Employment contract

It is important that the names of the parties to the employment contract are entered correctly in the contract. Especially in the case of the employer company, it is important to check that the correct employer is written in the contract. Writing down the place of business of the employer helps distinguish the employer, especially if the official name of the company is not written in the contract.

It is a good idea to agree on the start date of the work so that it is clear to both parties when the employee should be available to the employer.

In a fixed-term employment contract, a reason must be given as to why the contract is only for a fixed term. In other words, the employer must have some genuine reason why the employment relationship is agreed for a fixed-term and not permanent, if the contract is for a fixed term at the employer’s initiative. In addition, the employee must be given at least an estimate of the duration of the contract.

A fixed-term contract is usually intended to expire at the end of the term (grounds). However, sometimes the job does not match what was advertised in the job listing. For these situations, it is worth considering whether it is needed to agree on a trial period and/or termination clause (mixed agreement).

Agreeing on a period of notice makes a fixed-term contract a so-called “mixed agreement, in which case the employment relationship lasts until the end of the fixed term unless the contract is not terminated before this.

The trial period is a maximum of 6 months at the start of the employment relationship or up to half of the duration of a fixed-term employment contract, but never more than 6 months. If the parties want a trial period, it is advisable to agree on this in writing in the employment contract. Sometimes, the employer attempts to terminate the employment relationship on grounds of a trial period even when no such trial period has been agreed. Therefore, if an attempt is made to terminate during the  trial period, first check whether a trial period has been agreed in writing. 

A risk of having a trial period is that the employer can then terminate the contract immediately without notice period.

It is advisable to agree on the place of work in detail. If, for example, the place of work has been agreed to be the capital region, a situation may arise where the employee’s daily place of work moves from Espoo to Vantaa.

In addition, it is important to agree on remote work. If remote work has not been explicitly agreed, the employee does not have the right to work remotely.

If the employee does not have a primary fixed place of work, the employment contract should include a description of the principles according to which the employee works at different work sites.

Job descriptions are sometimes vaguely worded as “tasks assigned by the employer” or something similar. This gives the employer broad scope to change the employee’s duties. The employment contract should specify both the position and the key duties associated with it. The title alone is not sufficient; it is advisable to list the most important tasks, even if only briefly. This is in the interests of both parties, as it helps to prevent disputes. A separate job description can also be attached to the employment contract to explain the agreed tasks in more detail. If the job description is attached directly to the employment contract, it is more binding than a general description of the content of the duties.

At the start of the employment contract, the employer must indicate which collective agreement it will follow. However, the collective agreement may change later. It is advisable to specify the applicable collective agreement in the employment contract. If the employer is not obliged to comply with a specific collective agreement, the parties may nevertheless agree on this separately. If no collective agreement applies, it is essential for employees to check the provisions of the employment contract concerning holiday pay, sick pay, pregnancy and parental leave pay, and travel expense reimbursements. If these have not been agreed separately, the law does not guarantee these benefits, which are traditionally more secure under collective agreements.

The salary should be agreed upon as unambiguously and clearly as possible. Typical disputes in employment relationships arise from ambiguously recorded salaries. In addition, any fringe benefits (such as telephone, car, and meal allowances) should be recorded in the agreement. It should be specified whether the benefits are included in the monetary salary or whether they are received in addition to it. If a salary increase to be implemented at a later date has already been discussed at the start of the employment relationship, this can be added to the employment contract.

How any bonuses are recorded in the employment contract is also important. An unconditional right to a bonus means that the conditions for receiving it must be recorded as clearly as possible in the employment contract. A good contract also specifies whether performance-related pay/bonuses will be paid at the end of the employment relationship.

According to the Working Hours Act, regular working hours cannot exceed eight hours a day and 40 hours a week. Regular weekly working hours may also be arranged to be an average of 40 hours over a maximum period of 52 weeks.

