Laying off in General

Laying off employees is regulated by the Employment Contracts Act. Therefore, work and salary payment may temporarily be suspended by way laying off employees, while the employment relationship otherwise remains in force. The availability of work at a company may temporarily diminished whereupon it is not appropriate to dismiss employees.

Lay-off may be done for a fixed period or until further notice, and be on a part-time or full-time basis. If an employee is laid off on a full-time basis, work and payment of salary is completely suspended whereas, if an employee is laid off on a part-time basis, work and payment of salary are only partly suspended. Lay off on a part-time basis may be arranged so that the employees work for instance every other week.

Laying off is based on the employer’s decision or an agreement concluded on the employer’s initiative. The justification for a unilateral lay off is a general work-related dismissal ground specified in the Employment Contracts Act or a temporary decrease of work. In respect of lay-offs based on a contract, the employer and employee agree on the grounds for the lay off and the course of action, but the lay- off must be necessary in consideration of the employer’s activities or financial position.

A termination or cancellation ground relating to the employee’s person is not a valid laying off reason. Therefore it is not possible to use lay-off as a punishment. It is possible, however, to interrupt temporarily employee’s working and salary paying by an agreement as an alternative to termination or cancellation.

When above mentioned agreement is based on employee’s initiative, it is not laying off but an employee free of a kind. Employee free can be based on a sabbatical the employee has requested, for example.

There is no lay-off order in the Employment Contract Act, but an employer must take in consideration the special protection of shop stewards as well as discrimination prohibition, demand for equal treatment and the Equality Act. In addition, most of the collective agreements contain provisions on the deduction order of the manpower. Also these provisions must be taken in consideration.

The employee is allowed to take another job for the lay-off period.