11/03/2025

Changing the terms and conditions of employment: what do employers and employees need to know?

A change in the terms and conditions of employment means a change in the terms and conditions of the employment contract, either at the initiative of the employer or the employee. As a general rule, contracts are binding as they stand and cannot be unilaterally modified without just cause or the consent of both parties. The essential terms of the employment relationship are those expressly agreed in the employment contract, such as job description, salary and working hours. In addition, established practices in the employment relationship, which have been developed through a long-standing and regular practice and have acquired a contractual binding character, may also be considered essential terms.

For example, in KKO 2021:76, the Supreme Court held that a clear break practice that had been consistently followed between the parties for a long time had become a binding condition of the employment relationship. Since 1995, the workplace had a practice whereby employees doing heavy sorting work were allowed to take daily paid breaks of 23 minutes in total, longer than the statutory breaks and the breaks provided for in the collective agreement, which were part of their working time. As the breaks were an essential condition of employment, the employer was not entitled to change the practice by unilateral order.
Three ways in which the terms and conditions of employment can be changed are discussed below.

1. Change by agreement

If the employer wants to change the essential terms and conditions of the employment relationship, the employee's consent is required. If the employment contract does not provide for the possibility to change the terms of employment, it is strongly advisable to make use of good communication and negotiation skills and to try to negotiate the change in agreement with the employee. However, it should always be borne in mind that collective agreements and mandatory legislation may impose restrictions on the employer's ability to change the terms and conditions of employment.

2. Changes under the right to manage work

Within certain limits, the employer has the right to unilaterally change the terms and conditions of employment by exercising its right to manage the work. The extent of the right to manage can be determined by looking at the employment contract and seeing first where it bends and whether a practice has become established. An essential term cannot be changed simply on the basis of the right to manage work.
In the Supreme Court decision KKO 2023:76, the employer's right to change the working hours of its employees and add a half-hour unpaid lunch hour to the working day was assessed on the basis of the right to manage work. The Supreme Court held that the working time condition was material and held that the employer had acted in breach of the employment contracts by unilaterally ordering a change in the working time pattern as described in the case.
In the light of the Supreme Court's ruling, as in previous rulings, the extent of the employer's right to direct the work is essentially determined by what is agreed in the employment contract. When drafting an employment contract, it is therefore advisable to avoid writing down overly detailed provisions in order to maintain flexibility in the event of any future changes.

3. Change on grounds of dismissal

In certain situations, the employer can unilaterally change the terms of employment if it has grounds for dismissal. The grounds for dismissal may be personal or collective, based on production and economic reasons.
In practice, this means that if the employer could dismiss the employee on these grounds, it is also possible to offer a less severe alternative, such as a change in the terms and conditions. However, this type of modification can only come into force after the modification negotiations and the notice period under the Collective Bargaining Act. The modification of an essential term of an employment contract is effectively tantamount to terminating the old employment contract and offering a new employment contract.
The Supreme Court has ruled that a unilateral modification of the essential terms of an employment relationship is tantamount to a reduction in the workforce, also for the purposes of the obligation to pay compensation under the Collective Bargaining Act. In case 2021:17, the employer had unilaterally changed the employees' meal break and the starting time of working hours on the basis of the right to manage work and had only conducted so-called "light" collective bargaining. The Supreme Court held that the employer's action had been a change of conditions on the grounds of dismissal of the employee, which was equivalent to dismissal of the employee. Since the employer had not followed this procedure, the workers were ordered to pay compensation even though their employment relationships were not terminated. In uncertain situations, it is advisable, as a precautionary measure, to engage in "reduction negotiations" tied to deadlines and quantitative forms in order to avoid risks. 

Finally

Changing the terms and conditions of employment is not a simple process, with many legal constraints and difficult issues. In principle, the contract between employer and employee is binding on the parties and cannot be changed unilaterally. If a change is necessary, it can be made either by agreement, within the framework of the right to manage employment or on the basis of dismissal.

VALO Partners advisory services

VALO Partners Law Firm provides comprehensive, proactive risk management and partners in challenging situations such as change negotiations, termination of employment, collective bargaining, outsourcing, employment litigation and data protection issues. Contact our experts!

For more information about our services, click here.

- Alexa Kavasto, employment lawyer


30/12/2024

How is your organisation preparing for the requirements of payroll transparency? We've put together a clear set of steps for implementing the requirements of the Pay Transparency Directive for you below

The entry into force of the Wages and Salaries Directive and how to prepare for it

The EU Pay Transparency Directive, which will enter into force nationally in June 2026, will bring significant changes to pay transparency and equality. The new provisions will apply to employers of all sizes in the private and public sectors. The Pay Equality Directive concerns equality between women and men and pay. Action needs to be taken in companies now. Here are key steps to ensure that your organisation is ready to meet the requirements of the Directive and promote equal pay.

