Finland Employment Contracts Act Amendment

Overview

The Act on Amending the Employment Contracts Act (744/2022) represents a significant legislative update in Finland, primarily aimed at enhancing the transparency and predictability of working conditions for employees. This Act, published on July 14, 2022, and largely effective from August 1, 2022, serves as the national implementation of the European Union's Directive 2019/1152 on transparent and predictable working conditions. Its core purpose is to ensure that employees receive more comprehensive and timely information about their employment terms and to provide greater stability, particularly for those working under variable hour contracts. While the user's specialization is pay equity, this specific Act primarily addresses broader employment contract terms rather than introducing direct pay transparency or audit mechanisms, which are covered by other Finnish legislation and ongoing legislative proposals.

Historically, Finnish employment law, primarily governed by the Employment Contracts Act (55/2001), has provided a robust framework for worker protection. However, the evolving nature of work, including the rise of atypical employment forms and the need to align with EU standards, necessitated these amendments. The Directive 2019/1152 sought to address gaps in worker protection, especially for those in precarious or non-standard employment, by setting minimum standards across the EU. Finland's Act 744/2022 integrates these standards, ensuring that Finnish workers benefit from clearer terms of employment, more predictable working hours, and access to essential training. The amendments were proposed by the Finnish Government and approved by Parliament, reflecting a national commitment to improving labor market conditions and worker welfare.

Key innovations introduced by Act 744/2022 include expanded employer obligations to provide written information on employment terms, a mandatory annual review of working hours for employees with variable schedules, and the requirement for employers to provide free and paid mandatory training. These changes are crucial for fostering a more equitable and transparent working environment, even if they do not directly mandate pay gap reporting or equal pay audits. By ensuring that employees are well-informed about their contractual rights and working conditions, the Act indirectly supports the broader goals of fair treatment and non-discrimination, which are foundational to pay equity principles. The Act also reinforces the existing prohibition of discrimination, referring to the Non-Discrimination Act and the Act on Equality between Women and Men.

Definitions

The Act on Amending the Employment Contracts Act (744/2022) introduces or reinforces several key definitions within the context of Finnish employment law, particularly those related to working conditions and employee information. A central concept is 'key terms of employment,' which refers to the essential information an employer must provide to an employee about their work relationship. This now includes, but is not limited to, the starting date of employment, the type of employment (fixed-term or indefinite), the place of work, primary duties, applicable collective agreements, the basis for remuneration, regular working hours, and, specifically for variable-time employees, details on how work is offered and the minimum working hours. The expanded scope and timing of this information provision are direct implementations of the EU Transparent and Predictable Working Conditions Directive, aiming to eliminate ambiguity and ensure workers are fully aware of their contractual rights and obligations from the outset of their employment.

Another critical definition refined by the Act is 'variable working hours.' This term describes an arrangement where an employee's working time within a specified period fluctuates between a minimum and maximum amount as agreed in the employment contract, or where the employee commits to working for the employer when separately called upon. The Act mandates that employers must not agree on variable working hours if the employer's need for labor is fixed, thereby preventing the misuse of such flexible arrangements. Furthermore, it introduces a requirement for employers to regularly review the actualization of these variable hours. If the actual working hours consistently exceed the agreed minimum, the employer is obligated to offer an amendment to the employment contract to reflect a higher minimum working time, providing greater stability and predictability for these employees.

While Act 744/2022 itself does not primarily define terms related to 'equal pay' or 'comparable work,' it operates within the broader Finnish legal framework that explicitly defines these. 'Equal pay' refers to the principle that individuals performing the same work or work of equal value should receive the same remuneration, irrespective of gender. This is primarily defined and enforced under the Act on Equality between Women and Men (609/1986). 'Work of equal value' is assessed based on a comprehensive evaluation of job requirements, including skills, effort, responsibility, and working conditions, rather than solely on job titles. The Employment Contracts Act, as amended by 744/2022, reinforces the general prohibition of discrimination, thereby indirectly supporting these equal pay principles by ensuring fair treatment in all aspects of employment, including the provision of information and working conditions.

Covered Employers

The Act on Amending the Employment Contracts Act (744/2022) applies broadly to all employers and employees within Finland, as it amends the foundational Employment Contracts Act (55/2001). The scope of the original Employment Contracts Act is comprehensive, covering most employment relationships in both the private and public sectors, with certain exceptions for specific categories of workers (e.g., civil servants under separate public service legislation, although many principles are mirrored). The amendments introduced by Act 744/2022, particularly those concerning information provision, variable working hours, and mandatory training, are designed to apply universally to ensure consistent protection and transparency across the Finnish labor market. There are no specific size thresholds for the application of these particular amendments; the obligations generally apply to any employer engaging an employee under an employment contract.

