What does change security cost an employer?

Change management It is the employer's statutory obligation that arises when terminating employees for production and economic reasons. The costs vary depending on the number of employees to be terminated, the size of the employer, and the length of the employment relationships of those terminated. Change security includes unpaid leave, training, and occupational healthcare, the costs of which the employer must cover in certain situations.

What does change security mean, and why does the employer have to pay for it?

Change security is a statutory system that protects employees during organizational changes. It obliges the employer to provide support to dismissed employees to find new work and facilitate the transition period. The employer's obligation to pay for change security is based on the Employment Contracts Act and its goal of reducing the harmful effects of dismissals.

The purpose of transition security is to make the employee's move to a new job as smooth as possible. The system includes enhanced communication, the creation of employment plans, and concrete support measures, such as paid time off for job searching. From the employer's perspective, transition security helps to handle the dismissal process responsibly and in accordance with the law.

The obligation to manage change applies to all employers who terminate employees for production and economic reasons. The scope of the obligations depends on the size of the employer and the number of employees being terminated. Smaller employers have fewer obligations than larger companies.

How much does change management actually cost an employer?

Change protection costs are determined by the employer's size and the number of employees being laid off. Companies that regularly employ at least 30 employees pay the most, while smaller employers may only have information obligations. The largest costs arise from training, occupational healthcare, and paid leave.

Training costs are incurred when an employer regularly employs at least 30 people and terminates an employee who has been employed for at least five years. In such cases, employment-promoting coaching or training must be offered. If training is not provided, the employee must be paid an amount equivalent to the value of the training.

Occupational healthcare costs arise in the same situations for six months after the employment obligation ends. The transition security payment for employees aged 55 and over is equivalent to about one month's salary, but it is paid by the unemployment fund or Kela – not the employer. The value of transition security training is about two months' salary.

SMEs should investigate their change security obligations in advance for budgeting purposes. Costs can vary significantly depending on the number of layoffs and the length of their employment relationships.

When is an employer obligated to pay transitional security, and what are the exceptions?

A change security fee applies when terminating employees for production and economic reasons. The obligation arises automatically when the grounds for termination are economic or production-related, regardless of the number of employees being terminated. Co-determination negotiations do not eliminate the obligation to pay, but they do affect the course and schedule of the process.

The scope of the employer's obligations depends on the size of the company. Companies with fewer than 30 employees can manage with information obligations and guiding employees to employment services. Larger employers have broader obligations in organizing training and occupational healthcare.

In practice, there are no exceptions to adjustment security when it comes to dismissals for production and economic reasons. Dismissals made for personal reasons are not covered by adjustment security. Neither does the termination of fixed-term employment usually entail an adjustment security obligation.

The extended transition security for those aged 55 and over is a special case where the employee must have been employed by the same employer for at least five years. This applies to all employers, regardless of company size. Expert assistance is often necessary for managing complex transition situations.

Change security is a significant cost factor in redundancy situations, but at the same time, it's an important protection of employees' rights. Understanding your obligations in advance helps you prepare for costs and handle the process appropriately. The ultimate goal of change security is to benefit both the employee and the employer by making the change situation more manageable and less traumatic.

Do you need help with change management?

The costs and obligations of change security can be complex to determine. If your company is facing a termination situation or you want to ensure your change security obligations in advance, we offer expert assistance. Explore our services I contact to receive personalized advice on change management.