Collective agreements generally agree on shorter working hours than the Working Hours Act. Many collective agreements set a maximum working hours of 7.5 hours per day or 37.5 hours per week.

Working hours can be agreed locally at the workplace in accordance with the law and collective agreements. For more information, see variable working hours agreements, for example.

The employee can agree on additional work in the employment contract, but not on overtime work – they must be agreed separately on each occasion or for a short period of time.

If the work is an independent management task within the company, where the employee is free to decide their working hours, it is possible that the Working Hours Act does not apply and there is no entitlement to overtime pay. In such cases, overtime pay can be agreed separately.

During the employment relationship, the employee accrues paid leave, also known as annual holiday. The Annual Holidays Act (162/2005) contains general provisions on accruing days of holiday and holiday pay, but collective agreements often contain terms that are more favorable than those provided for in the Act. An employment contract may also stipulate benefits that are more favorable than those provided for in the Annual Leave Act, so it is advisable to negotiate additional paid or at least unpaid vacation time at the beginning of the employment relationship, if necessary.

Please note that annual holiday pay is required by law, whereas holiday bonus is agreed locally or in the collective agreement. Read more about holiday bonus.

The notice period may be no longer than six months. The notice period agreed upon by the employer may be longer than the employee’s notice period, but not shorter than the employee’s own notice period.

If the notice period has been agreed on in the employment contract or collective agreement, the general notice periods laid down in the law do not apply. It is worth checking the collective agreement to see whether it has been agreed that it is possible to deviate from the notice periods agreed in the collective agreement by means of an employment contract.

If no notice period has been agreed upon, the general notice periods specified in the Employment Contracts Act shall apply.

Please note that the signature date and the start time of the work may be different dates.

If necessary, the employment contract may also include provisions on, for example, standby work, additional work, working abroad, non-disclosure and non-competition agreements.

If your job involves traveling domestically or abroad, it is a good idea to check the terms and conditions of your collective agreement regarding travel expenses. If there is no collective agreement, it is a good idea to agree on the reimbursement of travel expenses in your employment contract. It is recommended that travel expenses be reimbursed in accordance with the tax administration’s current decision on tax-free travel expense reimbursements. Separate compensation may also be agreed upon for any travel time outside of working hours, especially if the job involves a lot of traveling.

If variable working hours, such as a zero-hour contract, are agreed  at the employer’s initiative, the employer must provide the employee with an explanation of the reasons for using variable working hours and an estimate of the expected number of hours. The purpose of this is to help the employee plan their use of time and give an estimate of the expected income.

The employee can agree on additional work in the employment contract, but not on overtime work – they must be agreed separately on each occasion or for a short period of time.

The employer is required to notify the employee of the changes to the terms of employment in writing. The notification does not need to be given in situations where the change in the terms applicable to the employment relationship is due to a change in legislation or the collective agreement.

The employee must also be given an account of the right to training provided by the employer on the basis of the law, an agreement or practice.

In addition, the employee must be informed of the collective agreement applicable to the work and the insurance institution where the employer has arranged the employee’s pension cover or insured the employee against accidents at work and occupational diseases.

The basic characteristics of an employment contract are the performance of work on the basis of a contract, for pay, on behalf of the employer under the direction and supervision of the employer.

The parties to an employment contract may not agree that a contractual relationship which meets the above characteristics does not observe the Employment Contract Act. If the employment contract conflicts in some respects with the collective agreement applied to the contract, the employment contract is null and void in respect of such parts and the corresponding provisions of the collective agreement are observed instead.

The employer must provide the employee with a written account of the main terms and conditions of the employment relationship when the employment contract is agreed for an indefinite period or a fixed term of more than one month. The duty to provide information applies only to those key terms and conditions that have not been agreed in a written employment contract.
 
The employer must provide the employee with a written account of the main terms and conditions of the employment relationship, if they are not included in a written employment contract. The account must be given by the end of the first pay period at the latest. The account must be given without the employee requesting it separately.