Yhteistoimintaneuvottelut

New Co-operation Act aims to increase dialogue

9.12.2021
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News article

The new Co-operation Act will enter into force at the turn of the year 2022.

The new Act on Co-operation within Undertakings will enter into force at the turn of the year 2022. The goal of the legislative reform is to improve the employees’ ability to access information and to exert influence, to promote continuous dialogue and wellbeing at work, and to develop the employees’ competence.

In order to strengthen co-operation, the legislator has wanted to improve the involvement and position of employees not just in the co-operation procedure, but in other decision-making processes of companies as well.

The new Act on Co-operation within Undertakings consists of three entities: continuous dialogue, change negotiations, and personnel representation in company administration. 

The goal of the legislative reform is to improve the employees’ ability to access information and to exert influence, to promote continuous dialogue and wellbeing at work, and to develop the employees’ competence.

The work community must be developed through dialogue

The goal is for the employer and employees to have a continuous dialogue together. According to legislation, this dialogue should take place at least on a quarterly basis. In companies with less than 30 employees, holding the dialogue twice a year is sufficient to meet the level required by law.

If the company has not elected an employee representative, the dialogue should be held at least once a year at a common meeting open to everyone. The parties can also agree on a different arrangement when it comes to the number and timing of these meetings. 

The employer must provide the employee representative, in writing, with all information relevant for conducting the dialogue that is reasonably within the employee’s capacity to provide. This information must be provided no later than one week before the dialogue, unless otherwise agreed.

What information is considered relevant depends on the topic being discussed, and it is not necessary to discuss all points laid down in the Act at every meeting. When this information is provided beforehand, the parties can prepare for and orient themselves with the topics about to be discussed. However, the Act does not contain a list detailing the information that needs to be provided for each dialogue.

In the Government’s proposal, this is justified by stating that such a list could run counter to the purpose of the law, placing the focus of the dialogue on irrelevant issues. The Government’s proposal does describe, on a general level, the specific features related to the obligation to provide information for each dialogue topic. 

These dialogue topics are listed in Chapter 2, Section 8 of the Act on Co-operation within Undertakings. Topics of the dialogue must include: 

  • the company’s development prospects and financial situation
  • workplace rules, practices and policies
  • staff structure and the way labor is used
  • staff competence needs and competence development
  • the maintenance and promotion of work wellbeing
  • other matters arising from legislation.

The employee representative may also submit a motion about a topic to be discussed at the next meeting. However, if the motion is submitted later than two weeks prior to the meeting, the employer may postpone the matter until the next meeting. The employee representative must be informed of this postponement, however.

The goal is for the employer and employees to have a continuous dialogue together, on a quarterly basis or twice a year, depending on the size of the company.

Instead of the old personnel and training plan, in the future, the employer must draw up a work community development plan in dialogue with the employees. An equality plan and diversity plan may be drawn up as part of the development plan. According to the Government’s proposal, the development plan would be a dynamic document that could be used as a tool to support dialogue.

According to Chapter 2, Section 9 of the Act on Co-operation within Undertakings, the development plan must include:

  • current situation and foreseeable development costs that may have an impact on staff competence needs and work wellbeing
  • objectives and measures used to develop staff competence and promote work wellbeing
  • division of responsibilities, timetable and follow-up procedure for the measures
  • principles for using external labor.

The Act also contains instructions on what the parties should pay attention to when drawing up the plan. One such point is the need to maintain the working capacity of elderly employees.

In addition to the obligation of drawing up the development plan, the new Act on Co-operation within Undertakings lays down in its Chapter 2, Section 11 that the employer is obliged to provide certain information regularly once or twice a year. The information to be provided twice a year includes information on the number of employees in each business unit, or according to a similar division.

An example of information to be provided once a year includes information on the use of external labor, more specifically the related work sites and works tasks, and the periods of time when external labor has been used. The parties involved may also agree on another kind of arrangement when it comes to the information provided once a year. 

In the future, the employer must draw up a work community development plan in dialogue with the employees.

Change negotiations to be held in the future

Chapters 6 and 8 of the current Act will be merged to form Chapter 3 of the new Act, which concerns change negotiations. According to Chapter 3, Section 16 of the Act, the scope of change negotiations would include terminations, lay-offs, the reduction of a contract to a part-time contract, and any unilateral changes made to an employment contract’s essential conditions, provided that these decisions are based on financial or production-related grounds.

If an essential condition is changed unilaterally, this means that the change is made based on a reason that could also constitute grounds for dismissal.

Other matters falling within the scope of change negotiations include any essential changes made to duties, working methods and the arrangement of work, work premises and regular working hours, provided that these changes are within the scope of the employer’s power of management, they affect the position of one or more employees, and they are based on reasons listed in Section 16 of the Co-operation Act. 

No changes will be made to the time requirements of the negotiations, and the negotiation proposal and the content of the negotiations will remain largely the same as before. The timing of the negotiations is discussed extensively in the commentary regarding the Act – the negotiations should take place at the right time, i.e. when the employer is considering measures leading to reductions. Consideration means that the employer is able to identify the measure and the associated personnel consequences so that they can draw up a negotiation proposal and negotiate the matter.

Prior to the negotiations, this consideration cannot progress so far that it would prevent further changes to be made to the plan. 

The change negotiations shall be conducted between the employer and the employee representative. If there is no employee representative, the negotiations shall be held between the employer and the employees affected by the negotiations. If a measure considered by the employer concerns an individual employee, the negotiations can also be conducted between the employer and the employee in question.

It is worth noting, however, that in such a situation the employee has the right to demand the matter to be negotiated in the presence of the employee representative, or between the employer and the employee representative. 

The employee representative has the right to submit written proposals and alternative solutions to be discussed in the change negotiations. These proposals must be submitted well in advance of the meeting.

If the employer does not consider the proposal(s) to be appropriate or feasible, the employer must state the reasons for this in writing during the negotiations. These employer arguments should be recorded, for example, in the minutes of the meeting, and they may be accompanied by the proposal made by the employee representative. The employer must make sure that the minutes of the meeting are drawn up if requested to do so. 

The employees have the right to participate in the proceedings

The third entity in the reform of the Co-operation Act deals with taking the provisions from the Act on Personnel Representation in Company Administration and making them part of the new Act on Co-operation within Undertakings. These regulations are applied if the company employs at least 150 people in Finland. 

Employees have the right to participate in the proceedings of the employer’s decision-making, executive, supervisory or advisory bodies as they discuss important issues concerning the employer’s business and finances and the status of employees. Employee representation should be primarily agreed upon between the employer and the employees.

If the parties cannot reach an agreement, it will be carried out in accordance with the legislation at the request of the employees. Even if an agreement is reached, the representation must take place in a body that factually discusses important questions related to business, finances and the status of employees. The agreement must be drawn up in writing.

In statutory representation, at the request of at least two personnel groups that together represent the majority of the employees, the employees have the right to appoint their representatives and deputy representatives, according to the employer’s choice, to the supervisory board, board of directors, executive groups or equivalent bodies of the employer that represent all of the employer’s business units.

The employee representative shall otherwise have the same rights, duties and responsibilities as the other members, but they shall not take part in matters concerning the election, dismissal and terms of contract of the company’s management, nor in matters related to the employees’ terms of employment or industrial action. The employee representative has the right to receive training in order to perform their duties.

Read more: What happens in yt-neuvottelut (cooperation negotiations)?