1. Designing a pay policy

To prepare, you should assess how open your organisation wants to be about pay issues. The Directive sets minimum requirements, such as the publication of average and median salaries and salary ranges by gender. It is important to consider whether your organisation wants to limit itself to meeting these requirements or whether it is seeking wider pay transparency. This decision will determine what measures need to be taken going forward.

Measures:

  • Assess the organisation's target level of pay equity.
  • Think more broadly about where your organisation stands in the marketplace in terms of wages.
  • Should changes be made to improve the competitive position?

2. Inventory and analysis of the current situation

Before taking action, it is essential to take stock of the current state of pay in your organisation. This means collecting and analysing pay data and assessing whether there are any unjustified pay gaps.

Measures:

  • Bring together your organisation's pay statistics and reward systems.
  • Assess whether the pay survey in the equality plan has been properly carried out.
  • Find out whether up-to-date role descriptions are available for each position.
  • Assess the need for changes to the organisation's recruitment process.

3. Creating a system for monitoring equal pay

Organisations should put in place a system that allows continuous monitoring and analysis of pay levels. This will ensure that any pay differentials are justified and based on objective criteria.

Measures:

  • Make sure that all payroll data is up-to-date and reliable.
  • Check any provisions in the collective agreement.
  • Decide whether to use a commercial system or develop your own system that takes into account the unique characteristics of your organisation.
  • Define clear criteria for assessing pay:
    • Assessment of complexity
    • Performance evaluation
  • All key elements of the salary must be taken into account. Classification by title is not sufficient.
  • Use consistent grades and titles.
  • Identify any pay gaps and the reasons behind them.
    • Legislation allows for differential pay if the difference is based on a person's performance or, for example, a provision in a collective agreement. However, the criteria must be transparent, i.e. organisations must draw up a set of criteria according to which salaries are determined.

4. Evaluation and corrective measures

There may be objective factors behind the pay gap, but it is important to assess whether there are discriminatory practices in pay decisions. Fairness assessments help to identify and eliminate potential inequalities.

Measures:

  • Estimate the pay gap by gender. You can extend the assessment to include age and ethnic group, for example.
  • Be prepared to provide employees with information on the average wage level by gender for groups of employees doing the same or equivalent work.
  • Use the objective and impartial criteria previously established in the organisation to make salary decisions.
  • Document and justify all pay decisions clearly and transparently.
  • Start eliminating unjustified pay gaps. If there is a difference of 5% or more in the average pay of workers of different sexes in any category of workers that cannot be objectively justified, the difference must be corrected within 6 months.

5. A plan to comply with the Directive

The implementation of the Wages and Salaries Directive requires careful and strategic planning. A process plan will ensure that all the requirements of the Directive are met in a timely and appropriate manner.

Measures:

  • Draw up a detailed plan setting out how your organisation will meet the requirements of the Directive.
  • Ensure that the organisation has sufficient resources to implement the plan.
  • Define the responsible persons and deadlines for all actions.

6. Ensuring reporting capacity

The Wages and Salaries Directive obliges companies to report on pay levels and pay differentials on a regular basis. For organisations with 100 or more employees, employers must report to the Authority on the pay gap between men and women (100-249 employees: every 3 years, 250 or more employees: annually). If a pay gap of 5% or more between men and women is found in a group of employees for which no justification can be found, the pay gap must be closed within 6 months or a pay review must be carried out in consultation with staff representatives and an action plan drawn up to remedy the situation.

Measures:

  • Ensure that pay levels and pay gaps can be reported.
  • Produce clear and understandable reports on wage levels and pay differentials.
  • Test the reporting system before deployment.

7. Open communication and training

The implementation of the Directive requires open communication within the organisation. It is important that employees are aware of the content of the Directive and its implications.

Measures:

  • Communicate openly to employees about the requirements of the Directive and the implications for the organisation's pay policy.
  • Make sure employees know how to request pay information and get help with equal pay issues.
  • Provide training on equal pay and wage bargaining, especially for front-line workers.

8. Data protection and processing of payroll data

Payroll data is sensitive information and must be handled in accordance with strict data protection policies. Employers must ensure that payroll data is processed lawfully and securely. When collecting payroll data, it is also important to ensure that the data used is reliable and comparable. External comparisons and statistics can complement internal data and provide a broader perspective.

