state where we have a business presence. From time to time, we suddenly find ourselves facing a legal issue in a state where we have no outside counsel relationship. It has been a real benefit to know that the ELA has assembled such an impressive team of experts throughout the U.S. and overseas.

A few years ago, we faced a very tough discrimination lawsuit in Mississippi. We had never had to retain a lawyer there before. I was absolutely delighted with the Mississippi ELA firm. We received an excellent result. They will no doubt handle all of our employment law matters in Mississippi in the future. I have also obtained the assistance of several other ELA firms around the U.S. and have received the same outstanding service. The ELA is a tremendous resource for our company.

Roberts-Gordon LLC

Our affiliated companies have used the Employment Law Alliance in connection with numerous acquisitions, and have always been extremely pleased with our ability to obtain the highest quality legal advice on due diligence issues from jurisdiction to jurisdiction. We have found the Employment Law Alliance firms to be not only first rate with respect to their legal advice but also responsive and timely in assisting us with federal and state law issues critical to our due diligence efforts. We consider the Employment Law Alliance to be an important part of our team.

Rockwell Collins, Inc.

We have partnered with many ELA firms on the development and execution of case management strategies with very positive results. We have been very pleased with the legal advice and counsel provided by the law firms we have utilized who are affiliated with the Employment Law Alliance. The ELA firms we have worked with are customer focused, responsive, and thorough in their approach to handling labor and employment law matters.

Elizabeth Daly
Assistant General Counsel

Sanmina-SCI

Sanmina-SCI has facilities strategically located in key regions throughout the world. Our customers expect that we will provide them with the highest quality and most sophisticated services in the marketplace. We have that same expectation for the lawyers with whom we do business. With operations in 17 countries, we need to be certain that we have a team of lawyers working together to address our employment law needs worldwide. The ELA has delivered exactly what it promised-- seamless and consistent high quality services delivered in each locale around the globe. It has quickly become a key asset for our human resources department.

Starwood

We own, manage, and franchise hotels throughout the U.S. and in more than 90 countries. With more than 145,000 employees worldwide, ensuring that we comply with the complex web of local labor and employment laws in every one of these jurisdictions is a daunting task. The Employment Law Alliance has served as an important resource for us and we have benefited greatly from its expertise and long reach. When a legal dispute or issue has arisen in some far-flung place, Employment Law Alliance lawyers have always provided responsive, practical, and cost-effective assistance.

Wilmington Trust Corporation

Wilmington Trust has used the ELA to locate firms in California, Washington State, Georgia, and Europe. Our experience with the ELA lawyers with whom we have worked has always been one of complete satisfaction and prompt, practical advice.

Michael A. DiGregorio
General Counsel