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This information package concerns a situation where an employee decides to terminate an indefinitely valid employment contract, i.e. a permanent employment contract. When resigning, the employee should take into account at least matters related to the notice period, taking holidays, work obligation, payoff, suspension period and certificate of employment, as well as any matters regarding unpaid salaries and a non-competition agreement, for which more information is provided below.
Period of notice
An employee may terminate an indefinitely valid employment contract without grounds, but the employee must nevertheless observe the notice period. The obligation in the Employment Contracts Act to terminate an employment contract on the grounds of dismissal therefore applies only to the employer.
Unless otherwise agreed in the employment contract or collective agreement, the general notice periods set forth in the Employment Contracts Act shall apply.
The general periods of notice after the employment relationship has continued without interruption are:
14 days if the employment relationship has lasted no more than five years
one month if the employment relationship has lasted more than five years
An employee cannot unilaterally decide to take their leave during the notice period. However, by mutual agreement, the employee and employer may agree on the employee taking holidays during the notice period for both the completed and current holiday determination year (1 April–31 March).
The employer may, after hearing the employee and in accordance with the notification procedure of the Annual Holidays Act, order the employee to take the annual holidays of the already completed holiday determination year during the notice period in accordance with the holiday periods.
If an employee fails to take leave days, they are entitled to holiday compensation for these untaken holidays.
Can an employee resign while on leave?
An employee may resign while on leave. The notice period also continues during the holiday, i.e. the holiday and the notice period “run” at the same time.
Work obligation during the notice period
The employer may release the employee from the obligation to work during the notice period, but the employer is still obliged to pay the employee wages for the period of notice.
It is advisable to agree on the termination of the work obligation in writing. Despite the removal of the work obligation, the other rights and obligations of the employment relationship still apply. Annual holiday benefits are also accrued during the notice period, even if the employee has no work obligation during the notice period.
When is the last salary paid?
According to the Employment Contracts Act, the last salary, i.e. the so-called payoff, must be paid on the last day of the employment relationship, because when the employment relationship ends, the pay period also ends.
However, it is often agreed in the employment contract or collective agreement that the payoff will be paid to the employee on the employee’s next normal pay date. If the employee’s final salary is late, the employee has the right to demand that the pay for the waiting period be paid for the waiting days, but for no more than six calendar days.
Agreement on non-competition and the period of notice
During the employment relationship, there is a prohibition on competing activities, according to which an employee may not, without the permission of their employer, perform work for another person or otherwise engage in activities that would obviously harm the employer if contrary to good practice. The prohibition of competing activities also applies during the notice period.
A non-competition agreement may restrict an employee’s right to conclude an employment contract after the termination of the employment relationship with an employer engaged in activity which competes with that of the employee’s former employer.
A non-competition agreement may also restrict an employee’s right to engage in competing activities on their own account at the end of the employment relationship. A non-compete obligation can be agreed for a maximum of one year.
A non-competition agreement can be concluded at the beginning of or during the employment relationship, but not after the employment relationship has ended. A non-competition agreement cannot be required to be concluded, for example, during the notice period.
Suspension period, i.e. time without compensation: A suspension period, or karenssi in Finnish, is a concept of everyday language that means periods determined in the Unemployment Security Act for which no allowance is paid.
Sometimes the suspension period also refers to a waiting period, or a personal liability period. However, the waiting period is different from the uncompensated period.
When an employee terminates a permanent employment contract, the period without compensation is usually 45 days.
According to the Employment Contracts Act, employees have the right to receive, upon request, a written certificate from the employer concerning the duration of the employment relationship and the nature of the employee’s duties (a short certificate of employment). Often, when an employee resigns, the employee asks for a certificate of employment in the notice of termination.
At the express request of the employee, the employer must also add the grounds for the termination of the employment relationship and an assessment of the employee’s working skills and behaviour (a comprehensive certificate of employment). The certificate of employment must not contain anything other than what is stated in its wording.
