Choice of law

The choice of law applying to international contractual obligations under civil and trade law is governed by the Rome I Regulation.

If an employee’s employment contract is only connected to Finland, Finnish employment legislation shall apply under the territorial principle. If an employee’s employment contract has connections to another country besides Finland, it is described as an international employment contract.

Basically, the employer and employee are free to agree amongst themselves which legislation should be applied to their international employment contract. Notwithstanding the above, the employee is always entitled to the terms and conditions of employment provided for in the legislation that would be selected by default under the provisions of choice of law in the Rome I Regulation (593/2008), which governs contractual obligations under civil and trade law. In other words, the result may not be to deprive the employee of the protection afforded by provisions that cannot be derogated from by agreement under the employment legislation that by default would apply on the basis of the Rome I Regulation.

Choice of law on a case-by-case basis

In practice, it is sensible to find out which legislation would apply to the employment contract under the choice-of-law provisions of the Rome I Regulation. Under the choice-of-law provisions, by default the contract shall be governed by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract. If the place where the employee habitually carries out his work cannot be determined, the contract shall be governed by the law of the country where the place of business through which the employee was engaged is situated.

In some exceptional cases, neither the legislation of the country where the employee habitually performs his work nor the legislation of the country where the employee was engaged apply to the employee's employment contract. This may happen where an overall assessment shows that the employee's employment contract is more closely connected to a country other than the country where the employee habitually performs his work or the country where the employee was engaged.

Legislation applicable to posted workers

A posted worker is an employee sent by a foreign company to Finland to perform work on a temporary basis because the employer offers services in Finland.

Regarding posted workers, it must be established which country’s legislation applies to their employment contracts. The Finnish Posted Workers Act must also be complied with. This Act provides for the minimum terms and conditions of employment and working conditions for workers posted to Finland.