Procopé & Hornborg Employment blog: Changes to the posted workers act
We advise all posting companies to review their existing posting agreements and posting agreement templates with their Finnish subcontractor or temporary work agency to ensure compliance with amended Finnish legislation. For any additional questions or employment law advice, please contact our experienced Employment team. We are pleased to discuss the impact of the amendments on your business.
Posting a worker means a situation where a foreign employer (posting company) sends its employee (posted worker) to another country to work for a fixed period. The employee can be sent to do subcontracting work, temporary agency work, or as part of a group-internal transfer. The Finnish Act on Posting Workers (447/2016) applies to all employees posted to Finland, irrespective of their employer’s country of origin.
Amendments to the Posted Workers Act entered into force on 1 December 2020 with a 12-month transitional period. The amendments aim to promote posted and local workers’ equal treatment regarding payment rates and terms of employment. We have compiled the key changes below.
The concept of pay
The concept of pay covers all pay components based on legislation and collective agreements, such as supplements for shift work, night and evening work, overtime work, and work performed on a day off. Any payments of an uncertain nature are deemed reimbursement of incurred expenditure and as such, are not calculated as part of the minimum pay.
The employer’s right to set off has also been restricted with a new provision. Accordingly, the posting company may set off at most one third (1/3) of the net pay payable to the posted worker against a counterclaim. Therefore, the posted worker will always have a minimum of two thirds (2/3) of his net pay to safeguard his standard of living in Finland.
Duty to provide information on temporary agency work
In temporary agency work, the user company is obliged to inform the posting company in case the posted worker is re-posted or temporarily transferred to perform work in another work site abroad.
Collective Agreement applicable to employment contracts
In addition to the generally binding Finnish collective agreement, work performed by the posted worker may also be subject to a collective agreement with normal binding effect on the posting company. However, a company-specific collective agreement can never be applied to the posted employee. The posting company has the burden of proof that the applicable terms have been followed.
If the posting company arranges accommodation in Finland for the posted worker, it must meet the requirements for accommodation conditions laid down in Finnish legislation and the applicable collective agreement.
Where the effective duration of posting exceeds 12 months, additional requirements of the applicable collective agreement apply. These requirements concern various compensations, supplements, and financial benefits, such as pay for national holidays and sick leave. In contrast, provisions on conclusion and termination of an employment contract, non-compete clauses, and supplemental occupational pensions do not have to be applied.
At the justified request of the posting company, the 12-month threshold may be extended to a maximum of 18 months.
Expenditure on travel, accommodation, and meals
When a posted worker is temporarily posted from his or her regular place of work in Finland to another workplace, the posting company must reimburse any travel, accommodation, and meals costs that arise during the posting. The expenditure shall be reimbursed at least in accordance with the provisions of the generally applicable collective agreement.
The expenditure arising from posting a worker to Finland from the country of departure will continue to be covered by the departure country’s national provisions. In case these costs are not reimbursed, or the reimbursement is substantially lower than what is considered reasonable in Finland, the expenditure must be reimbursed in accordance with the generally applicable collective agreement.
The new regulations already apply to those posted workers in Finland whose posting agreement between the employer and the contractor was concluded on 1 December 2020 or later. When the agreement was concluded before this date, the amendments will not apply until 1 December 2021. In derogation, long-term postings that fall under the new regulations immediately, even if the posting started before 1 December 2020.