Tuesday. 31.03.2020
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CORONAVIRUS

Government facilitates layoffs to help companies during the epidemic

On the other hand, the conditions for accessing unemployment benefits are also softened.
Government facilitates layoffs to help companies during the epidemic

Finland is also preparing for the economic consequences of the coronavirus (koronavirus, in Finnish) epidemic. This crisis started as a health emergency but it is now threatening to cut the Gross Domestic Product (GDP) of the entire European Union and plunge the member states into a new recession.

Some extraordinary measures taken by the Government, such as restrictions imposed on people's movement and the general recommendation that citizens stay at home, have sunk the business of many companies. So much so that authorities decided to take measures aimed, according to the Ministry of Economic Affairs and Employment, to ensure "people's livelihood and liquidity of companies."

On Thursday 26 March, the Government submitted a proposal to Parliament on amendments to the Employment Contracts Act, the Seafarers' Employment Contracts Act and the Act on Cooperation within Undertakings.

Those amendments are expected to be applied as soon as possible and will remain in force until 30 June 2020.

Shorter notice period for lay-offs

The main measures proposed by the Government are aimed at facilitating layoffs.

In the Government proposal, the notice period preceding employee lay-offs is shortened from 14 days to five days.

In other words, employers will not need to communicate the layoffs to the employees two weeks in advance. Instead, they will be required to inform employees "no later than five days before the layoff begins," the Ministry explains. However, employers would still be allowed to deviate from the notice period requirement and comply with collective agreements between national employer and employee associations.

Similarly, the duration of cooperation negotiations regarding layoffs will be shortened from the current six weeks or 14 days to five days.

In the future, employers will have the right to lay off an employee in a fixed-term employment relationship under the same conditions as an employee with an employment contract of unspecified duration.

The provision on trial period will be amended so that the employment contract can be terminated during the trial period for financial or production-related reasons.

The proposal extends the employee re-employment obligation to nine months if the employee was laid off during a time when the temporary provisions were in force.

Extended right to unemployment benefit

The positive part of these reforms is that the conditions for accessing unemployment benefits are also softened.

The Government aims that those people who may be laid off would be entitled to unemployment benefit even if they were engaged in business activities or studies.

The Ministry of Economic Affairs and Employment says that this amendment would provide "easier and quicker access to unemployment benefit to those who are studying or engaged in business activities as a part-time activity, as that would eliminate the need to investigate any labour policy requirements regarding studies or business activities."

Payment of unemployment benefit to a person who has been laid off would require, as is the case currently, that the person registers as a jobseeker with the Employment and Economic Development Office (TE Office) and that a labour policy statement is issued regarding the person’s entitlement to unemployment benefit.

The obligation to accept work offered by the employer referred to in the Unemployment Security Act would continue during lay-off.

This Act would apply to those laid off as of 16 March 2020 or later.

Companies deteriorated "dramatically"

Government justifies these measures by arguing that the Covid-19 outbreak and the measures taken to stop the spread of the epidemic have led to a situation where the economic operating conditions of companies and, consequently, their ability to offer work have deteriorated dramatically in a short period of time.

This has forced companies to start adapting their operations. The number of lay-off notifications submitted to the TE Office has risen sharply since the first half of March, and some companies have been forced to resort to dismissals instead of lay-offs. 

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