Contents of a contract of employment
A contract of employment is made in two identical copies, one for the employee and the other for the employer. At least the following matters are generally recorded in the contract of employment:
The parties to the contract of employment
Both the employer and employee sign the contract of employment.
The date of commencement of work
Whether the contract is valid for the present or fixed-term
A contract of employment that is valid for the present is the principal rule. It means that work will continue until the employee resigns or the employer dismisses the employee. An employer must have a justified reason for dismissing an employee. Acceptable reasons for dismissal are specified in the Employment Contracts Act. If a contract of employment is valid for the present it means that the employee has a steady or permanent job.
A fixed-term work contract means that the time of commencement and ending of work have been agreed upon. A contract of employment can be made for a fixed-term if there are justifiable grounds for it. Acts and collective agreements determine exactly when fixed-term contracts of employment can be used.
A contract of employment may be fixed-term, for example, for the following reasons:
- work experience placement
- project work
- peak demand or period
If a contract of employment is fixed-term, it is binding on both parties for the agreed term unless the possibility of dismissal has been agreed upon. A fixed-term contract can be dissolved only for very weighty reasons.
Probationary period and its duration
A probationary period can be agreed upon at the beginning of the contract of employment. The probationary period cannot exceed six months. In fixed-term employment, the probationary period cannot exceed half of the employment contract duration. During this period, the employee can assess whether the work is suitable for them, and the employer can assess whether the employee is suitable for the task. During the probationary period, the employee and the employer can dissolve the contract of employment without a period of notice. The grounds for dissolving the contract of employment during the probationary period must not be discriminating. During the probationary period, the employee is paid normal remuneration.
Place of work
Remuneration and its method of payment
Remuneration is determined according to the collective agreement. If there is no collective agreement in the sector of work, employees are entitled to reasonable remuneration. An employer must not pay remuneration that is less than stipulated in the collective agreement. Remuneration can contain various bonuses. Typical bonuses to remuneration in Finland include experience bonus, overtime pay and extra compensation for shift work.
Payday is usually once or twice a month. Employers pay remuneration to the employee’s bank account. Employees are entitled to receive a payslip that shows the different parts which form the remuneration.
When remuneration is discussed in Finland, what is usually meant is gross salary (bruttopalkka) from which tax, employee and employer’s contributions are deducted. The amount that remains for the employee is net salary (nettopalkka).
The contract must specify regular working hours. Working hours must comply with the Working Hours Act and the collective agreement.
Annual holidays and holiday pay
An employee is entitled to the same remuneration for the holiday period as when working. In addition, an employee is paid holiday pay. The payment of holiday pay is based on the collective agreement. When the contract of employment expires the employee is entitled to holiday compensation for those days for which they have not received holiday or holiday compensation by the end of the contract of employment.
Period of notice
A contract of employment that is valid for the present expires after either the employee’s or employer’s period of notice. The period of notice signifies the time for the duration of which an employee is obliged to work before the work ends. During the period of notice, all the normal employees’ rights and obligations apply to the employee and they receive normal remuneration. If an employer dismisses an employee, they must provide the reason for it. The Employment Contracts Act specifies acceptable reasons for dismissal.
Mention of the collective agreement that the contract of employment observes