Greater Agility in the Co-operation Act – Lighter Dialogue Obligations and Change Negotiations Cut in Half

Kaisa Salo
May 9, 2025
5 min read

The Act on Co-operation within Undertakings will change from 1 July 2025. As a result of the amendments, the co-operation obligations of employer organisations with 20–49 employees will be restricted quite significantly compared with the current situation. The obligations of larger employers with at least 50 employees will also be eased, as the minimum negotiation periods will be reduced by half.

What does the change to the Act’s general scope of application mean?

From 1 July 2025, the Act on Co-operation within Undertakings will apply in full to companies, organisations and branches that regularly employ at least 50 employees. By contrast, the obligations of employers with 20–49 employees to conduct change negotiations and engage in dialogue will be considerably more limited. The provisions concerning employee representation and sanctions will continue to apply to all employers with at least 20 employees. The Act will continue not to apply in any respect to employer organisations with fewer than 20 employees.

What will change for employers with at least 50 employees?

A significant change is that the statutory minimum negotiation periods will be reduced by half. Accordingly, if an employer is planning workforce reduction measures affecting fewer than 10 employees or material changes to employment terms on financial and production-related grounds, the minimum negotiation period will be seven days from the beginning of July. If, for example, an employer is planning to lay off at least 10 employees indefinitely, the negotiation period will in future be three weeks. The shorter seven-day negotiation period will apply to temporary lay-offs lasting no more than 90 days. It will also remain possible for collective agreements to provide for negotiation periods that differ from those laid down by law.

It should be noted that the minimum requirements for change negotiations will not otherwise change. Employers must continue to address the grounds for the proposed measures, the intended plans, their effects, alternatives and measures supporting employment in the same way as under the current legislation. Although the shorter negotiation obligation may seem like a relief, careful advance planning will become even more important to ensure that all statutory requirements can be met within half the previous time. If an employer intends to conduct negotiations on an organisational change that would materially alter the employment terms of eight employees in different personnel groups, each with its own representative, the employer may be facing a very busy week if it wishes to complete the negotiations within the statutory minimum period.

What will change for employers with 20–49 employees?

A significant easing is that smaller employers will no longer automatically be required to initiate a change negotiation process in order to implement planned organisational changes or workforce reduction measures. First, temporary lay-offs lasting no more than 90 days will be completely excluded from the scope of change negotiations for smaller employers. The obligation to conduct change negotiations will nevertheless continue to apply where planned workforce reduction measures or material changes to employment terms on financial and production-related grounds affect at least 20 employees within a period of 90 calendar days.

The 90-day period referred to above may cause difficulties in some situations. For example, if indefinite lay-offs are initially considered for 16 employees, change negotiations do not need to be conducted before the measures are implemented. However, if the assessment later proves incorrect and a further five employees must be laid off within 90 days, the employer must initiate change negotiations concerning the new lay-off needs because the total number of affected employees exceeds 20. Companies with fewer than 50 employees will always apply the seven-day negotiation period.

Employers with 20–49 employees will also no longer be required to conduct change negotiations concerning so-called minor changes to the organisation or arrangement of work that fall within the employer’s managerial prerogative. However, the information and consultation obligations relating to transfers of undertakings, mergers and demergers must continue to be complied with in the same way as under the current legislation.

The obligation to engage in dialogue with personnel will remain. However, workplaces with 20–49 employees will in future have greater freedom to design their own workplace-specific dialogue practices, including the matters to be discussed and the timing of the dialogue. This is an excellent opportunity to build co-operation practices tailored to the needs of each workplace community. Despite this flexibility, the dialogue must still cover at least those matters required under other legislation, such as the principles governing the collection of personal data. Employers should seek to agree on the dialogue practices with personnel, but the employer will ultimately decide how the process is arranged. The practices must be documented and communicated to personnel, for example on the workplace intranet.

What does the new period reserved for assessing employment services mean?

The new provision may affect the timing of employment termination measures following change negotiations and should be taken into account carefully, as a breach may also result in an obligation for the employer to pay compensation.

If the employer has issued a negotiation proposal indicating that at least 10 employees may be dismissed, the employment of a dismissed employee may not end before 30 days have passed since the negotiation proposal was submitted to the employment authority. The purpose of the provision is to ensure that the employment authority has sufficient time to identify, together with the employer, employment services that support re-employment before the employment contract ends. The notice period and the 30-day period may run concurrently, and the period will be calculated in calendar days from the submission of the negotiation proposal. In practice, a short negotiation period combined with a short notice period could result in the employment relationship ending before the 30-day period has elapsed. This must therefore be taken into account when scheduling termination measures. For smaller employers, the obligation will arise only in relatively limited circumstances, as they will generally be required to issue a negotiation proposal only where workforce reduction measures affect at least 20 employees.

Conclusion

Despite the increased flexibility, the legislative amendments will introduce a considerable number of new issues and questions of interpretation that employers must take into account. Timely and careful planning of the processes will become even more important, even though the negotiation periods will be significantly shorter. The new thresholds will require particular vigilance from employers with 20–49 employees when assessing the effects of planned measures on personnel.

Please contact us if you are planning personnel changes and the amendments to the Act on Co-operation within Undertakings are making your head spin. We are happy to help.