Does an employer have an obligation to offer work and provide training when consecutive fixed-term contracts expire?

By Riikka Heinonen, Teea Kemppinen

12-2017

Offering work to a fixed-term employee

In August 2017, the Finnish Supreme Court gave the ruling 2017:55 regarding an employer's obligation to offer work and provide training when a fixed-term contract expires. In this case, a federation of municipalities as an employer ("federation of municipalities") was obliged to pay its former employee compensation for terminating the employment contract because, according to the Supreme Court, the employer had neglected its obligation to offer work and provide training under the Finnish Employment Contracts Act. This ruling was made despite the fact that the case concerned a fixed-term contract, which had expired in accordance with the terms of the fixed-term employment contract. The Supreme Court's ruling is highly unusual, but what were the circumstances behind the ruling and could this ruling affect employers' obligation to offer work or training in the future?

The Supreme Court's interpretation is interesting because the above-mentioned obligation under chapter 7 section 4 of the Employment Contracts Act applies unambiguously only to situations where a permanent employment contract is terminated, and more precisely, with financial and production-related grounds. In this case the employment had not been terminated and the employment contract was not permanent. Nonetheless the Supreme Court declared that the obligation to offer work and provide training would also apply to fixed-term contracts in certain situations.

The grounds for using fixed-term employment contracts were acceptable

The ruling concerned an employee who worked continuously as a social worker for the federation of municipalities for over eight years, in 16 different fixed-term employment contracts. The employee lacked the necessary qualification for the role under the Act on Qualification Requirements for Social Welfare Professionals.

According to the Act on Qualification Requirements for Social Welfare Professionals, the post can also be given to a person who does not hold the qualifications required by the law, for a maximum of one year. As a result, the Supreme Court considered that in this case the lack of qualifications required by the law was a justified reason to have consecutive fixed-term employment contracts with the employee. According to the Supreme Court there had thus been a legitimate reason for each fixed-term contract.

Special characteristics of the case

Despite the federation of municipalities acting legitimately when it employed the employee for a fixed-term, the Supreme Court ruled that the employee should have been compared to a permanent employee when it came to the employer's obligation to offer work and provide training. The Supreme Court based its ruling on the obligation of equal treatment and employer's obligation of loyalty.

According to the obligation of equal treatment, comparable employees should be treated equally in similar situations. In this case, the Supreme Court ruled that the employee's position in these circumstances was comparable to that of a permanent employee as far as the obligation to offer work and provide training was concerned. Thus the Supreme Court ruled that the federation of municipalities should have found out whether the employee could have been offered other work or training before the fixed-term contract expired.

Can the obligation to offer work be seen as a main rule in fixed-term employment contracts?

Because of the exceptional characteristics of this case, extending the obligation to offer work to all fixed-term employees is not justified. The reference to the exceptional circumstances in this case ("in these circumstances") in the Supreme Court's reasoning rules out this obligation to offer work in cases where the employer did have a justified reason for using a fixed-term employment in line with the Employment Contracts Act, and when there are no special qualification requirements involved. Instead, only in situations where statutory qualification requirements prevent the usage of permanent employment agreements, the case should be evaluated in light of this new Supreme Court ruling. 

Extending the obligation to offer work to all fixed-term employees would be contrary to the Employment Contracts Act, because the obligation to offer work exclusively relates to permanent employment agreements, not in any way to fixed-term employment contracts.

 

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