What are co-determination negotiations?

YT negotiations, also known as co-operation negotiations are a legal process that obligates employers to negotiate with personnel regarding significant organizational changes. Negotiations must be conducted before final decisions are made in situations affecting employees' status, such as dismissals, layoffs, or structural changes in the organization. Legal changes that came into effect at the beginning of 2025 have raised the threshold for application and shortened negotiation periods, which particularly affects the operations of SMEs.

What do codetermination negotiations mean in Finnish working life?

Co-determination negotiations are based on the Co-determination Act, which regulates cooperation and dialogue between the employer and personnel at workplaces. Change negotiations are a special part of co-determination negotiations, conducted when reducing the workforce due to economic and production reasons is being considered.

The obligation to negotiate applies to situations where terminations, layoffs, reduction of working hours, or unilateral changes to essential employment contract terms are planned. The purpose of the law is to ensure that personnel have the opportunity to influence decisions concerning them and that the employer considers all alternatives before making final decisions.

The changes that came into effect at the beginning of 2025 raised the general application threshold of the law to 50 employees. However, certain obligations still apply to companies employing 20-49 workers, particularly concerning the practice of continuous dialogue.

When must a company initiate co-determination negotiations?

The obligation to negotiate arises when a company employing at least 50 employees is considering significant Organizational changes. Also, companies with 20-49 employees are covered by the negotiation obligation in limited situations, such as when planning the dismissal of at least 20 employees.

Practical situations that trigger a duty to negotiate:

• Layoffs due to economic reasons
• Production reasons, such as technological changes
• Organizational reorganizations
• Layoffs lasting more than 90 days
• Transfers of businesses, mergers, and demergers
• Significant changes in job duties or working hours

With the reform, the co-determination act no longer applies to companies with 1-19 employees at all, which significantly lightens the administrative burden for the smallest companies.

How does the co-determination negotiation process proceed in practice?

The negotiation process begins with the employer with a negotiation proposal, which describes the planned changes and their justifications. The law amendment has halved the minimum duration of negotiation periods.

The new negotiation times are:

• Seven days (previously 14 days) for minor changes
• Three weeks (previously six weeks) for broader changes

Key process steps:

1. Drafting a negotiation proposal: The employer prepares a written presentation of the planned changes
2. Starting negotiations: Personnel are provided with sufficient information to support decision-making.
3. Dialogue The parties are going through options and looking for the best solutions.
4. Labor needs assessment: If at least 10 employees are being laid off, a proposal for negotiations shall be submitted to the labor authority.
5. 30-day waiting period: As a new requirement, employment contracts may not terminate until 30 days have passed since the submission of a negotiation proposal.

This new 30-day time limit gives the labor authority time to arrange employment support services for laid-off workers.

What mistakes do SMEs make in co-determination negotiations?

Startups often make mistakes that can lead to legal consequences and to liability for damages. The most common mistake is the neglect of the duty to negotiate or insufficient preparation for the process.

Most common pitfalls:

• Misinterpretation of the applicability threshold: Especially companies with 20-49 employees can err about when the duty to negotiate applies to them.
• Too urgent schedule: Although negotiation times have shortened, it is still necessary to ensure that all required matters are covered.
• Incomplete documentation: The course and decisions of the negotiations must be carefully recorded.
• Insufficient information for staff: Information must be clear and understandable.
• Failure to map out alternatives: All possibilities to avoid layoffs are not sufficiently considered.

To avoid errors, it is advisable to search Expert assistance for managing change processes, as legislative changes have introduced new requirements, compliance with which necessitates precise legal expertise.

Key takeaways from co-determination negotiations for a SME manager

Every SME manager should understand that preparation The key to successful YT negotiations. Legal changes have brought both reliefs and new requirements, the management of which requires expertise.

Key things to remember:

• The application threshold increased to 50 employees, but companies with 20-49 employees still have certain obligations.
• Negotiation times were halved, but the quality of the process must not suffer
• The new 30-day waiting period applies to redundancies involving at least 10 employees.
• Documentation and proper procedure are critical for avoiding legal risks.
• Engaging staff in the change process improves results

Change negotiations are part of a broader organizational change that requires careful planning and a human approach. A successful process not only meets legal requirements but also maintains employee trust and the company's reputation.

If your company is facing changes, you should get in touch on time to experts. Timely support ensures that the process runs according to regulations and that the staff's perspective is taken into account throughout the change.