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Planning Restructuring of Company’s Operations – Have Employment Law Aspects Been Taken into Account?


When a company is planning to restructure its operations, attention should also be paid to Finnish employment law aspects. Arrangements like restructuring, sale or purchase of a business or a part thereof, closing an office or moving operations to retail dealers or subcontractors, may have personnel effects that must be considered from an employment law perspective. Failure to adhere to employment law obligations may result in high costs and prevent the achievement of the possibly pursued cost savings.

Before taking any measures which may have personnel effects, a company should, firstly, consider whether it is obliged to follow the procedures set out in the Act on Co-operation within Undertakings. The Act applies to companies regularly employing at least 20 persons and often obligates the employer to notify its personnel of its state and plans or to negotiate with the personnel before making any decisions.

Secondly, a company should consider whether its planned arrangement could constitute a transfer of business from an employment law perspective. Transfer of business is a wide concept (it may, for example, include moving operations to subcontractors) and it automatically causes the transfer of employees to the transferee’s service with the same, unchanged, terms and conditions of employment.

Thirdly, if the restructuring requires a company to reduce personnel, it should be noted that dismissals based on financial and production-related grounds can only be pursued if the work to be offered has diminished substantially and permanently and the employee cannot be assigned or trained for other duties. Moreover, for nine months after the dismissal, the employer has an obligation to re-employ the dismissed employee if it is in need of more work force for the same or similar type work previously done by the employee and the employee is still looking for work via the employment office.

For more information, please contact the undersigned. A more detailed article is also available in Finnish.

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