Characteristics of an employment relationship
Characteristics of an employment relationship - Ingressi
In some cases, work can be performed without there being an employment relation-ship between the employer and the employee. Work can be performed in the role of an entrepreneur or family member or as part of a hobby. However, parties cannot freely agree on whether they are in an employment relationship or not, and the mat-ter is laid down in law. If the characteristics of an employment relationship are met, it is an employment relationship.
It is important for both the party commissioning the work and the person performing the work to know whether the arrangement is an employment relationship, as this affects the rights and obligations of both parties.
Characteristics of an employment relationship - Yleistä
The scope of application of the Employment Contracts Act is compelling legislation, i.e. it is not something the parties themselves have a choice on. If the characteristics of an employment relationship are met, it is an employment relationship. In this case, labour legislation as a whole will apply. This has a significant impact on the obligations of the party commissioning the work, i.e. the employer in the case of an employment relationship, but also on the employee's rights.
Labour legislation has been put in place to protect the weaker negotiating party, i.e. the employee is protected with such points as a period of notice, the obligation to pay sick pay, minimum earnings based on a collective agreement, working time protection and various occupational safety regulations. In addition, occupational health care and occupational disease and accident insurance are integral parts of an employment relationship.
If the work is carried out as part of a hobby, as a family member or as an entrepreneur, the person performing the work is outside of scope of the protection provided by law.
The most important provision in the assessment of an employment relationship is Chapter 1, section 1 of the Employment Contracts Act, which defines the characteristics of an employment relationship. According to the Act, an employment relationship is in question when work is performed on the basis of an agreement (employment contract) entered into by an employee, or jointly by employees as a work community, agreeing to personally perform work for an employer under the employer's direction and supervision in return for pay or some other remuneration.
Characteristics of an employment relationship include:
- an agreement
- personal duty to work
- work is performed on behalf of another person
- compensation for work, i.e. typically pay
- direction and supervision of work.
All characteristics must be met in order for an arrangement to be considered an employment relationship. In situations open to interpretation, the existence of an employment relationship is assessed through overall discretion. This takes into account the terms of the work, the conditions in which the work is performed, the interpretation of the parties on the nature of the legal relationship (employment/self-employed/other) and other factors affecting the actual status of the parties.
In particular, it may be difficult for persons who do not speak Finnish, Swedish or English fluently to perceive their own position in working life. The occupational safety and health authority has issued instructions for them in several languages, which are available on the web page Are you self-employed or an employee?.
Below is a more detailed description of each characteristic of an employment relationship.
Characteristics of an employment relationship - Plussat
Characteristics of an employment relationship - Although the employment relationship
Although the employment relationship has a precise set of criteria laid down in law, after examining individual characteristics, it may be necessary to assess all the facts that have emerged in the matter as a whole. This is because individual characteristics can be fulfilled regardless of whether the work is carried out in an employment relationship or as an entrepreneur.
Characteristics of an employment relationship - Overall assessment
Characteristics of an employment relationship - Is working in an employment relationship more limited
Is working in an employment relationship more limited than self-employment?
Self-employment is a good way to start a business, but it is worth noting which employee's rights you miss out on in this case.
Many believe that working in an employment relationship is always automatically more limited than working as an entrepreneur. However, please note that the labour laws already provide extensive possibilities for agreement, when people know how to use them.
A non-compete clause related to an employment relationship, questions concerning the placement of working hours or remuneration for work can for the most part be agreed on between the employer and the employee. Even the period of notice can be agreed on extensively. However, the sector’s collective agreements may restrict agreements in more detail than the law.
Work performed as a family member
Work performed by a family member is not always assessed directly through the characteristics of an employment relationship. Instead, the work may be based on the basis of a person’s status as a family member. As a rule, this is non-gainful employment that falls outside the scope of application of the Employment Contracts Act. This refers at least to work between spouses, but on the basis of familial relationship may also include work between children and parents living in the same household. As a rule, work carried out for family members does not go beyond this. It may also be relevant whether the employer is a company or a person. It is generally thought that only a natural person can have family members. However, a family member may always enter into an employment relationship with the employer.
However, as regards the application of the Working Hours Act, there is more leeway when a family member is in question and the employer's company form is not given the same weight.