Employment can be terminated for many reasons. A lay-off usually happens from the employer’s initiative and a resignation from the employee’s initiative. Giving a notice and resignation terminate the employment, but what’s next?
A fixed-term contract will terminate at the end of the fixed term or at the completion of the agreed work. A regular employee’s employment can end with a notice given by the employer, the employee’s resignation or a cancellation of the employment. Employees can hand in their notice without a reason, but employers are required to give a justified reason for the dismissal.
Whatever the reason for the ending of the employment, employees should remember to ask the employer for a testimonial for the work done. It is an important piece of paper when applying for the next job. If the employees are about to become unemployed, they should also ask for a payroll statement.
An employee resigning
Employees can resign and terminate the work contract. Employees will not need grounds for the termination of the work contract. It is enough to just wanting to end the employment.
Employees’ notice periods by law:
- 14 days, if the employment has lasted no more than five years.
- One month, if the employment has lasted more than five years.
It is good to make the resignation with a written notice of termination or by email. It should show the date, the employee’s name and personal details as well the notice of resignation. Preferably, hand in your written notice to the employer or supervisor in person. You will find a template for a written notice in the materials.
Work shall continue until the notice period as provided by law or the collective labour agreement has passed. The notice periods have been determined in law. Deviations of them may occur in collective labour agreements and agreements between the employer and the employee.
The employer giving notice
The employer can only terminate the work contract for an appropriate and weighty reason. For example, repeated negligence of work shifts can be a reason for dismissal. Dismissals are possible in work contracts that are valid until further notice. A fixed-term contract cannot be terminated, unless it has been separately agreed on in the work contract.
If employees neglect their duties or otherwise act in a reproachful manner in the employer’s opinion, they must be given a warning prior to the dismissal. The purpose of the warning is to tell the employees how they have acted wrongly in the employer’s opinion. Another purpose is to give them an opportunity to correct their action.
The employer’s notice periods by law:
- 14 days, if the employment has lasted no more than one year.
- One month, if the employment has lasted more than a year but no more than four years.
- Two months, if the employment has lasted more than four years but no more than eight years.
- Four months, if the employment has lasted more than eight but no more than twelve years.
- Six months, if the employment has lasted more than twelve years.
The employer can terminate the work contract due to a reason caused by the employee. In that case, the dismissal must always have a proper and weighty reason in line with the Contract of Employment Act, e.g. a severe breach or negligence of obligations that essentially affects the employment.
However, prior to the dismissal the employer must give the employee a warning. The employer may have a right to dismiss for example when the employee is continuously late or repeatedly absent from work, despite warnings.
If the dismissal takes place due to reasons caused by the employee, the employee must be given an opportunity to be consulted on the reasons for dismissal prior to it. The employee has the right to bring the shop steward of the workplace to this event.
The reason for dismissal can also be the deterioration of the employer’s financial situation, resulting in a reduced amount of work. Although the work is reduced, the employer must, prior to a dismissal, try to organize other work for employees that corresponds with their competence and education or to retrain them into new jobs.
If the dismissal is based on financial reasons and there are under 20 employees in the workplace, the employees must be consulted in connection with the dismissal. If the employer giving notice employs more than 20 people, joint co-determination talks must be held with the personnel before the employer can decide on measures that can lead to the employees’ dismissal, lay-off or work changing into part-time work.
The aim of the co-determination talks is to discuss the reasons for and impacts of as well as alternatives to the measures the employer is considering, to try to avoid or at least reduce the dismissals targeted to employees. These alternatives may include e.g. part-time work, lay-offs, new jobs in other parts of the company or further training. Shop stewards represent the personnel in the co-determination talks.
An employee’s pregnancy or family leave is not a reason for dismissal by law. The employer can only terminate the work contract of an employee on maternity, paternity, parental or child-care leave with financial and production-related grounds, if the employer’s operations are coming to a complete end.
The employment can also be terminated when the employer is declared bankrupt.
On the termination of employment, you have a right to obtain written references from the employer showing the duration of your employment and the quality of your duties. You can also ask for a statement of the reason for terminating the employment and an assessment on your competence and conduct. You should always remember to ask for references, as it is an important document when applying for a new job.
A lay-off usually happens by the employer’s initiative and the resignation by the employee’s initiative.
Cancellation of employment
Employment can also end at its cancellation. In a cancellation, the work and the payment of wages are ended immediately and there is no notice period. The employer can only cancel a work contract due to a particularly weighty reason.
The employer can cancel a work contract if employees has very severely neglected or breached their duties defined in the work contract. For example stealing or putting colleagues’ or customers’ safety at risk or being at the workplace under the influence of alcohol may justify the immediate cancellation of employment. Often in such cases there may have already been several negligences or breaches in the past that the employee has also been warned about.
In a cancellation of an employment, the work and the payment of wages are ended immediately and there is no notice period.
Similarly an employee can cancel the work contract if the employer seriously breaches or neglects its obligations such as payment of wages or occupational safety.
Furthermore, a work contract can be considered cancelled if the employee is absent from work for at least seven days without giving the employer a competent reason for their absence during that time. If the employer or its representative is absent from the workplace for at least a week without giving you a competent reason for its absence, you can consider the work contract as cancelled.
Payment of wages as the employment is ending
At the end of employment also the pay period ends. Unless otherwise agreed, the final salary must be paid on the last day of the employment. For example, the work contract may state that the final salary is payable on the next normal pay day of the company. In case employees have not taken all annual leave or other paid days off at the time when the employment ends, it will be compensated for as money in connection with the wage payment.
If the payment of the final wages is delayed from the agreed payday, the employee has the right to receive a full pay for the waiting days in addition to the interest on arrears as defined by the Interest Act, however not for more than six calendar days. Therefore, remind your employer of the delay in the payment of your final wages and demand the interest on arrears to be paid.