Finland: Zero-hour contracts – zero tolerance or zero resistance?

22 June 2015

Aki Laitinen

The so-called "zero-hour contracts" have raised a lot of debate recently in Finland. Both supporters and opponents have had their say on this highly controversial matter. But are they a good or a bad thing?

The Ministry of Employment and the Economy is currently preparing an amendment to the Working Hours Act that would concern zero-hour contracts. The work was due to be finished in spring 2015 but due to political disagreements it has "got stuck in boardrooms" only to wait for the new government to emerge. Now that this has happened, it is likely the work will be finished this year.

Citizens have become active as well. There have been signees of a petition of which the aim is to limit the use of zero-hour contracts by setting the minimum working hour limit to 18 hours per week. So far almost 60 000 people have signed the petition and after the recalculation it will be handed over to the Members of Parliament who will discuss the matter and vote whether to accept it or not. If accepted, this would be a very radical change to the current state of affairs as it would oblige employers to pay employees for these minimum hours whether the employees have actually worked these hours or not.

But what is a zero-hour contract? There is no statutory definition for this in Finland. In a broad sense, it may be defined as consisting of different types of contracts which include provisions concerning working hours and performing work which is broad and flexible.  It may have been agreed for example that the working hours vary between 0 and 40 per week. Some even question the employment contract nature of those zero-hour contracts which do not oblige employees to accept work offered to them by the employer. 

But what exactly are the pros and cons involved in these contracts? Employee representatives have, naturally, emphasized the cons. They have pointed out that zero-hour contracts may result in uncertainty or loss of social security benefits. However, what employee representatives often fail to see is that in general, zero-hour contracts are beneficial for both employees and employers as well as for the economy. They answer to the personal needs of both sides. Employees may be in a situation where they can't, or do not want, to work regularly. For example, for students and retirees zero-hour contracts offer a flexible way to earn some extra income. Normally employees in zero-hour contracts are not obliged to accept work offered to them so they are free to choose when they work. Moreover, employees do not have to put constant effort into finding new jobs. Employers find zero-hour contracts beneficial as they provide a flexible way to adapt to the times of high demand and the times of low demand of work force. Employers save the recruitment costs as they already have a work reserve to choose from.

It is easy to conclude that a minimum working hour limit proposed in the petition is a lame duck. It would make it more difficult for employers to create new jobs and would worsen the already bad situation of small and medium-sized enterprises. What the Government needs to do right now, is to improve Finnish competitiveness and employment and that will not be attained by setting limits that would create more disincentives for employers to hire new workers.