Social partners’ proposals to help businesses in the corona crisis – “A step in the right direction, but more action needed” 

A list of proposals aimed at easing the situation of companies hit by the corona crisis has been agreed by the trade unions and employers. The organisations are jointly proposing actions for the Finnish Government to take to amend labour law and reduce the burden on businesses. EK’s Board of Directors has approved the joint proposals.  

“Businesses are in distress right here and right now. Businesses need tools to cope with the corona crisis. These joint proposals, published today, are a step forward. While they are a step in the right direction, more is needed to save businesses. Hopefully the government will accept our proposals,” says Jyri Häkämies, EK’s Director General. 

Social partners’ proposal to the Finnish Government to protect businesses, employment and livelihoods in the economic crisis caused by the coronavirus 

As a result of the coronavirus, the Finnish economy is in a situation that jeopardises business, employment and people’s livelihoods. To this end, the central labour market organisations have jointly submitted a proposal to the Finnish Government on the necessary measures to reduce the cost of employment, to improve the flexibility of labour legislation and to improve social security for workers who have become unemployed or been laid off. 

Temporary reduction of employers’ pension contributions by EUR 910 million 

  1. Private sector employers’ pension contribution 

Temporarily reduce the employers’ contribution by 2.6 percentage points. This represents a temporary departure from the 50/50 rule for contribution changes. The temporary discount will be implemented as soon as possible but not later than 1 June 2020 and will be valid until 31 December 2020. 

For private sector employers, this means a reduction of EUR 910 million if entry into force is on 1 June 2020. The emu buffer of the earnings-related pension scheme, currently around EUR 7 billion, would be used to reduce the contribution. The buffer will be replenished by temporarily increasing the employer contribution between 2022 and 2025 so that the effect of the temporary reduction will be fully offset. 

Postponement of payment of earnings-related insurance contributions 

  1. Deferral of TyEL insurance payments for three months 

Encourage private sector employers and pension insurance companies (as well as company and industry pension funds) to agree to postpone payment of pension contributions by three months.  

  1. Facilitation of TyEL relending 

Facilitate the payment of pension insurance contributions through TyEL relending by having Finnvera provide companies with the collateral they require for refinancing. 

  1. Withholding employment pension company customer bonuses 

Pension companies should refrain from paying customer bonuses for the period during which their solvency rules are eased and employers’ pension contributions are reduced. 

Temporarily increase labour law flexibility for the private sector until 31 December 2020 

The social organisations say that layoffs and redundancies are only a last resort. The first priority is to look for other work or training. However, this is not always possible due to the financial problems caused by the coronavirus, and therefore we propose the following temporary changes to labour law. 

  1. Reduction of the minimum negotiation times in the Act on Co-operation within Undertakings 

Reduce the minimum negotiation times laid down in the Act on Co-operation within Undertakings in the event of lay-offs from the current 14 days and 6 weeks to 5 days in both cases. 

  1. Extending the right to lay off to fixed-term employment contracts 

Extend the right to lay-off to cover fixed-term employment contracts to the same extent as for contracts of indefinite duration. 

Laid-off employees must have the right to unemployment benefits and the right to terminate their fixed-term employment contracts. 

  1. Shorten the lay-off notice period 

Reduce the 14 day notice period laid down in the Employment Contracts Act is to 5 days. 

  1. Clarify the option to lay off employees before the conclusion of co-determination negotiations 

Labour market organisations agree that the sudden and severe drop in demand for a company’s products or services caused by coronavirus, leading to the need to lay off a significant proportion of its employees, constitutes an exceptional situation under section 60 of the Act on Co-operation within Undertakings. Assessment will be made on a case-by-case basis. When there are no longer any grounds for deviating from the co-operation obligations, the employer must immediately start the co-determination negotiations. 

  1. State to assume obligation to pay remuneration in exceptional circumstances 

If the suspension of work is due to a decision by an authority to suspend operations, there shall be no obligation to pay remuneration during the period of suspension. This presupposes that employees’ loss of earnings for the duration of the suspension, but not for more than 14 days, is fully compensated by the state. 

In cases where, due to a decision of another authority, work is prevented or a school or kindergarten of a child under 12 years of age is closed to prevent the spread of an infectious disease, the employee’s loss of earnings for the duration of the obstacle is fully compensated from state funds. 

  1. Expand the right to cancel a trial period 

Allow the cancellation of an employment contract during a trial period for financial and production-related reasons. 

At the same time, stipulate that there will be no unemployment benefit waiting period or deductible days when a trial period is cancelled. 

  1. Extension of re-employment obligation 

Extend the obligation to re-employ to 9 months if the employee has been dismissed during the fixed-term changes to labour law contained in this agreement. 

Improve the income security of those who are laid off or unemployed until 31 December 2020 

  1. Improve unemployment security 

Cancel the unemployment security deductible period. Layoff periods are not counted towards the maximum period of unemployment security. 

Changes in unemployment security take effect retroactively as of 16 March 2020. 

Clarify unemployment security legislation to entitle employees to daily unemployment allowance even in the case of agreed lay-off. 

  1. Shorten the employment condition 

Unless otherwise met, the employment condition is 13 weeks for employment that has commenced after 1 January 2020 and ends on 31 December 2020 at the latest. 

  1. Employers’ obligation to declare employees who have been laid off 

In the case of lay-offs of 10 or more persons, the employer must send a lay-off notice to TE Services and to the benefit payer. 

The notice shall include the workers to be laid off and the dates on which lay-offs begin and end. The employees mentioned in the notice would be considered registered as unemployed jobseekers. The unemployed persons claim unemployment benefit from the payer of the benefit and the benefit is paid if the claim is in accordance with the lay-off days declared by the employer. Laid-off persons may, if they so wish, register separately as unemployed with TE Services and be entitled to its services. 

  1. Secure the funding of lay-off allowance 

The state will contribute to the funding of lay-off allowances for a limited period up to the end of 2020, by funding a portion of the basic earnings-related allowance. 

  1. The operational capacity of unemployment funds and the prompt payment of benefits are guaranteed in all situations. 

The state prepares to support the operation of unemployment funds with EUR 20 million in 2020 according to separately agreed principles. 

Signatories of the negotiation result:
Jyri Häkämies
Jarkko Eloranta
Sture Fjäder
Antti Palola
Markku Jalonen 

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