The Finnish Parliament has approved the Government’s proposal to lower the threshold for terminating an employment contract on individual grounds.

Current Employment Contracts Act:

Serious breach or neglect of obligations arising from the employment contract or the law and having essential impact on the employment relationship as well as such essential changes in the conditions necessary for working related to the employee’s person as render the employee no more able to cope with their work duties can be considered a proper and weighty reason for termination arising from the employee or related to the employee’s person. When assessing the appropriateness and weight of the reason, the overall evaluation must take into account the number of employees in the employer’s service as well as the overall circumstances of both the employer and the employee.

Under the legislative amendment, the termination criteria will be eased:

The requirements of materiality and seriousness will be removed from the law.
Instead of “proper and weighty reason,” a proper reason will suffice.
The importance of overall assessment will increase: the acceptability of termination will still be evaluated case by case, considering the circumstances of both parties in full.
The employer’s obligation to offer other work before termination will be narrowed to situations where the employee’s ability to work has changed (e.g., illness, accident).

Using a personal reason for termination will still generally require giving a prior warning, so that the employee understands the reprehensibility of their conduct and has a genuine opportunity to correct it and thus avoid termination. Termination will also continue to be prohibited on arbitrary or discriminatory grounds.

It is also important to check the provisions of the applicable collective agreement. They may maintain the conditions for termination in accordance with the law currently in force, even after legislative changes.

The change will also have indirect effects on CEO and shareholder agreements, insofar as obligations and subsequent actions (such as severance payment obligations and good/bad leaver assessments) are linked to the existence of a possible termination ground under the Employment Contracts Act.

The amendments will enter into force on 1 January 2026.