For instance, the obligation to provide written information on key terms of employment within specified deadlines applies to all employers, regardless of their size or the number of employees. Similarly, the requirement to review the actualization of variable working hours and offer contract amendments if necessary is applicable to any employer utilizing such flexible working arrangements. This broad application underscores Finland's commitment to upholding the principles of the EU Transparent and Predictable Working Conditions Directive, which aims to establish minimum rights for all workers, irrespective of the size of their employer. The Act does not introduce new exemptions for specific sectors or types of employers concerning these particular provisions, maintaining a level playing field for worker protection.

While Act 744/2022 itself does not introduce specific employer size thresholds for pay equity reporting or audits, it is important to note that other Finnish legislation, such as the Act on Equality between Women and Men (609/1986), does include such thresholds for related obligations. For example, employers with 30 or more employees are required to prepare gender equality plans that include pay surveys. Furthermore, the ongoing legislative process to implement the EU Pay Transparency Directive (2023/970) in Finland proposes specific thresholds for pay gap reporting, with companies employing 100 or more workers facing mandatory reporting requirements on a phased timeline (e.g., companies with 150-249 employees by 2027, and those with 100-149 employees by 2031). Therefore, while Act 744/2022's provisions are broadly applicable, employers must also consider other relevant legislation that may impose additional obligations based on their size or sector, particularly in the realm of pay equity.

Employee Rights

Act 744/2022 significantly strengthens several key employee rights, primarily focusing on enhancing transparency and predictability in working conditions. One of the most prominent rights is the expanded entitlement to receive comprehensive written information on the key terms of employment. Under the amended Act, employers are now obligated to provide this information earlier than before: certain essential details must be provided within seven days of the employee starting work, while other information can be provided within one month. This includes crucial details such as the starting date, the type of employment, the place of work, primary duties, applicable collective agreements, the basis for remuneration, and regular working hours. This right ensures that employees have a clear understanding of their contractual relationship, fostering greater security and reducing potential disputes arising from unclear terms.

Another vital right introduced for employees, particularly those with variable working hours, is the right to a regular review of their actual working time. Employers are now required to review the realization of agreed working hours at least every 12 months. If this review reveals that the employee's actual working hours consistently exceed the minimum agreed upon in their contract, the employer must, within one month of the review, offer to amend the employment contract to reflect a higher minimum working time that corresponds to the actual workload. Employees or their representatives also have the right to request a written explanation of the review's results and the factors underlying them. This provision aims to prevent the exploitation of flexible contracts and ensure that employees are compensated fairly for the work they consistently perform, providing a pathway to more stable and predictable employment.

Furthermore, the Act establishes the right for employees to receive mandatory training free of charge and during working hours. If an employer has a legal or collective agreement-based obligation to provide training necessary for an employee to perform their work, this training must be provided without cost to the employee and must be counted as working time, ideally taking place during regular working shifts. This right ensures that employees can maintain and develop the skills required for their roles without personal financial burden or loss of income, promoting professional development and adaptability in the workforce. Additionally, the Act reinforces the right of part-time and fixed-term employees to be informed about vacant positions within the company, ensuring they have equal opportunities to apply for more stable or full-time roles, thereby combating potential discrimination based on employment type.

Pay Transparency Requirements

Act 744/2022, while not directly introducing comprehensive pay transparency reporting mechanisms like mandatory pay gap reports, significantly enhances transparency related to the *terms* of remuneration and working conditions, which indirectly supports pay equity. The Act mandates that employers provide employees with clear written information on the basis for determining their salary or other forms of compensation, as well as the pay period, as part of the expanded information duties. This ensures that employees understand how their pay is calculated and the components of their remuneration package from the outset of their employment. While it doesn't require public disclosure of salary ranges for all positions or detailed pay statistics, it lays a foundation for individual pay transparency by making the pay-setting criteria explicit to each employee.