Measures:

  • Please update your privacy policy and make sure that it also covers the processing of payroll data.
  • Ensure that employees' payroll data is stored securely and used only for its original purpose.
  • If possible, use anonymised salary data.

9. Continuous improvement

Promoting equal pay is an ongoing process. It is important to monitor the implementation of pay policies and make the necessary changes.

Measures:

  • Constantly monitor developments in pay equality and update pay policies as necessary.
  • Encourage an open discussion on pay and equality in the workplace.
  • Provide training and support to employees on issues related to promoting equal pay.

The entry into force of the Wages and Salaries Directive will bring important changes for organisations, but it is also an opportunity to promote equal pay and increase the level of transparency in pay. It should be remembered that pay transparency is only part of the picture. Organisations must also work to eliminate the discriminatory practices and structures that underlie the pay gap.

Contact our experts to book a free initial survey, which is not binding on you. Together, we will go through the current state of your organisation and the steps you need to take to prepare for payroll transparency. Book an appointment for a free initial survey by contacting our experts!

VALO Partners Law Firm provides comprehensive, proactive risk management and partners in challenging situations such as change negotiations, termination of employment, collective bargaining, outsourcing, employment litigation and data protection issues. 

For more information about our services, please see here.

- Alexa Kavasto, employment lawyer

16/12/2024

Payroll Directive - Is your organisation ready?

The requirements of the EU's payroll directive, which will enter into force nationally by June 2026 at the latest, will bring significant changes to the daily lives of businesses. Although the deadlines may seem far away, our experts say it would have been a good idea to start preparing now.

What does the pay equity directive mean?

The directive sets requirements for recruitment practices, internal pay practices and reporting obligations when certain staffing levels are exceeded. Employers will be required to disclose the salary or wage rate payable for the job in job advertisements or otherwise before the interview, which will bring changes, especially to the Finnish recruitment culture where salary has traditionally been discussed only at the end of the recruitment process. In addition, access to salary information for employees will be improved: every employee will have the right to know how their salary is set and how it compares with other salaries in similar jobs. A clear and transparent pay system will improve organisational climate and employee engagement.

The directive does not mean that everyone's wages will be made public. Instead, employers have an obligation to ensure that pay is set fairly and based on objective, gender-neutral criteria such as job requirements, qualifications and level of responsibility.

How to prepare for the Wages and Salaries Directive?

1. Start by taking stock of the current situation

The first step is to find out whether your organisation's pay system is sufficiently transparent and fair. Evaluate your pay policy in relation to the market. Is everyone aware of the general principles and practices of how employers assess employees' skills and performance? Conduct a comprehensive pay survey and check for unjustified pay differentials. So-called "pay gap". So-called "contractual wages" are not justified at present and will not be in the future. Evaluate the job requirements and take into account any TES provisions. A pay survey as part of a gender equality plan will help identify the need for change and provide a good basis for developing a pay system.

2. Update your recruitment practices

Updating recruitment processes is an important part of the preparation. Preferably, start announcing starting salaries or salary ranges already in job advertisements. This not only meets the requirements of the Directive, but also helps to create a transparent employer image. It is also a good idea to ensure that job titles and salary criteria are gender-neutral.

3. Draw up role descriptions and salary criteria

The assessment of job requirements is at the heart of the directive. Start by drawing up role descriptions for each position. Clearly describe what is required for different roles and define the pay criteria for determining pay for the same or equivalent work. A breakdown of salaries by job title is not sufficient. Objective and transparent criteria, such as performance, skills or experience, reduce misunderstandings and increase trust in the workplace. Every employee has the right to know what factors determine their pay and how they can influence it. As such, the Directive does not prevent different pay for people in the same position.

4. Eliminating unjustified pay gaps

If a pay gap of at least 5% between women and men is found for those doing the same or equivalent work and no justification is found, the pay gap must be closed within 6 months or a pay slip must be drawn up.

an action plan to remedy the situation. In our experience, there is often a justifiable reason for pay differentials that can withstand the light of day, but the problem is that the criteria for determining pay are not transparent within the organisation. As such, it is perfectly acceptable to pay, for example, a self-motivated and productive employee a better salary than another unproductive employee doing the same job. It would be unfair if the employer were obliged to pay these employees the same wage and their stretch, performance and flexibility could not be reflected in their pay at all.

5. Prepare for salary reporting

The Directive imposes reporting obligations, especially on larger organisations. Companies with 100 or more employees will have to report regularly on pay differentials and the reasons for them. It is therefore worth starting early to update data collection systems and review practices. This will ensure that all the necessary information is available and easy to report.

