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Home Work life guide page Termination of employment Production-related and financial grounds

Production-related and financial grounds

According to the Employment Contracts Act, an employer may terminate an employment contract when the available work has decreased essentially and permanently due to financial or production-related grounds or to reorganisation of the employer’s business.

However, the employment contract may not be terminated if the employee can be placed or trained for new work duties.

An employer who cannot offer the employee other work may also exercise control over another organisation. In such a situation, the employer must find out whether they can offer the employee work in other companies or corporations under their control.

The employer has dismissed me for financial and production-related reasons, even though they have hired a new employee. Has my termination been legal?

According to the Employment Contracts Act, there are, as a rule, no financial or production-related grounds for dismissal if the employer has hired a new employee for the same or similar tasks before or after the dismissal, unless there has been a significant change in the employer’s operating circumstances between your dismissal and hiring the new employee.

Do you need more information?

The third part of the Lakiruutu series examines the questions submitted by members who have been made redundant on production-related or financial grounds. In addition, the session reviews the special groups that have increased protection against dismissal and discusses prohibited grounds for termination. View the video in OMA+ service!