The content of this article is based on articles published on our website entitled Finnish Commerce Federation’s guidelines in relation to the coronavirus and Laying off employees.
See other articles on this topic:
Detailed contents of the emergency provisions in the Collective Agreement for the Commercial Sector and employment legislation
Changes to the Collective Agreement for Opticians
Changes to the Collective Agreement for Commercial Transport Workers
Guidelines on co-operation procedures during the coronavirus pandemic
Accrual of annual holiday
If an employee is unable to work due to an order by the Finnish authorities with the aim of preventing a disease from spreading (Annual Holidays Act, section 7, paragraph 2, point 4), the absence is considered equivalent to time at work. Quarantine is an example of such an order. The employee shall accrue annual holiday for the entire period during which they are unable to work.
Employees accrue annual holiday as normal when they are caring for a sick child.
Annual holiday accrues for absences for compelling family reasons (Employment Contracts Act, chapter 4, section 7).
In the circumstances referred to above, it is advisable to determine beforehand whether the case concerns this type of absence or a different form of agreed leave.
Accrual of annual holiday and additional days off in the event of a lay-off
- If an employee is laid-off full-time, the first 30 working days are considered comparable with time at work when annual holidays are calculated. The calculation of the period of 30 working days begins afresh if the lay-off is interrupted and continues after the interruption. If an employee was covered by the 35-hour earnings rule for accruing annual holiday before the lay-off, the first 42 calendar days are considered comparable with time at work when annual holidays are calculated.
- If an employee is laid-off to the effect that the working time is reduced, the days of lay-off accrued over the first six months are considered comparable with time at work when annual holidays are calculated. If such a working time arrangement continues uninterrupted after the end of the holiday accrual year (on 31 March), a new six-month period will begin to elapse after the end of the holiday accrual year (on 1 April).
Additional leave days as referred to in section 7 a of the Annual Holidays Act do not accrue during lay-offs.
Granting and taking annual holiday
During the coronavirus epidemic, annual holiday is granted in the normal way in accordance with the Annual Holidays Act. In practice, it may be advisable to consider allocating holidays in a period when the amount of work is reduced.
Granting and taking annual holidays during lay-offs
The employee may take annual holiday during the lay-off. In principle, when annual holiday is granted, the same holiday seasons are observed as usual.
According to the Annual Holidays Act, an employee’s summer holiday (24 days) must be granted during the summer holiday season, which runs from 2 May to 30 September. This rule of thumb applies irrespective of any lay-offs. Lay-offs do not prevent annual holidays from being allocated to the summer holiday season; on the contrary, the employer is obliged to grant summer holidays during the summer holiday season.
The summer holiday can be placed outside the summer holiday season if this is agreed with the employee. If such an agreement is made, the summer holiday must be granted before the 2021 summer holiday season begins on 2 May 2021.
It is advisable to state on the notice of lay-off that annual holiday does not cause the lay-off to end; instead, the lay-off will continue automatically in accordance with the original notice of lay-off, without a new notice of lay-off being issued.
Announcing annual holidays, hearing employees’ views and timing of annual holiday
Despite the extraordinary circumstances and any ongoing lay-offs, the employer must comply with the provisions of the Annual Holidays Act when granting annual holidays. Before specifying the timing of the holiday, the employer must provide the employee with the opportunity to express their views on the timing. Once this has been done, the employer may decide on the timing of the annual holiday. Employees must be treated fairly when annual holiday is granted. If the workplace has used a rotating system for granting holidays, this may also be observed during lay-offs. Above all, employers are advised to allocate annual holidays for some employees at the beginning of the summer holiday season. Otherwise, a situation may arise where the employer has a greater need for workers towards the end of the summer, but all of the employees still need to take summer holidays. Even in this situation, the employer is not entitled to require annual holidays to be taken outside the summer holiday season, as the employer should have taken this into consideration when planning the holidays.
The employer must notify the employees of the timing of their annual holidays at least one month before the holiday begins. If this is not possible, the timing of a holiday can be announced no less than two weeks before the holiday begins. The extraordinary circumstances brought on by the coronavirus may entitle the employer to observe the two-week notification period, but employers should approach this with caution. If necessary, the employer must be able to provide justification for why the one-month notification period would be unreasonably difficult for the company to observe.
The timings of any annual holidays that have already been decided or agreed are binding on the employer. Lay-offs and the coronavirus situation shall not entitle the employer to postpone annual holidays that have already been agreed with employees. Annual holidays that have already been agreed can be postponed with the employee’s consent.
Example 1: An agreement was made with an employee (or an employee was notified) concerning annual holiday on 3 March. The timing of the annual holiday is 20 April to 26 April. Notice of lay-offs was issued on 23 March, and the lay-off is due to last from 30 March to 3 May. In this situation, it is advisable to agree on a new time for the annual holiday. Unless otherwise agreed, the annual holiday will be held as normal, but the employee must be informed that the lay-off will continue after the annual holiday. It is advisable to include a statement on the notice of lay-offs concerning any annual holiday that is already known when the notice is issued, as well as the potential for the lay-off to continue after the annual holiday.
