Employment matters

What are employment matters?

Employment matters form an entity of legal provisions and contractual arrangements on the terms of employment and of procedures and practices based on these. The central provisions governing employment relationships are contained in the Employment Contracts Act, the Working Hours Act and the Annual Holidays Act. The most important contracts are the employment contract and the collective agreement. Generally binding collective agreements have the most far-reaching effects. They determine the minimum terms of employment in employment relationships in the given sector.

The purpose of monitoring employment matters

The guiding principle of employment laws is to guarantee minimum benefits for the weaker party to an employment relationship – the employee. The purpose of monitoring employment matters is to safeguard the minimum level of terms and conditions for working as well as equal treatment and employment protection for employees. The aim of monitoring is also to prevent enterprises from gaining competitive advantage from violation of the minimum terms and to support especially small enterprises in their OSH activities and thus help them to manage employment matters. The enforcement of employment laws is an obligation of the OSH Inspectorates.

Management of employment matters lays the foundation for efficient work performance. The basic elements of an employment relationship are mutual trust and responsibility. Responsibility in an employment relationship means commitment to act as agreed and instructed. Trust in the contracting partner arises from fulfilling the promises and contract terms. Managing employment matters in the workplace calls for careful formulation of the contract terms and orientation in them, definition of the competences and the domains of responsibility, as well as instruction on independent action, professional work attitudes and cooperation. Fruitful cooperation is sustained by leadership which supports employees’ own solutions and where the superior leads by asking questions, listening and giving responsibility and recognition.

Neglecting the terms of employment causes distrust which weakens the level of motivation and performance and may lead to conflicts, irresponsible behaviour and inferior results of work. If the employer does not recognise employees’ rights, their commitment, the quality of work and efficiency will decline. If employees neglect their obligations, the employer will lose confidence and the continuation of the employment relationship is endangered.

The two monitors of generally binding collective agreements

In Finland we have two parallel systems for ensuring compliance with collective agreements. Their legal consequences differ from each other.

Systems for ensuring compliance with collective agreements
• a system with rights and obligations for parties to an employment relationship bound by a collective agreement, that is a system based on the Collective Agreements Act (1946/436) and
• a system of generally binding collective agreements with obligations for non-organised employers, that is a system based on Chapter 2, section 7 of the Employment Contracts Act (2001/55).

Compliance with generally binding collective agreements is monitored by those employer organisations and employee unions which are parties to an agreement and, on the other hand, also by occupational safety and health authorities. Both have their own spheres of monitoring. Their competences are divided in the following way:

Monitoring collective agreements
• The employer organisations and employee unions monitor compliance with all collective agreements they have concluded within the normal scope of a collective agreement as referred to in the Collective Agreements Act. In this case, the employer, as a member of the employer organisation which has concluded an agreement, is bound by that collective agreement.
• Occupational safety and health authorities monitor only compliance with generally binding collective agreements and only in respect of those employment relationships where the employer’s duty to follow a collective agreement is based solely on Chapter 2 section 7 of the Employment Contracts Act, not the Collective Agreements Act. In this case, the employer is non-organised and not bound by the collective agreement.

Employer organisations and employee unions as monitors

While employer organisations and employee unions, as parties bound to a collective agreement, monitor compliance with that agreement, they can solve disagreements in negotiations at the local or national level. Most ordinary disputes concerning the interpretation and application of collective agreements are solved through negotiations. As a last resort, disagreement over violation, application or interpretation of a collective agreement may be brought to court by the organisation or union involved. The violating party may be sentenced to a compensatory fine in accordance with the Collective Agreements Act.

Occupational safety and health authorities as monitors

The powers of employer organisations and employee unions to monitor compliance with collective agreements do not extend to non-organised employers. Thus the Collective Agreements Act is not applied to non-organised employers, nor can the concluding employer parties of a collective agreement impose any obligations on them on the basis of that agreement. This means that in case of disagreements there are no local negotiations and the dispute cannot be submitted for decision to the national employer and employee organisations or brought to the Labour Court. Therefore the monitoring procedure of the occupational safety and health authorities essentially differs from the monitoring carried out by employer and employee organisations. It consists mainly of giving advice and guidance for the parties to an employment relationship on the wage terms and other minimum conditions laid down by the generally binding collective agreement. If a non-organised employer does not follow a generally binding collective agreement or authorities’ advice, the employer may ultimately be sued for the benefits and wage claims based on the agreement in a general court. The action is carried on by the employee, not the OSH authority.

Representation of interests differs from monitoring carried out by authorities

The employer and employee organisations in an industrial sector monitor their members’ rights and benefits in employment relationships. For example, the trade union of organised employees takes care for the employees’ interests in so far as these concern wage terms and other conditions and rights laid down in the collective agreement. The OSH authorities monitor compliance with the occupational safety and health provisions that govern the terms of employment but they do not represent the interests of the parties to an employment relationship.

Representation of interests covers, for example,
• clarification of the members’ rights and obligations based on collective agreements, employment contracts and employment laws (e.g. calculation of overdue payments)
• local and union-level negotiations in order to solve disagreements over employment matters
• carrying on action for wage claims and compensations in general courts and declaratory actions for application or interpretation of collective agreements in court.

Authority supervision covers, for example,
• giving the parties to an employment relationship guidance and advice on the grounds for rights and obligations in an employment relationship (e.g. which provisions form the basis of wages and how they should be calculated)
• instructions for the parties on how they should act to correct violation
• requests for investigation and notices of prosecution in labour offences
• advice and training to prevent problems in advance.