6. Briefing front-line staff for salary discussions

Front-line staff are required to be more familiar with the functioning of the pay system and to be able to justify pay differentials in a transparent and fair way. Pay discussions will certainly also increase as workers' rights to information about their own and others' pay improve. To support these discussions, front-line workers need sparring and accurate information.

Summary: NOW is the time to act

The Pay Transparency Directive offers an opportunity to make an organisation's pay systems and culture more transparent. Although there is still some time before the national entry into force of the obligations imposed by the Directive, meeting these obligations requires careful preparation and often a lot of raw Excel work. A well-planned and timely change process will ensure that your organisation is ready to meet the new requirements and also to reap the full benefits of payroll transparency.

If you need help preparing or want more information on the implications of the Directive, we are here to help you. Book an appointment for a free initial assessment by contacting our experts!

VALO Partners Law Firm provides comprehensive, proactive risk management and acts as a partner in challenging situations such as change negotiations, termination of employment, collective bargaining, outsourcing, employment litigation and data protection issues. 

For more information about our services, click here.

- Alexa Kavasto, employment lawyer

16/09/2024

Employers have a duty to prevent bore out

At my first summer job at a Veikkaus kiosk, I was so bored that I kept buying Ace cards, which I scribbled away during the working day. The meaningless work was terribly exhausting. I think I ended up losing money from that summer job. I now realise that I must have suffered from the so-called bore-out phenomenon, which has recently emerged as a problem as significant as work fatigue. Bore out is the lesser-known equivalent of burn out, where prolonged stress is caused by the monotony of work. The symptoms are similar to burnout: apathy, cynicism, hopelessness and depression. Whereas burn-out is caused by an excessive workload, bore-out is caused by a lack of job content. Bore out can undermine work performance, work motivation and general well-being just as much as overwork.

The job of frontline staff involves managing employee motivation. Boredom is not just an individual problem, it can have a significant impact on the functioning of the whole organisation and the well-being of employees. When employees experience boredom, their work motivation decreases, which is reflected in the company's performance. 

The Occupational Safety Act requires taking personal characteristics into account

Boredom is personal and the law on safety at work requires employers to take into account the personal characteristics of the worker. The employer must take into account the work, working conditions, other working environment and personal conditions of the employee. Each employee has his or her own experience of which factors contribute to job satisfaction and which factors are perceived by the employee as motivational obstacles.

What can the employer do?

In our culture, it is much trendier to be busy and overworked than underworked and idle. As a result, it can be difficult for an employee to speak up in the workplace about the bore-out phenomenon. However, employers have a responsibility under the Occupational Safety and Health Act to also prevent bore-out by providing sufficient challenge and meaningful work for employees.

To prevent boredom, the employer needs to know the employee and the content of the work the employee is doing. Proactive measures, such as regular discussion and interaction, can help promote work performance and prevent boredom.

The 2022 amendment to the Collective Bargaining Act introduced the obligation of continuous dialogue, which requires employers to share information with staff on their prospects and financial situation in advance. As a lawyer, I have considered that a similar model could be introduced to combat burn-out and bore-out. Every employee has the right to feedback on the work they do. Without feedback, there can be no development. Employees should therefore be regularly consulted on how they feel about their work and be offered opportunities for training and professional development. This can motivate employees if they feel they are developing their skills and see new opportunities in their work. 

Employers should also ensure that employees have clear goals to work towards. Motivation is greatly enhanced if all employees understand what is being done in the workplace, what the work is needed to meet and what each employee's role is in the whole. By helping employees to see how their work relates to the wider organisational goals, they can feel that their work is meaningful.

VALO Partners advisory services

VALO Partners Law Firm provides comprehensive, proactive risk management and partners in challenging situations such as change negotiations, termination of employment, collective bargaining, outsourcing, employment litigation and data protection issues. Contact our experts!

For more information about our services, click here.

- Alexa Kavasto, employment lawyer

02/07/2024

The probationary period: a guide for the employer

 Probationary dismissal is the process whereby the employer terminates the employment relationship during the probationary period. This differs from a normal dismissal because it can be done without notice and is justifiably lighter. However, probationary dismissal is strictly regulated and must be carried out in accordance with the law. This article discusses the grounds and procedures for a probationary period from the employer's perspective. 