Dividing up summer holiday
The summer holiday (24 working days) should, in principle, be granted as a single period. An amount of summer holiday in excess of 12 working days can be divided up and taken in one or more additional periods only if this is essential in order to keep work going. The threshold for classifying a reason as essential has been set very high, and the extraordinary circumstances brought on by the coronavirus do not entitle employers to divide summer holidays into shorter periods. The fulfilment of the definition of ‘essential’ must be evaluated for each case individually. There are no rules on how the amount of holiday in excess of 12 working days should be divided. However, each period of holiday divided up in this way must also fulfil the criteria of ‘essential’.
At the employee’s request, an agreement can be made to divide the amount of summer holiday in excess of 12 working days into smaller parts.
Annual holiday pay
Lay-offs do not affect the method for calculating the annual holiday pay. If an employee has a full-time monthly salary, the annual holiday pay is calculated according to the full-time monthly salary prior to the holiday, irrespective of any lay-offs. The rule for calculating the annual holiday pay remains the same even if an employee’s working hours and remuneration have changed due to a part-time lay-off such that the employee had an hourly wage before the end of the leave-earning year or before any holiday was taken. In these circumstances, the employee is entitled to receive annual holiday pay calculated on the basis of the full-time monthly salary. Salary increases or changes in seniority grades that occur during the lay-off must also be taken into consideration.
Example 2: An employee works full-time on a monthly salary. The employee is laid off by reducing the number of working hours to 20 hours per week as of 15 March. The employee is due to take a summer holiday in July 2020. The employee’s annual holiday pay is calculated according to the full-time monthly salary that the employee would have been paid if they were not laid off.
If an employee worked part-time and/or received an hourly wage before a (part-time) lay-off, the annual holiday pay shall be calculated on a percentage basis.
If an employee is laid off entirely, an amount of calculated pay for a period of either 30 working days (when earning annual holiday according to the 14-day earning rule) or 42 calendar days (when earning annual holiday according to the 35-hour earning rule) shall be calculated for the annual holiday pay. If an employee has been laid off by reducing the working hours, no calculated pay for the period of lay-off shall be added to the annual holiday pay.
Example 3: An employee works part-time for 20 hours per week. The employee is laid off full-time as of 20 March. The employee takes a summer holiday in August. The employee’s annual holiday pay is calculated on a percentage basis, and the change in the working hours does not affect the calculation of the annual holiday pay. A sum of calculated pay equivalent to up to 42 calendar days is also added to the pay calculated on a percentage basis as the employee is covered by the 35-hour earning rule.
Example 4: An employee works part-time for 30 hours per week. The employee is laid off as of 20 March by reducing the number of working hours, and the employee’s new working time is 12 hours per week during the lay-off. The employee is due to take a summer holiday in July. The employee’s annual holiday pay is calculated on a percentage basis. The changes in working time do not affect the calculation of the annual holiday pay. As the employee was laid off by reducing the number of working hours, no calculated pay is counted for the part-time lay-off.
Lay-offs do not affect the method of calculating the annual holiday pay for the 2020–2021 leave-earning year. As a rule of thumb, if an employee has a monthly salary at the end of a holiday accrual year but the employee’s remuneration and working time changed during the holiday accrual year, the annual holiday pay shall be calculated on a percentage basis. However, for the duration of a lay-off, the interpretation is that if the lay-off is implemented by reducing the number of working hours, this change shall not affect the method of calculating the annual holiday pay. When a lay-off is implemented by reducing the number of working hours, the provisions of the Annual Holidays Act concerning the calculation of annual holiday pay in the event of changes do not, therefore, apply.
Example 5: A full-time salaried employee is laid off for the period from 15 March to 15 June 2020 by reducing the number of working hours. The employee’s new working time during the lay-off is 10 hours per week, and the employee receives an hourly wage. After the lay-off, the employee returns to full-time salaried employment on 16 June 2020. In 2021, the employee takes a summer holiday in July. The summer holiday pay in 2021 is paid according to the monthly salary. Although the employee was salaried at the end of the leave-earning year (31 March 2021) and the employee’s remuneration and working hours changed during the leave-earning year, the change does not affect the method for calculating the annual holiday pay.
Impact of annual holiday on the uninterrupted nature of a lay-off
If an annual holiday is taken during a lay-off period, the lay-off is considered to have been interrupted. For example, the duration of the annual holiday is not counted towards the 90-calendar-day period or otherwise as part of the lay-off period. If the notice of lay-off indicates that the lay-off is scheduled to continue after the annual holiday, the employer is advised to notify the employee when granting the annual holiday that the lay-off will continue automatically after the annual holiday. This is to avoid potential ambiguities and disputes. If the notice of lay-offs states that the lay-off is due to end on a specific date and the employer wishes to extend the lay-off period, a new notice of lay-off must be issued to the employee.
If annual holiday is taken during a lay-off period, it is not considered to interrupt the 200-calendar-day uninterrupted period. When calculating whether a continuous period of 200 calendar days has been fulfilled, the days of annual holiday are included in the 200-calendar-day period.
The commercial sector is not included in the critical functions specified by the Government, so employers cannot make temporary deviations from the arrangements for annual holidays and working hours on these grounds.
For further information on matters related to annual holidays, please see the Finnish Commerce Federation’s guide on annual holidays here (login required). The Finnish Commerce Federation’s employment advisers welcome enquiries from member companies by phone on +358 9 1728 5151 and by email at tyosuhdeasiat(at)kauppa.fi.