New limitations on the use of zero-hour contracts

Amendments to the Finnish legislation concerning the use of so-called “zero-hour” contracts and other forms of variable-working-hour contracts became effective on June 1, 2018. These amendments require employers to use zero-hour contracts only when they are able to show a genuine need for variable hours; for example, because of fluctuating demand. When these contracts are used at the employer’s instigation, employers are required to provide employees with a written statement confirming the rationale for, and extent of, their use.

A zero-hour contract typically refers to an employment contract where the weekly working hours vary between 0 and 40. However, the employer and the employee could also agree on other variable hours (e.g., that the weekly working hours vary from 10 to 30 hours) or that the employee is called to work when needed.

The aim of the amendments is to improve the position of employees and ensure effective implementation of employment protection provisions. Following the amendments, working hours must reflect the employer’s actual labor needs. Furthermore, employers must renegotiate working hours when an employee’s actual working hours during the past six months do not correspond with the employer’s actual labor needs. If the employer and employee do not reach an agreement, the employer must provide the employee with a written explanation regarding the situation.

The new legislation also includes revises the rules on sick pay and the calculation of pay during the notice period and requires that employers obtain an employee’s explicit consent (for each individual case or for a short time period) for additional work—effectively allowing employees to refuse extra work. The changes will significantly improve the position of employees who have variable working hours and reduce some of the flexibility employers have enjoyed with these contracts.

Comment

The amendments provide more clarity on the use of zero-hour and other variable-working-hour contracts and should bring some consistency to the circumstances in which they can be used. However, those circumstances are undoubtedly more restricted than before, and, as a result of the amendments, employers may want to review their long-term labor requirements and satisfy themselves that a variable working-hour contract is justified before engaging an employee on this basis.

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