Change negotiations and the threat of redundancy – what to do?

Change negotiations are negotiations between the employer and staff that must take place when the employer is planning measures that may lead to the dismissal, lay-off or part-time employment of workers or to a substantial change in the terms and conditions of employment for economic or production reasons.

The obligation to negotiate changes applies to employers who regularly employ 20 or more workers. In calculating the number of employees, indefinite and fixed-term contracts, full-time and part-time contracts are treated in the same way. It is irrelevant how many hours an employee works. Temporary agency workers are not included in the number of employees.

Change negotiations must take place when the employer is considering a reduction in the workforce for economic, production or reorganisation reasons. Reductions in the workforce are defined as redundancies, lay-offs and part-time work. Material changes to the terms and conditions of employment (e.g. a material change to the job duties) are also considered as a reduction in the workforce, i.e. they require a change negotiation.

According to the Co-operation Act, change negotiations must take place at the stage when a reduction is first being considered. In practice, this means the stage at which employees still have the opportunity to influence the plans and decisions to be taken.

Change negotiations must also take place when the employer is considering substantial changes under the authority of the management which may affect the position of one or more employees with regard to their work duties, working methods, organisation of work, organisation of work premises or organisation of regular working hours. In these cases, however, not all the procedural provisions of the law, such as minimum periods of consultation, apply. However, this article focuses on so-called reduction negotiations. Find out more about when negotiations on changes must take place.

The parties to the negotiations are the employer’s representative(s) and, as the staff representative, the shop steward, shop delegate or cooperative representative.

If a majority of employees in a particular group in the company are not entitled to participate in the election of a shop steward, the employees in this majority may elect a cooperative representative from among their number for a maximum period of two years, if the majority of them so decide. 

If there is no employee representative at all, the employer shall consult the employees directly. Even then, if the negotiations concern only an individual employee, the employee shall be consulted directly. In such cases, the employee concerned may request that the negotiations take place with a staff representative.

If the employees do not have an elected representative, it is worth considering the election of a cooperative representative. If elected for a fixed term of two years, such a representative will benefit from enhanced protection against dismissal. A representative elected for one negotiation only will not receive such protection.  

Change negotiations start with a negotiating proposal, or invitation to negotiate, issued by the employer. Unless otherwise agreed in the applicable collective agreement, the negotiating proposal must be submitted at least five calendar days before the start of negotiations.

The invitation to negotiate must indicate at least the time and place of the start of the negotiations and a specific proposal on the main issues to be discussed in the negotiations.  The negotiating proposal must also indicate:   

• the measures envisaged and the reasons for them  
• an initial estimate of the number of employees affected by the measures, broken down by category of employee and by measure 
• an explanation of the principles according to which the workers to be targeted will be determined  
• an estimate of the period over which the measures will be implemented. 

If the employer is not in possession of all the above information at the time the negotiation proposal is submitted, this information may be supplemented at the first negotiation meeting.

The negotiation period is 14 calendar days for redundancies involving fewer than 10 workers or for lay-offs of up to 90 days (regardless of the number of workers affected). The negotiation period is always 14 days even if the employer employs 20 to 30 workers, regardless of the number of workers being considered for redundancy. In other situations, the minimum negotiation period is six weeks.

Some collective agreements may provide for negotiation periods that differ from the law, for example by counting the negotiation period from the start of the proposal for negotiations.

The negotiating period may be agreed differently, i.e. it is possible to agree to shorten the negotiating period. It is generally not advisable for employees to agree to shorter negotiation periods. 

The Co-operation Act (Yhteistyötoimintalaki) does not lay down the number of negotiating sessions. It depends on the nature of the case and the practical need.

Change negotiations must cover the rationale, impacts and options for the planned measures.
 
In practice, the discussion of the reasons means going through the productive or economic reasons why the employer is planning to make staff redundancies. For example, the impact discussion will consider how the planned measures would affect the status and conditions of employment of the employees and how the reductions would be distributed among the different categories of employees. The analysis of alternatives will include an assessment of whether needs can be met by means other than workforce reductions and whether it is possible to redeploy and retrain workers for other tasks. 

In addition, the change negotiations must address options for limiting the scope of the persons affected by the measure and for mitigating the negative consequences of the measure for employees.

The employer should also draw up either an action plan or a policy, depending on the number of employees to be dismissed.

If the redundancies involve at least ten workers, the employer must submit a draft action plan at the start of the negotiations. The action plan must indicate:

1) the planned timetable for the negotiations;

2) the procedures to be followed in the negotiations;

3) the planned principles for promoting access to public employment services, job search and training during and after the notice period.

If the employer is considering making fewer than ten workers redundant, the employer must set out at the start of the change negotiations a policy to support the workers’ voluntary search for other employment or training and participation in employment services provided by the employment services during the period of redundancy.

The purpose of the Co-operation Act is to give employees a real say. For this reason, it is laid down that change negotiations must take place while employees still have a genuine opportunity to influence decisions.

One way of doing so is for the employee representative or the employee to have the right to submit a written proposal or alternative solution and request that it be discussed in the change negotiations. Such a proposal or alternative solution must be made well in advance of the meeting. It is the employer’s responsibility to go through the proposal. If the employer does not consider the proposal or alternative solution to be appropriate or feasible, the employer must justify its position in writing.

Otherwise, employees involved in the negotiations should be active in the situation, for example by expressing their views and asking the employer for clarification.

Minutes are not compulsory, but they should be taken whenever a staff representative or employee requests them. It is therefore always advisable for employees to ask for minutes to be kept. 

The purpose of the minutes is to describe the negotiations as accurately as possible. At the very least, it should record the date of the meeting, the persons involved, the outcome of the meeting and any dissenting opinions. The minutes should only be signed when they reflect the negotiations that took place.

The Co-operation Act requires that change negotiations must take place in a spirit of co-operation to reach a consensus. The parties must act constructively and seek to contribute to the progress of the negotiations. However, this effort to achieve consensus does not mean that, at the end of the negotiations, the parties must agree, for example, on the need for a reduction.

The employer can take decisions after the obligation to bargain has been fulfilled, i.e. after a sufficient period of bargaining has taken place and the issues required by law have been addressed.