Case Specifies an Obligation on Employers to Consider Alternatives to Termination in Appropriate Capability Cases

In a high-profile case (KKO 2017:27, May 19, 2017), the Finnish supreme court specifically emphasized an employer’s obligation to consider whether it can avoid termination of employment by placing its employee in other work. 

The employee at the center of the case had been the manager of an export section. His most essential duties included maintaining cooperation with retailers in his area of responsibility. In its judgment, the Finnish supreme court assessed whether the employer had valid reasons to terminate an employee’s employment agreement, after a large number of retailers in the employee’s area of responsibility had notified the employer that they would end cooperation with the employer if the employee continued as its contact person.

Under Finnish law, an employer is not entitled to terminate the employment agreement without a proper and weighty reason. Although this is always based on an overall assessment, essential changes in the employee’s ability to cope with his work duties may be considered a proper and weighty reason for termination. Further, the employer has to consider whether it is possible to avoid termination by placing the employee in other work.

The Finnish supreme court held that the employment agreement was terminated solely on the grounds of the dealers’ notifications. However, the court also stated that as the relations between the employee and a few of his customers had deteriorated to the point where cooperation was no longer an option, the employee could no longer be considered capable to cope with his work duties. 

Still, the court stated that since it was not proven that the employee would be unfit to work with other customers, the employer should have carefully investigated the possibility of placing the employee in other duties within the company. Consequently, because the employer failed to show that it had tried to find other duties for the employee as an alternative to termination, the court found that the employer unlawfully terminated the employment agreement.

The court ordered the employer to pay compensation equal to six months’ pay to the employee for unlawful termination. 

Comment

Another feature of this case was the court’s finding that grounds for termination may be fulfilled even when there has been no serious negligence or breach of conduct. Essential changes in the personal conditions of the employee rendering him or her unable to perform his or her work may also constitute grounds for terminating the employment relationship.

However, the outcome of the case emphasizes the importance of the employer’s obligation to carefully investigate alternatives to termination, even in cases where work with one specific client has been rendered unfeasible. Dismissal should always be a last resort.

Written by Tomi Kemppainen and Mats Forsius of Castrén & Snellman and Roger James of Ogletree Deakins