The Act's provisions regarding variable working hours also contribute to transparency in remuneration. By requiring employers to regularly review the actual working hours of employees with variable schedules and offer to adjust the minimum working hours in their contracts if actual work consistently exceeds the agreed minimum, the Act ensures that remuneration accurately reflects the work performed. This prevents situations where employees might consistently work more hours than their minimum contract stipulates without a corresponding adjustment in their contractual terms, which could otherwise lead to underpayment relative to their actual contribution. The employer's obligation to provide a written explanation of the review's results further enhances transparency around working time and its impact on potential earnings.

It is crucial to distinguish the transparency requirements of Act 744/2022 from the broader 'pay transparency' legislation currently being developed in Finland to implement the EU Pay Transparency Directive (2023/970). While Act 744/2022 focuses on individual employment terms, the proposed pay transparency legislation aims for more systemic transparency. This upcoming legislation, expected to enter into force around May 18, 2026, will introduce mandatory disclosure of salary ranges in job postings, prohibit salary history inquiries, and grant employees the annual right to request information on salary distribution by gender for similar roles. Furthermore, it will mandate gender pay gap reporting for companies with 100 or more employees, including metrics like median pay gaps, gender distribution across pay quartiles, and differences in variable pay components. Therefore, while Act 744/2022 sets a baseline for individual contractual transparency, the more extensive pay transparency requirements are part of a separate, ongoing legislative initiative.

Reporting & Audit Obligations

Act 744/2022 itself does not introduce new direct reporting or audit obligations specifically related to pay equity or gender pay gaps. Its focus is on individual employment contract terms and conditions, such as information provision and working hour reviews. However, the broader Finnish legal framework, particularly the Act on Equality between Women and Men (609/1986), already imposes significant reporting and audit-like obligations on employers concerning gender equality and pay. Under this existing legislation, employers with 30 or more employees are required to prepare a gender equality plan every two years. This plan must include a comprehensive pay survey that compares wages between men and women across different job groups, identifying and addressing any unjustified pay disparities.

The content requirements for these gender equality plans are quite detailed. They must include an assessment of the employer's gender equality situation, providing details on the employment of women and men in various jobs. Crucially, the plan must incorporate a pay survey covering all employees, presenting classifications of jobs performed by women and men, the pay for those jobs, and any identified differences in pay. Based on this assessment, employers are then required to outline necessary measures planned for introduction or implementation to promote gender equality and achieve equality in pay. The plan also necessitates a review of the extent to which measures previously included in the gender equality plan have been implemented and their effectiveness. These plans are to be prepared in cooperation with employee representatives, who must have the opportunity to participate in and influence their content.

Looking ahead, Finland is in the process of implementing the EU Pay Transparency Directive (2023/970), which will introduce new and more extensive pay gap reporting obligations. Draft legislation, published in May 2025, outlines that companies employing 100 or more workers will be required to report detailed gender pay gap metrics. This data will encompass average and median pay gaps, average and median gaps in variable compensation, the distribution of men and women across pay quartiles, and a breakdown of average pay gaps by job category. The reporting frequency will be every two years. Companies with 150 to 249 employees are expected to submit their first reports by 2027, with those employing 100 to 149 workers following by 2031. While Act 744/2022 does not directly mandate these, it operates within a legislative environment that increasingly emphasizes robust reporting and monitoring for pay equity.

Governance & Enforcement Bodies

The governance and enforcement of the Employment Contracts Act, including the amendments introduced by Act 744/2022, primarily fall under the purview of several key Finnish authorities. The **Ministry of Economic Affairs and Employment** plays a central role in the preparation and development of labor legislation, including the Employment Contracts Act. They are responsible for overseeing the implementation of employment policies and ensuring compliance with national and international labor standards. The **labor authorities**, which include the regional State Administrative Agencies (Aluehallintovirastot – AVI) and the Occupational Safety and Health (OSH) Divisions within them, are responsible for supervising the application of the Employment Contracts Act in workplaces. They conduct inspections, provide guidance to employers and employees, and investigate complaints related to employment terms and conditions.

For issues specifically related to discrimination and equal pay, the **Ombudsman for Equality (Tasa-arvovaltuutettu)** is a crucial independent authority. While Act 744/2022 itself reinforces general non-discrimination principles by referring to the Act on Equality between Women and Men, the Ombudsman for Equality is the primary body responsible for supervising compliance with the Equality Act. This includes investigating complaints of gender-based discrimination, providing advice, and promoting equality between women and men. In cases where an employee suspects pay discrimination, the employee's representative (e.g., a shop steward) or, in their absence, the Ombudsman for Equality, has the right to request salary information from the employer. The Ombudsman can also bring cases before the **Equality and Anti-Discrimination Tribunal** or other courts.

