Ending an employment relationship

Termination usually occurs at the initiative of the employer, whereas resignation, in turn, is initiated by the employee. An employee does not need a reason for resignation and does not have to disclose the reason to the employer. The employer can only terminate an employee for serious personal reasons or based on economic or production grounds. 

If you are in a permanent employment relationship, you can resign at any time without having to justify it to your employer. 

When resigning, submit a written notice of termination of employment preferably in person to your employer. If for some reason this isn’t possible, send the notice by post or email. 

Although it is possible to terminate employment verbally, it is recommended to do so in writing for documentation purposes. The resignation letter should include your name and personal details, the notice of resignation, and the date. 

As per the Employment Contracts Act, the notice period for an employee is: 

• If the employment has lasted up to five years, the notice period is 14 days. 
• If the employment has lasted over five years, the notice period is one month. 
• The notice period can also be agreed differently in the employment contract. 

During the notice period, the employment continues normally, with both the employee and employer having the same rights and obligations as during the employment relationship. 

Note that failing to comply with the notice period is a breach of contract for which one may be held liable for damages. 

The utilization of accrued annual leave can be agreed upon separately with the employer. If you have previously agreed on leave and it falls within the notice period, you may take the leave. 

Regarding annual leave and resignation: 

You can resign during your annual leave as usual. 

The notice period still applies during annual leave. 

However, the employer cannot force the employee to use their vacation days during the notice period without following the rules of annual leave: holiday should only be determined during holiday season and must be notified at least one month in advance. 

Generally, work obligations are in place throughout the notice period. The employer may choose to release the employee from work obligations in certain situations, such as when the employee is transitioning to work for a competing company. 

The employee is entitled to salary for the entire notice period, even if the work obligation is over. Other employment rights and obligations remain in place. For example, the employee should not cause harm to the employer or start working for a competitor during the notice period. 

A fixed-term employment contract binds both parties until the agreed-upon end of the fixed term. The fixed-term contract ends without notice when the agreed-upon term in the contract expires or when the predetermined work for the fixed-term contract is completed. 

In general, a fixed-term employment contract cannot be terminated unless it is explicitly agreed upon in the terms of the employment contract when the contract is made. However, even a fixed-term contract can be terminated if mutually agreed upon between the employee and the employer. 

A fixed-term contract made for a period longer than five years can be terminated after five years for the same reasons and procedures as an permanent employment contract. 

If a fixed-term contract includes a probationary period, within that period, both parties can terminate the contract immediately. 

If the employee or employer terminates a fixed-term contract before its expiration without mutual agreement, the party terminating the employment relationship is obliged to compensate the other party for any damages incurred. 

Contact Loimu’s advocacy services if you need to terminate your fixed-term employment contract. 

A state or municipal official can resign voluntarily or be dismissed. In practice, this occurs in a similar manner to terminating an employment contract. 

In contrast to an employment relationship, a civil service relationship can end with dismissal from office, which can be either due to criminal grounds or disciplinary reasons. If a civil servant neglects their duties or acts against their official responsibilities, but the actions are deemed minor enough that the grounds for termination are not fulfilled, a warning can be issued instead. 

An employer can only terminate a permanent employment contract for a valid and weighty reason. These reasons are not specifically defined by law but are assessed on a case-by-case basis. This is because termination cases vary in different sectors, workplaces, and individual employment relationships. 

Regarding valid and weighty reasons related to the employee or their personal circumstances, they can be considered to include serious breaches or neglect of obligations arising from the employment contract or the law, which significantly affect the employment relationship, as well as substantial changes in the employee’s personal capabilities related to work that make them unable to perform their job duties. 

However, valid and weighty reasons cannot include: 

• Employee’s illness, disability, or accident, unless their work capacity has significantly and long-lastingly decreased to the extent that it is unreasonable for the employer to continue the employment relationship. 
• Employee’s participation in a strike action carried out under the collective agreement law or by a workers’ association. 
• Employee’s political, religious, or other opinions, or their involvement in societal or association activities. 
• Employee’s pregnancy or family leave. 

Before an employee can be terminated, they must be given a warning and the opportunity to correct their behavior. While there is no specific time frame for the validity of a warning in the law, in practice, warnings are generally considered to lose their significance after one year.

An employer can terminate an employment contract when the available work has significantly and permanently decreased due to economic, production-related, or employer’s restructuring reasons. 

Insufficient reasons to terminate an employee for production and economic reasons include situations where: 

• The employer either before or after the termination has hired a new employee for similar tasks, despite no change in their operational conditions. 
• There has been no actual reduction in work due to the restructuring. 

In practical terms, when assessing a significant and permanent decrease in work, it is essential to consider the tasks involved in that particular job. If the tasks cease or are distributed among the remaining staff, it likely indicates a reduction in work. However, if another person takes over the tasks of the dismissed employee, it may not indicate a reduction in work. Temporally, the work reduction needs to occur by the end of the notice period at the latest. 

Challenging situations arise where the work has not actually decreased, but the employer’s operations are incurring losses, and cost savings are sought through workforce reductions. In such situations, the overall context must be considered, weighing whether the reduction in workforce produces significant savings essential for the company’s continued operation. 

It’s also important to note that an employee cannot be terminated if they can be reassigned or trained for other tasks. The employee should be offered their contractual work first. If such work is unavailable, the employee should be offered other work that matches their education, skills, or experience. The employer must also provide the necessary training for the new tasks, which can be considered reasonable and appropriate for both parties. 

