News & Events

Castren & Snellman Employment Law Newsletter 1/2016

Submitted By Firm: Castrén & Snellman

Contact(s): Tomi Kemppainen

Author(s):

Anu Waaralinna and Henna Kinnunen

Date Published: 1/7/2016

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You are reading Castrén & Snellman's Employment Law Newsletter. We would like to share information on recent Finnish court cases and changes in legislation with you. We hope you find this newsletter interesting and useful in your work. In case you require further information on any employment matter relating to Finland, please find our contact details below.

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Reform: The Act on the Contractor’s Obligations and Liability when Work is Contracted Out

The Finnish Act on the Contractor’s Obligations and Liability when Work is Contracted Out (1233/2006, as amended (the Act) has been amended.
 
The Act applies to companies (contractors) that use agency workers or sub-contracted labour in Finland. Under the Act, before concluding a contract on sub-contracted labour or the use of agency workers, the contractor must collect certain information and documents from or relating to its contractual party (so called obligation to check).
 
The amendments to the Act may be summarised as follows:

  • The threshold value of the sub-contract for the Act to apply is increased to EUR 9,000 excluding VAT (the threshold for temporary agency workers remains 10 working days that they are hired for).
  • The contractor is obliged to check that the contractual party has occupational health care in Finland.
  • The contractor may use the Public Tax Debt Register (PTDR) to check the contractual party’s outstanding tax liabilities. If the PTDR shows tax debt, the contractor has to ascertain its exact amount and evaluate, if the contractual party is intending to pay the debt. The contractor may become subject to a raised negligence fee, if it enters into an agreement despite realising that the contractual party is not intending to discharge its obligations.
  • If a foreign contractual party has a Finnish business identity code, the contractor has an obligation to request clarification that the contractual party is entered into the Prepayment Register, the Employer Register and the Value Added Tax Register in Finland as well as to request information on the contractual party’s possible tax debt as described above. The contractor has the above-mentioned obligations in addition to collecting corresponding information with respect to the contractual party from registers or other reliable sources in the contractual party’s country of establishment.
  • The contractual party is obliged to give the contractor written information on the posted workers’ social security arrangements before the agreed work begins. Correspondingly, the contractor has to ensure that it obtains the information. This is a continuous obligation in the construction sector for all new workers sent to Finland after the agreed work has begun.
  • The contractor must require in the agreement between the parties that the contractual party delivers information on the social security arrangements of posted workers sent to Finland after the agreed work has begun before such employees start working in Finland.
  • Penalties for breach of the Act have increased and now vary between EUR 2,000 and EUR 65,000.

Some provisions of the Finnish Posted Workers Act (1146/1999, as amended) (the PWA) have also been amended and the amendments have come into force in tandem with the Act. Under the revised PWA, the contractor must, before the agreed work begins, inform the posting company in writing about the authority that supervises compliance with and gives advice on the PWA.

The amendments have entered into force on 1 September 2015. 

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Employees’ representative’s protection against termination of employment agreement assessed by the Labour Court (TT 2015-17)

In its judgement of March 2015 the Labour Court of Finland assessed the enhanced protection against termination applicable to employment agreements of employee representatives.
 
Under Finnish law, an employer is entitled to terminate the employment agreement of a shop steward or an elected representative of the employees on grounds related to the employee’s person only if the majority of the employees whom the shop steward or elected representative represents give their consent to the termination.
  
In the case at hand, the employer had dismissed a shop steward due to his behaviour, which, according to the employer, had to be considered as harassment and bullying. Additionally, it was suspected that the shop steward had infringed copyrights by downloading copyrighted material into an internal website.
 
According to the employer, getting consent for the termination from the employees was impossible, as the trade union refused to provide the employer with information on which employees the shop steward represented.
 
The Labour Court held that the employer had terminated the employment agreement of the shop steward without the consent of the employees the shop steward represented. The employer had not actively investigated whom the shop steward represented and neglected its obligation to get their consent for termination. Thus, the termination was considered groundless, and the employer became liable to pay the shop steward 24-months’ salary as damages. When assessing the amount of the damages, the Labour Court held that, under the circumstances, there would have been no legal grounds for termination even if the employer had received the consent of the employees the shop steward represented.
 
The outcome of the case emphasises the enhanced protection against termination enjoyed by employee representatives and the employer’s obligation to actively seek the employees’ consent for terminating a shop steward’s employment agreement on grounds related to the shop steward’s person, regardless of the reason behind the termination.
 
The matter has also been subject to a criminal investigation, and the employer’s representatives have been charged with a violation of the rights of an employee representative, which is a criminal offence under the Criminal Code of Finland. The District Court has found the employer’s representative guilty of a violation of the rights of an employee representative, but the decision is not yet final.
 
It is important to note that employees’ representatives also have enhanced protection against termination on collective grounds. Therefore, it is essential to identify employees’ representatives before making any decisions on terminating employment agreements.

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Judgement in a work discrimination case issued by the Finnish Supreme Court (KKO: 2015:41)

In June 2015, the Finnish Supreme Court issued a precedent in which the CEO of a company was sentenced to 40 unit fines, totalling EUR 18,040, for work discrimination due to the CEO having put X in an inferior position because of her family status and sexual orientation without an important and justifiable reason as prescribed in the Criminal Code of Finland (39/1889, as amended).
 
In the beginning of September 2008, a female candidate, X, was chosen as the editor-in-chief of a Finnish independent newspaper owned by the company. In the work interview, the CEO inquired if X or her spouse were politically active. X responded negatively to this inquiry. During the interview, the CEO got the erroneous impression that the spouse of X was male. After concluding the director agreement, the parties agreed that the company will publish a stock exchange release announcing X as the new editor-in-chief of the independent newspaper.
 
A day before the stock exchange release was published, X gave an interview to a competing newspaper and revealed her appointment. Later, some directors of the company received an anonymous text message stating that the spouse of X is female and that she had been a candidate in municipal elections. The company cancelled the director agreement of X due to lack of confidence and due to X having published a press release earlier on the same day.
 
The Finnish Supreme Court stated that the purpose of the job interview was not to employ the spouse of X. The spouse had no obligations towards the company, and the company no rights or obligations towards the spouse. According to the Supreme Court, an editor-in-chief is independently responsible for the contents of the publications in the independent newspaper. Correspondingly, the political activity of the editor-in-chief’s spouse should not affect the image or credibility of the independent newspaper. According to the Supreme Court, the sexual orientation and the family status of X had affected the cancellation of her director agreement. The Supreme Court held that no weighty and appropriate reason existed that would have justified the company’s actions. Thus, the company’s actions were to be considered as work discrimination.
 
The outcome of the case emphasises the extensive non-discrimination obligation set for employers and their representatives. The Criminal Code of Finland prohibits all kind of work discrimination based on race, national or ethnic origin, nationality, skin colour, language, sex, age, family status, sexual preference, inheritance, disability or state of health, religion, political opinion, political or industrial activity or comparable circumstances. Further, it should be noticed that, if a job applicant gives untruthful answers to discriminatory inquiries made by the employer e.g. in a job interview, the employer does not have an automatic right to terminate the employment based on the untruthful answers.

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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