When are change negotiations mandatory?

Co-determination negotiations are mandatory when a company regularly employs at least 50 employees and significant changes are planned. Until June 2025, the threshold is 20 employees, but from July 1, 2025, the application threshold of the law will rise to 50 employees. The obligation for co-determination negotiations specifically concerns dismissals, layoffs, and significant organizational changes.

What are change negotiations and when do they become relevant?

Co-determination negotiations are negotiations between the employer and personnel, in accordance with the Co-determination Act, when significant changes are planned in the company. They are part of cooperation procedure, in which employees are given the opportunity to influence and present their views before final decisions are made.

Change negotiations become relevant in several situations. In the context of dismissals, they are mandatory when the dismissal of at least 20 employees is planned, regardless of the company size. For furloughs, negotiations are required when the furlough concerns a significant portion of the staff or lasts longer than 90 days.

Organizational changes trigger a duty to negotiate when the changes materially affect the employees' status. Business transfers, mergers, or divisions also require change negotiations in companies employing at least 50 workers.

When is a company obligated to arrange change negotiations?

A company is obligated to arrange change negotiations when it regularly employs at least 50 employees and significant changes are planned. This Application threshold from 1.7.2025 from the previous 20 employees.

In calculating the number of personnel, all employees in an employment relationship are taken into account, regardless of the duration of the employment or the length of the working hours. Fixed-term employment relationships are included if they are regular.

Special cases will remain the same even after the reform. Change negotiations are mandatory when planning to lay off at least 20 employees, regardless of the company's size. The same applies to business transfers, mergers, and demergers.

In companies employing 20–49 employees, the practice of continuous dialogue will be maintained, but the procedures will be significantly lighter than currently. Companies with fewer than 20 employees are not covered by the Co-operation Act at all.

What happens if change negotiations are not conducted in accordance with the law?

The failure to comply with the duty to negotiate changes can lead to serious legal and financial consequences. The employee has the right procedural error compensation, which can be 3-24 months' salary depending on the severity of the error and the employee's position.

Dismissals can be void if co-determination negotiations have not been conducted properly. This means that the employee can claim to return to work and be paid unpaid wages. The employer will also have to pay court costs.

The occupational safety and health authority can impose administrative sanctions for non-compliance. In serious cases, the matter may lead to criminal liability if it involves intentional or grossly negligent conduct.

The company's reputation suffers if change negotiations are handled poorly. Employee trust in management weakens, making future changes harder to implement. Recruitment becomes more difficult as word of a poor employer image spreads.

How is the change negotiation process implemented in practice?

The change negotiation process begins invitation to negotiate, which must be delivered to personnel and employee representatives at least five days before the start of negotiations. The invitation must state the subject, schedule, and participants of the negotiations.

The negotiation period is determined by the scope of the planned change. In case of dismissals, the minimum negotiation period is six weeks when the number of dismissed employees exceeds ten percent of the staff. For smaller changes, the negotiation period may be shorter.

Participants include employer representatives, shop stewards, and, if necessary, the occupational health and safety manager. Minutes will be taken of the negotiations, recording the matters discussed and any disagreements.

The employer must investigate the reasons, alternatives, and impacts of the change on the personnel. Personnel are given the opportunity to present their own views and alternatives. During the process, efforts should be made to find solutions that reduce the negative impacts of the changes.

Properly handling the change negotiation process requires deep knowledge of the Finnish Co-operation Act and practical experience. With us, you get Expert support for planning and implementing change negotiations, so that the process proceeds in accordance with the law and the rights of the staff are taken into account. Contact us so in the change planning phase, so we can ensure that the process proceeds smoothly from start to finish.