The **labor courts** (Työtuomioistuin) and general courts also play a significant role in enforcing the Employment Contracts Act. Disputes arising from employment contracts, including those related to the interpretation and application of the Act's provisions (such as information duties, variable working hours, or mandatory training), can be brought before these courts. Employees can seek redress for violations of their rights, including compensation for damages. Trade unions and employee representatives, such as shop stewards (luottamusmies) or elected representatives (luottamusvaltuutettu), also play a vital role in monitoring compliance at the workplace level, advising employees, and engaging in collective bargaining to ensure fair working conditions.

Monitoring & Evaluation

Monitoring and evaluation of compliance with the Act on Amending the Employment Contracts Act (744/2022) are integrated into Finland's existing labor law enforcement mechanisms. The primary responsibility for monitoring adherence to the Employment Contracts Act, including its amendments, lies with the **Occupational Safety and Health (OSH) Divisions of the regional State Administrative Agencies (AVIs)**. These authorities conduct proactive inspections of workplaces to ensure compliance with labor legislation, including the provisions related to information provision, working hours, and mandatory training introduced by Act 744/2022. They also respond to complaints filed by employees or their representatives regarding alleged violations of the Act.

When a complaint is filed, the OSH authorities investigate the matter by gathering information from both the employer and the employee, reviewing relevant documentation (such as employment contracts, working time records, and training policies), and, if necessary, conducting on-site visits. If a violation is identified, the authorities can issue orders for corrective action, provide guidance, or, in more serious cases, refer the matter for further legal proceedings. The Act's requirement for employers to conduct an annual review of variable working hours and to offer contract amendments based on actual work performed provides a built-in monitoring mechanism at the workplace level, which can then be subject to external oversight by labor authorities.

For issues related to discrimination, including pay discrimination, the **Ombudsman for Equality** plays a crucial role in monitoring and evaluating compliance with the Act on Equality between Women and Men, to which Act 744/2022 refers. The Ombudsman investigates complaints, provides opinions, and promotes gender equality through various initiatives. The effectiveness of the broader equal pay framework is also subject to ongoing evaluation, such as through the Tripartite Equal Pay Programme, which involves government, employer, and employee representatives. While Act 744/2022 itself does not specify new audit frequencies or evaluation criteria beyond the existing framework, its provisions contribute to a more transparent and predictable working environment, which in turn facilitates the monitoring of fair employment practices and the identification of potential discriminatory patterns.

Enforcement & Penalties

The enforcement and penalties for violations of the Act on Amending the Employment Contracts Act (744/2022) are primarily governed by the general provisions of the Employment Contracts Act (55/2001) and other relevant Finnish legislation, such as the Criminal Code. Non-compliance with the obligations introduced by Act 744/2022, such as failing to provide the required written information on employment terms, neglecting to review variable working hours, or not offering contract amendments when warranted, can lead to various legal consequences. Employees whose rights have been violated may seek compensation for damages through civil litigation in labor courts or general courts. The amount of compensation would typically be determined based on the nature and extent of the harm suffered by the employee.

More severe violations, particularly those involving discrimination, can lead to criminal liability. The Employment Contracts Act explicitly refers to the Criminal Code (39/1889) for penalties related to the violation of the prohibition of discrimination (Chapter 2, Section 2 of the Employment Contracts Act, referring to Chapter 47, Section 3 of the Criminal Code). This means that employers or their representatives who intentionally or negligently discriminate against an employee, including on grounds related to pay, could face fines or, in serious cases, imprisonment. Additionally, violations concerning freedom of association or the rights of employee representatives (e.g., shop stewards) are also subject to criminal penalties under the Criminal Code.

The enforcement process typically begins with a complaint to the labor authorities (OSH Divisions) or the Ombudsman for Equality, depending on the nature of the violation. These bodies can mediate, provide guidance, or issue orders for corrective action. If an employer fails to comply with such orders or if the violation is deemed serious, the case may be referred to the public prosecutor for criminal investigation or to a court for civil proceedings. Appeals against court decisions follow the standard judicial hierarchy in Finland. The aim of these penalties and enforcement mechanisms is to ensure effective deterrence against non-compliance and to provide adequate remedies for employees whose rights under the Employment Contracts Act have been infringed, thereby upholding the principles of fair and transparent working conditions.