Criteria for the probationary period 

According to the Employment Contracts Act, a probationary period may be terminated on the following grounds: 

  1. Employee misconduct: if the employee does not meet the requirements of the job or does not fit in during the probationary period, the employer may terminate the employment relationship. This may be due to reasons such as lack of skills, lack of motivation or unsuitability for the job. 
  1. Employer's situation: a probationary period can also be terminated for reasons caused by the employer, such as financial difficulties or organisational restructuring that makes the job redundant. 
  1. Illegal Reasons: probationary periods may not be granted on discriminatory or inappropriate grounds. The prohibition of discrimination covers, inter alia, discrimination on grounds of sex, age, ethnic origin, religion, disability and sexual orientation. 

Probationary Leave Procedure 

The probationary period must be carried out carefully and in accordance with the law. The process includes the following steps: 

  1. Evaluation and Documentation: the employer must document the employee's performance during the probationary period. This may include feedback, follow-up reports and discussions that demonstrate the basis for the probationary period. 
  1. Consultation: the employer must consult the employee before granting a probationary period. The employee must be given the opportunity to express his/her views on his/her performance and the reasons for the probationary period. 
  1. Decision: after the consultation, the employer can take a decision on the probationary period. The decision must be based on objective and documented reasons showing why the employee is not suitable for the job or the work community. 
  1. Notification: the employer must give the employee written notice of the probationary period. The notice must state the reasons for the termination and the date from which the employment relationship will end. 

Possible sanctions 

If a probationary period is terminated unjustifiably or unlawfully, this can have a number of negative consequences for the employer: 

  1. Liability to pay compensation: the employer may have to pay compensation to the employee for unjustified probationary leave. The amount of compensation depends on the seriousness of the case and the damage caused to the employee. 
  1. Reputational damage: unfounded probationary leave can damage the employer's reputation and image, which can make future recruitment and retention more difficult. 
  1. Legal consequences: the worker can take the case to court, which can lead to legal costs and additional compensation. 

VALO Partners Advisory Services 

VALO Partners offers expert advice and assistance on probationary leave. Our experts, Alexa Kavasto and Kiira Koponen, will help ensure that the probationary dismissal is carried out in accordance with the law and fairly, minimising legal risks and ensuring a smooth process. 

For more information about our services, click here. 

06/06/2024

Processing personal data and preventing discrimination in recruitment: tips and misunderstandings to avoid

A job interview is not only about assessing the candidate, but also about creating an employer brand, where the candidate builds an image of the interviewer and the organisation. With tips from a lawyer specialising in employment law and a founding partner of VALO Partners, you can ensure that your recruitment process doesn't end in misunderstandings or a courtroom.

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16/04/2024

New winds for employers in the government's programme: seven highlights of labour law reforms

The Spring 2024 #PressureCause strikes have been political strikes to protest against changes to the government's employment laws. Indeed, the planned changes have been quite pro-employer for a long time. In this blog, we outline the main changes to employment laws envisaged in the government programme.  

Companies should prepare for changes to employment laws by keeping up to date with legislative developments, updating their internal practices accordingly and communicating the changes to key staff, for example through training. However, careful legislative drafting is still needed to implement these changes and it is possible that not all the proposals will be implemented as they stand. 

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04/03/2024

Concrete tools for lawyers to tackle underperformance

In this article, Alexa Kavasto of VALO Partners Law Firm gives practical tips on how to deal with underperformance.

Underperformance by an employee is a difficult issue, not only for the employee, but potentially for the whole work community. When an employee does not reach his or her full potential, it can affect the work atmosphere, the company's financial performance and customer satisfaction. For the frontline worker, the situation can be difficult because raising the issue can feel uncomfortable and the tools to address underperformance may not be in the manager's own toolbox.

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02/01/2024

The ABC of the probationary period - What every employer needs to understand about termination of employment during the probationary period

During the probationary period, Matti has mostly been a bit of a work in progress. His motivation has been lacking, he doesn't get along with his colleagues and his work hasn't been done to a sufficient standard. The employer has therefore decided to terminate Matti's employment because of this. The probationary period is coming to an end, but Matti took sick leave in the last few minutes. He is not answering his phone or his messages, and the notice of the end of his probationary period has not been received.

Here's one example of a tricky probationary break situation our clients have encountered recently. In this blog, we have put together a concise information pack on the issues surrounding probationary leave that all employers should understand.

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10/11/2023

A successful employment contract - the lawyer's top 5 tips for drafting an employment contract 

Employment contracts are the most important economic contracts for companies, so drawing up employment contracts should not be seen as a mere formality. This blog post deals with one of the most important steps in the recruitment process - the signing of an employment contract. A well-drafted employment contract lays the foundation for a successful employment relationship and legal protection for both parties. Read below for our partners Kiira and Alexa's top 5 tips for drafting a successful employment contract. 

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