The Ministry of Employment and the Economy is responsible for the preparation and development of labour legislation in accordance with the guidelines of the country’s Government. Legislation is prepared in tripartite discussions in cooperation between employers’ and employees’ interest organisations. Labour law lays the foundation for the employee’s position, rights, obligations and working conditions. These include, for example, the Employment Contracts Act, the Working Hours Act and the Annual Holidays Act as well as legislation concerning public-service employment relationships.
The Occupational Safety and Health Act, the Non-discrimination Act and the Act on Co-operation within Undertakings also safeguard the position of employees in working life.
The Finnish labour market system is based on agreement and conciliation. Negotiations are based on the principles of the International Labour Organization (ILO). The ILO’s main principle in the development of working life is tripartism, which means cooperation and negotiations between employer organisations, employee organisations and the country’s government.
Collective agreement system
The national labour market organisations formed by employers and employees agree on collective agreements. Agreements are used to agree on the rules of the labour market and working conditions in a way that is typically better for the employee than legislation. Finland does not have a law on minimum wages in euros; instead, salaries are determined by way of collective agreements.
These agreements are agreed between the organisations for a fixed term, i.e. an agreement period. After the end of the period, the parties to each collective agreement shall negotiate the terms and conditions for renewing the agreement. Negotiations are usually based on the provisions of the previous agreement.
Changes to remuneration and other terms of employment in accordance with the agreement have a cost effect that regulates, limits and reflects the magnitude of the changes and the impact on the employer’s labour costs. The terms of employment are not renegotiated during every round of negotiations.
Local agreements
In collective agreements, the national contracting parties agree on which terms of employment can be agreed locally in different ways for each workplace or company. The parties to local agreements are the employer and the shop steward of the trade union that has concluded the collective agreement.
Local agreements can be used to take into account the nature and circumstances of the company’s and workplace’s operations so that both the employer and employees benefit from the agreement.