Finland’s Supreme Court Rules Temporary Agency Did Not Have Grounds for Using Fixed-Term Employment Contracts

The Supreme Court of Finland recently ruled that a staffing agency did not have a justified reason for using a fixed-term employment contract.

The staffing agency had a practice of using several successive fixed-term employment contracts for workers. The contracts stated that the employment relationships would end when the assignment with the user enterprise ended. The workers involved in the litigation had between three and 10 successive fixed-term employment contracts, and the total length of the employment relationships varied from one year to just under three years.

According to the Employment Contracts Act, employment may be fixed term if it is estimated that there will no longer be a need for the work after the expiry of the term. The fact that work is performed as agency work is not enough, by itself, to meet this requirement. A justified reason for the fixed-term nature of the relationship is required regardless of whether the work is performed through an agency.

The Supreme Court noted that the duration of the employment contracts was linked to the duration of the agency’s contract with the user enterprise rather than to any event that could be objectively justified as ending the requirement for the work to be done. Hence, the employment contracts were fixed term without a justified reason.

Comment

This decision does not mean that temporary agencies cannot use fixed-term employment contracts or that user enterprises cannot use temporary workers from staffing agencies. Instead, it serves as a reminder that uncertainty regarding the continuity of the work for the user enterprise is not in itself a justifiable ground for use of a fixed-term employment by the staffing agency. However, fixed-term contracts may still be appropriate when the need for work is actually fixed, such as a one-time project or seasonal work. Having many successive fixed-term employment contracts between two parties is a strong argument for the use of fixed-term contracts, as it demonstrates the need for workers is ongoing.

Written by Mats Forsius of Castren & Snellman Attorneys Ltd and Roger James of Ogletree Deakins

© 2019 Castren & Snellman Attorneys Ltd and Ogletree, Deakins, Nash, Smoak & Stewart, P.C.