Relationship to Other Laws

The Act on Amending the Employment Contracts Act (744/2022) operates as an integral part of Finland's comprehensive labor law framework, primarily by amending the foundational **Employment Contracts Act (Työsopimuslaki, 55/2001)**. This means that its provisions are read and applied in conjunction with the broader principles and regulations established in the original Act, which governs the fundamental aspects of employment relationships, including contract formation, employee and employer duties, working time, and termination. The amendments introduced by Act 744/2022, such as enhanced information duties and the review of variable working hours, directly modify and update specific sections of the 2001 Act to align with contemporary labor market needs and international obligations.

Crucially, Act 744/2022 also explicitly references and interacts with Finland's anti-discrimination legislation. It reinforces the general prohibition of discrimination by referring to the **Non-Discrimination Act (Yhdenvertaisuuslaki, 1325/2014)** and the **Act on Equality between Women and Men (Laki naisten ja miesten välisestä tasa-arvosta, 609/1986)**. These acts provide the overarching legal framework for preventing discrimination on various grounds, including gender, and for promoting equality in all aspects of life, including employment and pay. While Act 744/2022 itself does not introduce new specific pay equity mechanisms, its provisions on transparent working conditions and non-discrimination indirectly support the objectives of the Equality Act by ensuring a fairer and more transparent basis for employment, which is essential for identifying and addressing pay disparities.

Furthermore, Act 744/2022 is a direct implementation of the **EU Directive 2019/1152 on transparent and predictable working conditions**. This means that its provisions are designed to transpose the minimum standards set by this EU directive into Finnish national law, ensuring harmonization with broader European labor standards. This relationship is significant as EU directives often set a floor for national legislation, allowing member states to introduce more favorable provisions. In the context of pay equity, Finland is also actively working on implementing the newer **EU Pay Transparency Directive (2023/970)**, which will introduce more direct pay transparency and reporting obligations. While separate from Act 744/2022, this upcoming legislation will further complement the existing framework by specifically targeting gender pay gaps through enhanced transparency and enforcement mechanisms, demonstrating a continuous evolution of Finnish law in response to both national and international imperatives.

International Context

The Act on Amending the Employment Contracts Act (744/2022) is deeply rooted in Finland's commitment to international labor standards, particularly those emanating from the European Union and the International Labour Organization (ILO). The Act serves as the national transposition of the **EU Directive 2019/1152 on transparent and predictable working conditions**. This Directive, part of the European Pillar of Social Rights, aims to improve working conditions across the EU by ensuring that all workers have access to clear and predictable information about their employment terms. By implementing this Directive, Finland aligns its national legislation with broader European efforts to enhance worker protection and adapt to new forms of work, such as those prevalent in the platform economy. The Directive's focus on information rights, limitations on probationary periods, and the right to request more stable employment directly influenced the amendments in Act 744/2022, ensuring Finnish workers benefit from these harmonized minimum standards.

Beyond the EU framework, Finland is a long-standing member of the **International Labour Organization (ILO)** and has ratified numerous ILO conventions, including those central to pay equity and non-discrimination. Key among these are **ILO Convention No. 100 on Equal Remuneration (1951)**, which calls for equal remuneration for men and women for work of equal value, and **ILO Convention No. 111 on Discrimination (Employment and Occupation) (1958)**, which aims to eliminate discrimination in employment and occupation on various grounds, including sex. While Act 744/2022 itself does not directly implement these specific ILO conventions, the underlying principles of fair treatment, non-discrimination, and transparent working conditions that it promotes are consistent with Finland's obligations under these international instruments. The broader Finnish legal framework, particularly the Act on Equality between Women and Men, is the primary vehicle for implementing the principles of ILO C100 and C111, ensuring that equal pay and non-discrimination are fundamental tenets of Finnish labor law.

The global trend towards greater pay transparency and efforts to close gender pay gaps further contextualizes Finland's legislative developments. The ongoing process to implement the **EU Pay Transparency Directive (2023/970)** in Finland is a direct response to this international momentum. This upcoming directive, which mandates measures such as salary range disclosure in job advertisements, pay history bans, and gender pay gap reporting, reflects a global shift towards more proactive measures to combat pay discrimination. Finland's engagement with these directives and conventions demonstrates its commitment to being at the forefront of labor rights and social justice, continuously adapting its national legislation to meet evolving international standards and best practices in promoting fair and equitable working conditions for all.

Implementation Timeline

Compliance Checklist

Sources and References