An employer can only terminate the employment contract of an employee on maternity, paternity, parental, or childcare leave for economic and production reasons if the entire business operations cease. Additionally, the employee’s contract cannot be terminated due to pregnancy. If the employer terminates the contract of a pregnant employee for economic and production reasons before the maternity leave starts, the employer must demonstrate that the termination was not due to the employee’s pregnancy. 

An employee has the right to compensation if the termination is made unlawfully. The lawsuit must be filed within two years from the date the employment relationship ended. 

In Finnish employment law, “työsopimuksen purkaminen” refers to the termination or cancellation of an employment contract. Cancelling of an employment contract can generally be utilized only in cases of a particularly severe breach by one of the parties involved. Cancelling of an employment contract requires an extremely weighty reason, which must be significantly more serious than the grounds for normal termination. If the employment contract is cancelled, it ends without a notice period. However, the employment relationship continues until the end of the work shift or workday. 

This process requires a more serious reason than termination. An employer can cancel an employment contract only when there is an extremely serious breach by the employee. When an employment contract is cancelled, it ends immediately without a notice period, usually at the end of the workday. The employee is entitled to their full day’s pay even if asked to leave the workplace immediately. 

The cancellation of an employment contract can occur regardless of the duration of the contract (whether permanent or fixed-term). 

An employer can cancel an employment contract if the employee has seriously breached obligations essential to the employment relationship to the extent that continuing the contract is unreasonable for the employer. The reason for cancellation must be invoked, meaning that the cancellation must be notified within 14 days of establishing the grounds. 

The grounds for cancelling must be extremely weighty, such that it is attributable to the other party’s actions, making it unreasonable to expect the continuation of the employment contract. 

Examples of extremely weighty cancellation grounds could include: 

• Misrepresentation during the signing of the employment contract 
• Intentional endangerment of workplace safety 
• Intoxication and substance use at the workplace 
• Gross insult or violence against another party 
• Disclosure of trade or professional secrets 
• Bribery 
• Failure to fulfill work duties despite warnings 

An employer can consider the employment contract as cancelled if the employee has been absent from work for at least seven days without a valid reason communicated to the employer. In such a situation, the employment contract is deemed cancelled from the beginning of the absence. 

An employee has the right to cancel their employment contract to end immediately without notice if there is a particularly serious breach by the employer. Cancellation of an employment contract requires a very weighty reason. 

If the employment contract is cancelled, it ends immediately without notice. However, the employment relationship continues until the end of the work shift or workday. Therefore, the employee is entitled to their full day’s pay even if asked to leave the workplace immediately. 

 

An employee can cancel the employment contract immediately if the employer seriously violates or neglects obligations essential to the employment relationship as mandated by the contract or law to the extent that it is unreasonable to expect the employee to continue working even for the duration of a notice period. Before terminating the employment contract, the employee must provide the employer with an opportunity to be heard regarding the basis for the termination. The reason for cancellation must be invoked, meaning that the cancellation must be indicated within 14 days of establishing the grounds. 

An employee may terminate the employment contract in situations such as: 

• when the employer misled the employee significantly during the contract negotiations, 
• when the employee’s reputation or morals are endangered as a result of the employment relationship, 
• when the employer or their representative seriously dishonors the employee or their family member or commits violence against them, 
• when the employer or their representative negligently jeopardizes workplace safety, 
• when the employee is not provided with sufficient work, 
• when the salary is not paid as per the contract. 

However, this list is merely illustrative, and the grounds for termination must be evaluated on a case-by-case basis and in its entirety. 

During probartionary period, an employment contract can be terminated immediately without notice by both parties. However, the reason for termination must not be unreasonable. Terminating an employment relationship during the probationary period does not require adhering to a notice period. The employment relationship ends immediately on the same day when either the employer or the employee informs the other party of the termination based on the probation clause. 

Neither party to the employment contract has the right to terminate the contract for unreasonable reasons in relation to the probationary period. Examples of unreasonable reasons for the employer include unfounded suspicions of illness or pregnancy. On the employee’s side, an unreasonable reason could be terminating the contract solely because the employee found a new position with better pay. However, valid reasons for termination from the employee’s side could be statements like “I do not enjoy the work” or “the work does not suit me.” 

An acceptable reason for an employer to terminate an employment contract during the probationary period could be, for instance, reasons related to the employee’s performance or personal conduct that does not meet the legitimate expectations set by the employer. 

If the reason for terminating employment is related to the probationary period, the following aspects should be clarified: 

• Is the probationary period specified in the employment contract? 
• Was the employment contract terminated during the probationary period? 
• What specific and detailed events does the employer cite as reasons for termination, and when did these alleged reasons occur? 
• Has the employee been given an opportunity to be heard? 

Regarding the probationary period and unemployment benefit sanctions, an employee is not entitled to unemployment benefits for 45 days following the termination of employment if they caused the termination themselves. This includes situations where the employer terminates the employee’s employment contract based on the probationary period. In these cases, the employment office will assess if the employee’s conduct contributed to the termination. If the employee did not act in a blameworthy manner, a benefit disqualification period will not be imposed. A disqualification is also not imposed if the employer states, for instance, that the employee was unsuitable for the job, and the termination during the probationary period is due to this reason.